Questions and Answers about the Spin-off of Meritor Automotive, Inc. From Rockwell International
1 October 1997
Questions and Answers about the Spin-off of Meritor Automotive, Inc. From Rockwell InternationalTROY, Mich., Oct. 1 -- Meritor Automotive, Inc. today issued the following: Q. Does Meritor management plan to take the company in a new direction now that it has separated from Rockwell International? What new opportunities might the separation present and how will the company take advantage of them? A. Although we are a newly independent company with a new name, our mission has not changed. We will remain the leading provider of quality automotive systems and technology solutions to our customers worldwide. As an independent company, Meritor will be able to quickly capitalize on industry trends and take full advantage of opportunities. We will be guided by an entrepreneurial management team totally focused on solving the needs of the vehicle industry. We have the enthusiasm and energy of a start-up company, balanced by the capability and long-standing reputation built from more than 90 years of experience in the automotive industry. As a stand-alone company, we will be able to focus more intensely than ever on providing our customers with outstanding value. Q. What will your relationship with Rockwell International be like going forward? A. Rockwell's original business was in the automotive industry, dating back nearly a century. There is a great deal of equity in the Rockwell name. That's why you'll continue to see us acknowledge in virtually all of our communication "A Heritage of Rockwell Technology." Rockwell provided us with our proud heritage and built us into the global leadership business we are today. From that solid foundation, Meritor is exceptionally well-positioned to compete effectively in global markets. Further, we plan to retain our relationship with the Rockwell Science Center as a source of technology innovation, just as we have in the past. Q. Will you be making any restructuring moves now that you are your own entity? What about acquisitions or divestitures? What about plant rationalization and the impact of same on your employment figures? A. As in any well-managed business, looking at opportunities and managing change are key components of our activities. With our singular focus on the automotive industry, what we can say with certainty is that we are prepared to take advantage of the right opportunities. We are equally prepared to deal with challenges, especially the challenges of change -- in terms of what we do, what we make, where, how, at what cost and with what level of profitability. We know that change is sometimes difficult or otherwise hard to accept. We will manage our business ever mindful of that fact. We will also manage it, however, ever mindful of our responsibilities to our shareowners, customers and employees overall as well as to the communities in which we do business. Q. What are the investment merits of Meritor? A. We have a strong, experienced management team with significant shareholdings in the company where compensation is tied directly to performance. We are singularly focused. We have a long track record of reliability, service and innovative technological solutions for our many customers and valued partners worldwide. We are not simply responding to but rather are anticipating and taking action with respect to market trends, customer needs, industry challenges and opportunities. Our global presence, which includes facilities, joint ventures, sales and premier customers in North America, Asia and Europe, means that Meritor can effectively weather regional economic business cycles. Q. Please break out your sales in terms of Heavy Vehicle vs. Light Vehicle Systems, foreign vs. domestic. Where do you see the greatest growth opportunities? A. Our 1996 sales totaled approximately $3.1 billion, with 44 percent of those sales to international customers. Our Heavy Vehicle Systems (HVS) business accounted for about $1.8 billion or 58 percent of total sales; Light Vehicle Systems (LVS) $1.3 billion or 42 percent of total sales. We hope to increase sales an average of 8 percent a year, with per-share earnings growing about 15 percent. We see growth opportunities in both businesses -- for HVS, as developing nations build roads and bridges to support fledgling economies; and more particularly for LVS, which has a reputation for excellence in Europe, where this business originated, and that has migrated to and is growing in the Americas. Q. Give us an overview of the current management team and its structure, as well as some information about who serves on your board of directors. A. Our management team is headed up by Larry D. Yost, Chairman of the Board and Chief Executive Officer. Other members of the team include: -- Robert A. Calder, Senior Vice President and President, Light Vehicle Systems -- Gary L. Collins, Senior Vice President, Human Resources -- David Greenfield, Senior Vice President, General Counsel and Secretary -- Thomas J. Joyce, Vice President and Treasurer -- Susan P. Kampe, Senior Vice President, Information Technology and Chief Information Officer -- Lawrence J. Lockwood, Vice President and Controller -- Thomas A. Madden, Senior Vice President and Chief Financial Officer -- Prakash R. Mulchandani, Senior Vice President and President, Worldwide Truck and Trailer Systems -- Richard C. Quaid, Senior Vice President and President, Off-Highway and Specialty Products -- Rodney J. Walter, Senior Vice President, Business Development and Communications. In addition to Mr. Yost, other members of our Board of Directors include: -- Joseph B. Anderson Jr., chairman and chief executive officer of Chivas Products Ltd., an automotive components supplier -- Donald R. Beall, chairman and former chief executive officer of Rockwell International -- John J. Creedon, former president and chief executive officer of Metropolitan Life Insurance Company -- Charles H. Harff, a consultant to Rockwell who previously served as its senior vice president, general counsel and secretary -- Harold A. Poling, former chairman and chief executive officer of Ford Motor Company -- Martin D. ("Skip") Walker, former chairman and chief executive officer of M.A. Hanna and president of Rockwell's Automotive business from 1978-1982 Q. Can you comment as to the depth of experience of your current management team? A. The members of Meritor's management team have a combined total of nearly 150 years in the automotive industry. They have experience in managing global manufacturing, engineering, operations, financing and marketing activities involving components and systems for commercial trucks, trailers, buses, off-highway commercial vehicles, specialty vehicles, government heavy-duty wheeled vehicles as well as passenger cars and light trucks in North America and throughout the world. Q. How have customers been reacting to the news about the spin-off? What about employees? A. Both our customers and employees have reacted very favorably to the spin-off, recognizing the benefits and opportunities it will bring. This is an exciting time for everyone associated with Meritor. Our proud heritage, core values, customer focus and desire to be the industry's worldwide leader will continue to be the driving force central to everything we do. These fundamental qualities provide us with a time-tested foundation for future growth, technological innovation and even higher levels of customer service and employee opportunity. Q. How will the spin-off impact your current and future joint venture partners? A. We very much value our joint venture partners and the successful relationships we've built over the years. We fully expect to retain them and grow our businesses together. Q. Meritor's initial shareowners own stock through the circumstance of having held Rockwell International shares. How much "flipping" do you expect in your early days as an independent company and what is management doing to minimize the impact of such "flipping"? A. We certainly expect to lose some of our shareowners initially, simply because our business may not be consistent with their investment goals or preferences. At the same time, however, we expect to attract additional shareowners because, indeed, we will now be consistent with their goals or preferences. We have a strong, experienced management team; we are singularly focused; we have a proven track record of reliability, quality, service and innovative technological solutions for customers worldwide; we have a strong balance sheet; our Board of Directors is outstanding; we are ranked among the Fortune 500(R) list of companies; and we have been named to the Standard & Poor's MidCap 400 Index. We have been aggressively telling our story to international security analysts for the past month. We intend to continue to tell the Meritor story to them as well as to our shareowners directly in the weeks and months ahead. SOURCE Meritor Automotive, Inc.