Printer Friendly

VARITY TO TAKE $110 MILLION RESTRUCTURING CHARGE; ACTIONS SET TO RESTORE PROFITS, REDUCE DEBT

 VARITY TO TAKE $110 MILLION RESTRUCTURING CHARGE;
 ACTIONS SET TO RESTORE PROFITS, REDUCE DEBT
 BUFFALO, N.Y., March 3 /PRNewswire/ -- Varity Corporation (NYSE: VAT) is undertaking restructuring actions which will result in special charges of about $110 million in the fourth quarter ended Jan. 31, 1992. Varity expects to issue its year-end results in late March.
 The company has carried out an extensive review of actions to address its two highest priorities: a return to profitability in 1992 and the reduction of debt.
 Victor Rice, chairman and chief executive officer, said Varity is responding to severe and prolonged recessionary conditions in its major markets. "Our action program will ensure our businesses achieve significant improvement in operating performance in 1992 whether or not there is an economic recovery," he declared. He said the company's near-term planning assumptions are for little or no improvement in market conditions.
 Of the special charges, approximately $40 million will relate primarily to headcount reductions to further improve operating efficiencies and lower cost structures. These actions, targetted to decrease worldwide employment by 1,300 jobs to 16,800 by the end of 1992, will lower annual operating costs by an estimated $45 million. Each of Varity's businesses -- automotive components, farm machinery, and diesel engines -- will be affected. With the latest actions, employment will be reduced by 4,200 jobs or 20 percent from the end of 1989.
 About $70 million of the restructuring charges will reflect provisions for asset writedowns in anticipation of the divestment of five non- core businesses. Rice, stressing the company's commitment to reduce debt, said Varity expects to generate between $125 million and $175 million for debt paydown through asset sales over the next 18 months.
 Rice said Varity continues to review additional strategic initiatives to further improve profitability and strengthen the balance sheet.
 Varity also disclosed preliminary estimates of the effects of the new Financial Accounting Standard No. 106, which requires that companies recognize currently the cost of future payments for retiree health care and other non-pension benefits.
 The company said its estimate of retiree benefit costs to be paid in the future, which relate to services already rendered, ranges from $150 million to $275 million. Varity said it has the option of recognizing the transition obligation immediately as a one-time charge to earnings or amortizing it over a 20 year period. The preliminary estimates of the company's incremental annual expense over the current basis of accounting, following adoption of the new standard, range from $10 million (if the entire transaction obligation were recognized in the year of adoption) to $35 million (if the transition obligation were recognized over a 20 year period).
 Varity said these estimates are subject to change and are dependent on a number of variables and that it had not determined whether the standard will be adopted in 1992 or 1993 or how the transition obligation will be recognized. Adoption of the new standard will not affect the company's cash flow.
 -0- 3/3/92
 /CONTACT: Andrea S. Rosen of Varity Corporation, 716-888-8037/
 (VAT) CO: Varity Corporation ST: New York IN: AUT SU: ERN


SM -- CL005 -- 4324 03/03/92 08:49 EST
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Mar 3, 1992
Words:525
Previous Article:AMERICA SERVICE GROUP POSTS RECORD EARNINGS FOR 1991
Next Article:CSC INDUSTRIES REPORTS FOURTH QUARTER RESULTS, MANAGEMENT CHANGE AND REFINANCING ARRANGEMENTS
Topics:


Related Articles
VARITY POSTS LOSS IN THIRD QUARTER
VARITY POSTS STRONG RECOVERY AND IMPROVES BALANCE SHEET IN 1992; OPERATING EARNINGS RISE 66 PERCENT BEFORE UNUSUAL CHARGES
VARITY REPORTS IMPROVED FIRST-QUARTER RESULTS BEFORE ACCOUNTING CHANGES
VARITY ACHIEVES SECOND-QUARTER NET INCOME ABOVE PRIOR YEAR
VARITY REPORTS EARNINGS IMPROVEMENT IN 3RD QUARTER
VARITY REPORTS FOURTH-QUARTER, 12-MONTH RESULTS; FULLY DILUTED EARNINGS PER SHARE RISE TO $0.59 IN THE FOURTH QUARTER, FROM $0.23 EXCLUDING A...
VARITY REPORTS RECORD THIRD QUARTER AND NINE MONTHS RESULTS BEFORE RESTRUCTURING CHARGE
VARITY REPORTS RECORD FOURTH QUARTER AND 12-MONTH OPERATING RESULTS
VARITY REPORTS FIRST QUARTER RESULTS
LucasVarity Announces First Quarter Fiscal 1997 Three Months Ended 30 April 1997

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters