(excerpt)
...
    Discontinued Operations
    On June 29, 1998, Rockwell announced its intention to spin off its
Semiconductor Systems business to shareowners.  Semiconductor Systems' fourth
quarter 1998 loss of $255 million includes after-tax special charges of
$90 million principally related to the closure and writedown of a wafer
fabrication facility in Colorado Springs, Colorado, and for costs associated
with a ten percent workforce reduction.  In addition, the fourth quarter loss
includes after-tax charges of $40 million for modem inventory write-offs,
$26 million for intellectual property matters and $35 million for estimated
after-tax operating losses expected to be incurred between Oct. 1, 1998 and
Dec. 31, 1998.
    "As we announced in September," Davis said, "Semiconductor Systems is
implementing several restructuring actions and cost reduction initiatives to
improve competitiveness and position the business for future profitability.
The operating losses and special charges recorded in the fourth quarter of
1998 are primarily related to the costs associated with these actions.  We are
on schedule to complete the spin-off of Semiconductor Systems on December 31,
1998, and we are confident about the future of the business as an independent
public company."