AlliedSignal And MTU Form Joint Venture For Industrial And Marine Gas Turbine Business.

FRANKFURT, Germany--(BUSINESS WIRE)--June 1, 1999--

New Company Called Vericor Power Systems;

Will Integrate Turbine Technologies And Offer Customers Global Reach

AlliedSignal Inc. (NYSE: ALD) and MTU Munchen, a subsidiary of DaimlerChrysler Aerospace, have agreed to form a (US) $100 million joint venture company called Vericor Power Systems. The joint venture will market, sell and provide customer support for aeroderivative industrial and marine gas turbines in the range of 0.5 to 15 megawatts. The basis for these activities is AlliedSignal's current product portfolio. The joint venture company will further expand this gas turbine product line through the combined development and production efforts of MTU and AlliedSignal. The new company is anticipated to become operational in the fourth quarter of this year.

"Vericor Power Systems will initially focus on AlliedSignal's 3.3-megawatt ASE40, 3.8-megawatt ASE50 and the 10-megawatt ASE120 gas turbines for industrial power applications, and AlliedSignal's TF40 and TF50 marine engines," said Tom Bray, President and General Manager of Vericor Power Systems and currently Director, Industrial Power for AlliedSignal Engines & Systems. "Vericor Power Systems will reduce risks for both MTU and AlliedSignal in the highly competitive industrial power and marine markets while optimizing resource allocation for both companies."

"With Vericor Power Systems, MTU's aero gas turbine business has growth potential in this segment of industrial power and marine propulsion markets," said Prof. Dr. Klaus Broichhausen, Vice President Market Forecast New Products and Technology of MTU. "This new business is a valuable addition to our existing activities with industrial gas turbines. It will also significantly strengthen MTU Maintenance Berlin-Brandburg activities in this business," Prof. Broichhausen added.

In June 1998, AlliedSignal Inc. signed an agreement with MTU Maintenance Berlin-Brandenburg to provide integrated repair and overhaul services for AlliedSignal's ASE40, ASE50 and ASE120 gas turbine engines. With MTU Friedrichshafen, a DaimlerChrysler company, AlliedSignal has an agreement to package, market and sell its industrial gas turbines.

As a transatlantic joint venture, Vericor Power Systems will provide access to design and fabrication competencies in both North America and Europe through AlliedSignal and MTU facilities. Vericor Power Systems will continue to work with global suppliers on parts for all products with the potential for low-cost manufacturing. Assembly and test of equipment will be done in those locations deemed to provide the most economic access to the customer base. Overhaul and repair will continue to be provided by the global network of authorized AlliedSignal and MTU service centers.

Together with its subsidiary companies, MTU Munchen is Germany's leading aero engine manufacturer with more than 3 billions $ sale in 1998. It has a workforce of some 6,500 and is engaged in the design, development, production, sales and support of aeroengines for commercial and military applications. It is interfaced through cooperative ventures with all major system manufacturers. MTU's objective for the next few years is to grow in all fields of activity and expand more than average in its core businesses.

AlliedSignal Inc., headquartered in Morris Township, New Jersey, USA, is a U.S. $15-billion advanced technology and manufacturing company serving customers worldwide with aerospace and automotive products, chemicals, fibers, plastics and advanced materials. More information on AlliedSignal is available on the World Wide Web at http://www.alliedsignal.com.

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This release contains forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934, including statements about future business operations, financial performance and market conditions. Such forward-looking statements involve risks and uncertainties inherent in business forecasts.