KK/Cosworth Press Conference Transcript....

[L1P1]

I had seen this yet. I'm sure it's out there somewhere and maybe linked (or posted) somewhere here. But it's easy, so <copy>...<paste>....

THE MODERATOR: Good afternoon, Ladies and Gentlemen. I'd like to welcome
you to the media call. I think probably by now you will have caught up
with the news that has been announced earlier today over here in Europe.
What we'd like to do on this call is to run through that news again.
I'm joined by Richard Perry-Jones, who is the group vice president, chief
technical officer, and has overall responsibility for Motorsport at Ford.
Also joined by Kevin Kalkhoven who has been confirmed as the new owner
of Cosworth today, and Tim Routsis, who is the managing director of
Cosworth.
The format today is we will just make a few short remarks from the speakers,
then we'll hand it over very much to you and take the Q&A; over the
telephone
line.

I'm going to turn it over to Richard Parry-Jones who is going to make
a few remarks.

RICHARD PARRY-JONES: Good morning, good afternoon, wherever you are,
Ladies and Gentlemen.

This is probably old news by now, but for the avoidance of doubt, I'm
going to reiterate the main points of the announcement we made today,
that is that Cosworth was purchased by Kevin Kalkhoven and Gerald Forsythe,
who as many of you know are co-owners of the Champ Car World Series and
PKV and Forsythe Championship Race Car Teams respectively. I personally
am absolutely delighted that Kevin and Gerald have bought Cosworth. Many
of you will know that since we made the announcement to sell our Formula
1 businesses in September, we've received tremendous support from the
management and the employees at Cosworth. We've been working very hard
to secure a sale to a reputable buyer.

Kevin and Gerry are very successful businessmen; they have long history
in Motorsport and a clear vision of how they want to take Cosworth forward.
You can imagine how pleased I am that we've arrived at this outcome.

Of course, separately today we've also announced the sale of our Jaguar
racing team to Red Bull. As part of that decision, we've announced that
we're very pleased that Red Bull will be racing with the Cosworth Formula
1 engine next year in their car.

From our point of view at Ford, of course, it's a day mixed with sadness
and joy. A sadness that we're in the passing of an era after 35 years
in Formula 1 with a partnership with Cosworth. Deciding to exit was a
very tough decision. But during that time, we should rejoice in the fact
that Ford and Cosworth together have experienced the highs and lows of
the sport and we've left a very rich legacy of victories and championships
that have been won by some of the most famous drivers and teams in
Motorsport
history. Sadness and joy are mixed up in those emotions.

Just to remind ourselves as we reach this point in our history that this
success would not have been possible without the contribution of all
our employees. Our partners, our drivers, our sponsors, and last but
most important of all, the fans. I'd like to thank them all. I reassure
this famous racing name will go forward under the stewardship of Kevin
Kalkhoven and Gerry Forsythe. We look forward to a positive relationship
in the future with Cosworth and Ford.

Congratulations on your new acquisition.

KEVIN KALKHOVEN: Thank you, Richard.

Good afternoon or good morning, folks, it's Kevin Kalkhoven. When Gerry
and I first talked about the situation, it's something that filled us
with a great deal of excitement, partly of course because we're both
motor racing nuts and also because we're businessmen.

Cosworth is one of the great Motorsports engineering companies in the
world. Its legacy, as Richard has said, extends on both sides of the
Atlantic to many, many championships and many, many victories.

When we started thinking about it and talking about it, we also began
to realize the opportunities of the future because while Cosworth does
have a significant heritage and legacy, what is of course as important
is where we take it from here.

The first aspect of that was the Formula 1 side. Of course, I'm delighted
that the Red Bull team will be on the grid for Formula 1 in 2005 with
a Cosworth engine, as will Menardi. So Cosworth will continue to be
represented
on the Formula 1 grid, and it will continue to the development of Formula
1 capabilities in the engines.

The second pillar of what we wanted to be able to do was, of course,
in North America, with the Champ Car World Series. CART, Champ Car, has
used Ford-Cosworth for many, many years, incredibly successfully; some
of the great victories in the series have been with Cosworth engines.

The Cosworth engine in the Champ Car World Series has proven to be an
outstanding engine with significant horsepower, a lot of software
capabilities
have been built into the engine to allow flexibility in the race formats,
and has been an engine that has provided incredibly close and competitive
racing this year, which has led actually to an average increase per race
in our fan attendance.

The engine has really done everything that we asked of it. We look forward
with this pillar of Cosworth for the future for developing more racing
engines for North America, including potentially those of our ladder
series and also extending the capabilities of Cosworth into this very
fast-growing sector called the tuner market, that generation of folks
16 and above, reaching to 60 in my case, but typically ending at about
30, of people who are dedicated fans of motor cars and wish to continue
to improve them. While the brand of Cosworth is a wonderful platform
to be able to provide tuner accessories for these folks, it is certainly
something we will be extending.

So Cosworth is an icon of Motorsports. We're thrilled to be able to continue
its development. We look forward to its next generation of technology,
and we look forward to having Cosworth engines in the Champ Car series
powered by Ford for a long time to come, together with a very successful
relationship with Ford.

Thank you very much. I'm now going to hand it over to the managing director
of Cosworth, a gentleman who has headed it up and will head it up in
the future with the existing management team, Tim Routsis.

TIM ROUTSIS: Thank you very much, indeed.

Good morning, everybody. I thought you might appreciate a short overview
of the sort of things that we're going to be doing with Cosworth in the
near future now and new ownership.

Just before going into that, I did want to take a moment to express a
vote of personal thanks to all of the Cosworth employees on both sides
of the Atlantic.

The sale of a sort of nature that has been gone through has attracted
a massive amount of interest and attention for all the sort of reasons
that Kevin and Richard have touched on. And inevitably, that sort of
a process is very distracting for an organization, and inevitably it
involves some uncertainties and a degree of worry in the work force.

Given that sort of an environment, it would have been somewhat
understandable
if people had in any way sort of had slightly sloping shoulders, heads
down a little bit. But I'm absolutely delighted to say that the performance
and professionalism of the staff of Cosworth, as I say on both sides
of the Atlantic, has been absolutely exemplary.

They've continued to do the job in a fabulously professional manner,
in a way which I found both inspirational and I would say slightly humbling,
because without doubt, today's successful outcome is in no small measure
due to their ongoing level of commitment.

When we do these sorts of sales, it's inevitable that there's a great
deal of emphasis placed on balance sheets and assets. But I think in
this case Gerry and Kevin really have got a first-class off-balance sheet
asset in the Cosworth folks, and they are absolutely excited to go now
into the future under this new ownership.

So what sort of things are we going to be doing? First of all, as you've
gathered, we are going to be very much maintaining and strengthening
our position in all of the forms of Motorsport in which we're currently
active. What you can expect from us in the not to far distant future
will be ongoing announcements of the sort of developments we're planning
on undertaking.

In parallel with that, we've got some expansion plans which will be moving
Cosworth and the Cosworth brand, which has been acquired as part of this
sale, into some symbiotic markets and, in particular, we're expecting
to do a lot of activity through the Torrance branch into the North American
market.

You will see us in areas such as marine, but above all, the key message
with this is that Cosworth knows where its heritage is, we know what
we're good at, and you are going to continue to see us in all aspects
of Motorsport.

There's a little overview about where we're going to be going in the
near term. I think we're heading for some quite exciting times, and I
know there's a very talented group of men and women that are really now
ready to show the world what they're capable of.

So with that, if I can hand it back now to Stewart, and we'll take some
questions, I believe.

THE MODERATOR: Thank you, Tim.

We'll take the first question, please.

PAUL NEWMAN: I don't have a question, but a comment. I'm delighted that
you guys have bought Cosworth. You are great competitors, you're savvy
businessmen. I just am glad that you guaranteed that Newman/Haas won't
be down on horsepower.

Also, I'm specifically delighted that we'll continue to guarantee a supply
of engines from Champ Car, free from any outside interference, which
I think is really important.

That's not a question, it's a comment.

KEVIN KALKHOVEN: We thank you and congratulate you on your championship
season with Sebastien Bourdais.

Q: Kevin, as everyone knows, Cosworth still has a deal to badge engines
for Chevrolet for one more season in the Indy Racing League. Is there
going to be any interruption in that contract or will that deal go ahead
through this season?

KEVIN KALKHOVEN: Absolutely no interruption at all. We are professional
businessmen. This is a contract that is in place and will continue to
be serviced to the best of Cosworth's ability in the 2005 season.

Q: Kevin, when you and Gerry and Paul first bought the assets of CART
and became Champ Car, there was some discussion that somewhere down the
not-too-distant road there would maybe be a switch to a normally aspirated
V-10 engine. I know that's kind of the reverse where Formula 1 may be
heading. What does this deal do for that possibility or is, indeed, that
a possibility somewhere down the road for Champ Car?

KEVIN KALKHOVEN: First of all, we fully expect in the next season we
will continue to use the Cosworth XFE engine, which has proven to be
so reliable and competitive this year. Of course now with the ownership
of Cosworth, we have also some opportunities for us in the future. I
think where they will take a little bit of time for us to absorb the
full capabilities of what Cosworth has got and feed them into our plans
for the future.

But certainly for the 2005 season, the sound of those wonderfully
turbocharged
XFEs will be resounding through the streets of many North American cities.

Q: A question that stems from comments that you made, Kevin, about how
this strengthens the association with Ford, and we will obviously see
that Cosworth will be involved in the Champ Car World Series for a long,
long time to come. I wondered if you might sort of on a more sort of
philosophical level comment on how you see the role of manufacturers
involved in racing, how you see that maybe evolving in terms of the Champ
Car World Series where, as you said, it would appear for at least for
the foreseeable future that it is going to be a single-engine series
for as far as we can see.

(continued in next post)

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KEVIN KALKHOVEN: As you probably know, I'm not very good at philosophy.
If I were, I wouldn't be involved in Motorsports, let's put it that way.

But I think we see an interesting situation in Motorsports, particularly
in open-wheel racing at this moment, which is that the manufacturer support
is by definition a significant two-edged sword. The financial support
that the manufacturers bring is obviously significant. The financial
support, when it disappears, as well we know in CART and now in Champ
Car, causes some significant heartburn.

We've lived through this and we've taken a very deliberate approach which
is that we worked with one manufacturer very successfully, our partners
at Ford, in order to provide something that is increasingly important
in Motorsports, which is the fact that it is entertainment, it's not
just a purist form of open-wheel racing. We have to provide entertainment
for our fans, and that entertainment comes from not just only seeing
manufacturers compete with each other but seeing close and competitive
racing where the driver is the determining factor, not the manufacturer
or the amount of money that they spend.

So what we've achieved in this year, Champ Car, is a series where the
driver is very much the king, where any driver, now that they all have
significantly the same package, can rise to the top. We've seen that
clearly in the racing this year. New teams can come in and rise to the
top, as we have seen with, for instance, RuSPORT and AJ Allmendinger.

What we have managed to do this, at least, without the embarrassment
of riches coming from the manufacturers in the way that it has in the
past, is revert to what we think is important for the future, which is
to make Motorsports entertaining, make it exciting, close, overtaking,
a lot of incidents on track, and not have it just dominated by money,
but by the drivers.

Q: If not philosophy, then pragmatic philosophy. How is that?

KEVIN KALKHOVEN: I'll take that one (laughter).

Q: Tim had referred a little bit to the American market, Torrance and
so forth. I wonder if both Kevin and Tim, if there's anything you could
say at this stage of the game in terms of how you would see Torrance
expanding at the moment, as you go forward.

TIM ROUTSIS: This is Tim here. I think one of the key aspects that Kevin
has touched on is the sort of emerging importance of the tuner market.
And one thing that is very clear for me is that although we may continue
to do some of the design work that will be associated with the sort of
genuine performance items that we will be provide to get market in the
UK, we will certainly be looking to put much more of the manufacturing
and distribution of those sort of components actually into the target
market, and I see Torrance as being absolutely pivotal in that.

KEVIN KALKHOVEN: We've already released in the United States three different
kits for the Ford Focus, which can take it up normally aspirated to 250
horsepower. We leased those a couple weeks ago. The interest level, the
demand for it, has been very, very significant. We're looking forward
to expanding our Torrance capabilities to serve this market.

Q: To update us, Tim, what are your total numbers of employees and how
many do we have there at Torrance?

TIM ROUTSIS: The total number of employees in Cosworth sort of overall
at the moment is just a tad under 600, and of that, we have about 80
in Torrance.

Q: It sounds, Kevin, like you basically said any other manufacturer
participation,
in the brand form or in the actual development form in Champ Car is probably
not in the cards in the next several years?

KEVIN KALKHOVEN: For the 2005 season.

Q: So even though Cosworth will continue in 2005, beyond 2005, there
is a possibility that other manufacturers might return to the series?

KEVIN KALKHOVEN: There's always a possibility of that, yes.

Q: Will Cosworth continue to supply Ford WRC?

RICHARD PARRY-JONES What we have arranged is that for the 2005 WRC season,
we will support M Sport, who is the organization that campaigns the WRC
Focus, in a manner which enables them to maintain and distribute the
WRC V-Tech engine that is currently in the cars.

We are working at the moment with Malcolm Wilson, who is the principal
of that organization, with a view to seeing if we can flesh out the terms
of the deal whereby Cosworth will develop a variant of the Ford dura-tech
alloy block engine for the 2006 WRC car, which will under current plans
be the new Focus.

I'm sort of quietly hopeful and optimistic we will be continuing for
a long and very successful relationship with Ford and WRC because certainly
I think it's true to say that the current Ford-Cosworth WRC engine is
still regarded as the class of the field.

Q: For Richard or anybody who can address it. We've heard different rumors
about who else might have been involved in buying Cosworth, including
gentlemen like Tony George and Chip Ganassi. Can you tell us about that
interest and who else might have tried to buy the company?

RICHARD PARRY-JONES Once we announced our decision on September 17th
to exit the business and sell these businesses, we have generated quite
a wide variety of interest in people coming forward and expressing to
know more about the companies and potentially even make an offer for
them.

But we've spent a lot of time sorting through these offers and these
expressions of interest with a number of critical criteria in mind. Just
to quote a few of them, for a moment, one of them is the buyer must have
a history in Motorsport and a really good understanding of the business
that's involved in Motorsport. The reason for that is we fear that people
who come forward thinking they understand a business like this, who haven't
been involved in Motorsport before at a significant level, almost certainly
don't know what they're getting into. That could be very dangerous for
Cosworth in the future.

The second criteria we had was really, does the buyer have kind of a
reasonably coherent view of what they want to do with the business, having
understood what there is to understand about it, and a clear vision for
taking the business forward.

A third, of course, was their financial capability, financial backup,
the wherewithal not only to pay the purchase price, but also to sustain
the company through its subsequent period and make sure it has a substantial
and stable base from which to grow.

Another critical factor, of course, was the ability to move quickly,
to move quickly into action and to conclude the deal at this time. The
reason for that criterion was that we needed to know what Cosworth's
future was in time to deport the date by which those companies and teams
that wish to compete in the 2005 Formula 1 championship need to register.
In registering, they need to declare what engine they're using and that
they have a valid engine contract.

So we needed to complete the deal on time, both to support our sale of
Jaguar racing to Red Bull, using the Cosworth engine, and to allow Menardi
to allow their use of the Cosworth engine.

So speed and effective decision-making were also the criteria for selecting
the buyer. Suffice it to say that Kevin Kalkhoven, Gerry Forsythe approach
was significantly superior against those criteria, and we're very happy
that having decided to work closely with them to bring the process to
a successful conclusion, we have been able to do that in a very expeditious
and smooth manner. This morning's press conference, I complimented Kevin
and his team on exemplary performance during the closing process.

So for us, it was not so much a question of who has got the highest amount
of money or who is shouting the loudest or who is making the best noises
behind the scenes; it was based on solid criteria of where we could find
a good future home as custodians of this fantastic company.

Q: Kevin, there's a comment in the press release from Jaguar about the
Champ Car ladder series development of engines. I take it to mean that
Toyota is at some point on its way out, and when do you expect that a
Cosworth engine will appear in series such as Atlantics?

KEVIN KALKHOVEN: Well, first of all, we are completely committed to Toyota
for the 2005 season, so that is something that we will be doing.

We will examine the 2006 season and beyond and discuss the engines with
a number of manufacturers. Of course, at this moment in time it's just
too early to say.

Q: Is it possible to know approximately how much has been paid to Cosworth?

KEVIN KALKHOVEN: I'm actually under a confidentiality agreement, so there's
nothing I can add on that situation at all.

Q: Can we say in millions?

KEVIN KALKHOVEN: It depends on what currency. You can say whatever number
you like (laughter).

Q: The top level administration. Will you keep the people in place that
you have now?

KEVIN KALKHOVEN: Yes, one of the things that impressed about Cosworth
was the strength and depth of its management team, which of course is
pretty profound. Tim will remain on as the chief executive and managing
director of Cosworth together with his team.

Q: You will be providing the new owner of Jaguar for the year of 2005.
Do you have any deals with them after that fact, after that year?

TIM ROUTSIS: Yes, you're quite correct; we will be supplying the new
owners of what used to be the Jaguar racing team, now Red Bull, with
Cosworth engines for 2005. Beyond that, as I'm sure you've picked up
through the European press, there are some pretty significant rule changes
coming up that affect the engine arrangements for 2006. Right now I and
all of our colleagues in Cosworth and our competitors are reviewing the
details of those changes very carefully. Together with the teams, we're
going to decide exactly what the best type of engine configuration to
deploy in 2006 is going to be.

Once we've pinned that down, we'll then be in a better position to see
who we will be supplying in 2006 and beyond.

Q: My question is in regards to the support series, comments that you
made. I was wondering that perhaps with the stockpile of three-liter
normally aspirated engines, maybe you might want to put those into a
chassis and run those as a support series for Champ Car.

KEVIN KALKHOVEN: Let the dust settle before we announce some of these
other plans on the ladder series, but there's certainly some interesting
opportunities around.

THE MODERATOR: Thank you very much for joining us, Ladies and Gentlemen.

[tllips]

Kevin and Gerry are very successful businessmen; they have long history
in Motorsport and a clear vision of how they want to take Cosworth forward.


Perhaps "long history" is a blanket statement covering Gerry and Kevin. Obviously, GF has a long history, but I was under the impression that KK did not have any motorsport experience prior to hooking up with Champcar for PK Racing. Is this true?

Regardless, KK is certainly saying and doing the right things. I am thoroughly impressed!

Now, if they can just get an agreement done with Mr. Bruggentheis (sp?), I will be as happy as a clam! :D

[devilmaster]

but I was under the impression that KK did not have any motorsport experience prior to hooking up with Champcar for PK Racing. Is this true?


He used to race cars in the 70's, according to this 'Light Reading' interview from late 2000. (http://www.lightreading.com/document.asp?doc_id=2871&page_number=6)

Steve