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 BUFFALO, N.Y., Nov. 22 /PRNewswire/ -- Varity Corporation (NYSE: VAT) today reported net income for the third quarter ended Oct. 31 of $22.2 million, or 49
cents per common share on a fully diluted basis. For the comparable period a year ago, net income was $10.5 million, or 23 cents per share. There were almost 12 million more average primary shares outstanding in the latest period, largely as a result of equity offerings and recent conversion of preferred shares.
 The company said net income in the year-ago quarter was negatively affected by a foreign exchange loss of $6.4 million; in the latest period a foreign exchange gain of $0.4 million was recorded.
 Sales in the quarter were $692 million, compared with $844 million a year ago, reflecting the disposition of several businesses. After adjusting the comparable 1992 period for these dispositions, sales would have been $656 million.
 Segment operating income was $37 million in the latest three months, versus $30 million last year after adjusting for business disposals and changes in accounting principles.
 Victor Rice, chairman and chief executive officer, said each of the company's three major operating groups -- Kelsey-Hayes automotive products, Perkins diesel engines, and Massey Ferguson farm machinery -- contributed to the improved operating results.
 Varity's restructuring and financing actions over the past 15 months -- resulting in a reduction of $1 billion in consolidated debt -- are continuing to have positive effects. Interest expense of $8 million in the recent quarter compares with last year's $35.3 million.
 Kelsey-Hayes increased sales in the latest period to $294 million against last year's $257 million on an adjusted basis. Operating income was $24 million versus $22 million in the year-earlier period. Rice said, "our ABS business is performing extremely well, and we expect the trend to continue". Operating margins in Kelsey-Hayes' foundation brakes business were negatively influenced by cost pressures from excessive overtime and outsourcing penalties as a result of exceptional demand for certain high-volume vehicle platforms. Additionally, Kelsey-Hayes continues to incur costs associated with the start-up of European ABS operations without offsetting revenues.
 Perkins improved operating income to $11 million from $6 million last year, reflecting the impact of operating efficiencies it has installed and its focus on world-class quality standards. Rice said Perkins continues to perform well in a difficult European industry environment.
 Massey Ferguson's operating income was $2 million compared to $1 million on an adjusted basis in the previous year's quarter. Rice said Massey Ferguson has improved market share in several key European and developing markets, although total industry sales in Europe are down more than 10 percent from 1992 levels.
 During the quarter Varity converted 11.8 million Class I preferred shares into 8 million common shares.
 In the first nine months of fiscal 1993 Varity reported income of $49.3 million or $1.13 per common share on a fully diluted basis before the $146.1 million cumulative effect of changes in accounting principles and an extraordinary loss of $1.7 million for early debt redemption. This compares with net income of $22.2 million or 33 cents per share over the nine-month period last year.
 1993 1992
 Quarter to October 31
 Sales and revenues USD 692,200,000 844,400,000
 Net income 22,200,000 10,500,000
 Preferred share dividends 600,000 4,600,000
 Per share earnings:
 Primary 0.58 0.23
 Fully diluted 0.49 0.23
 Average shares outstanding 37,247,000 25,567,000
 Nine months to October 31 1993 1992
 Sales and revenues USD 1,998,100,000 2,559,600,000
 Net income (loss) (98,500,000) 22,200,000
 Preferred share dividends 9,800,000 13,900,000
 Per share earnings (loss):
 Before extraordinary loss and
 cumulative effect of changes
 in accounting principles:
 Primary 1.16 0.33
 Fully diluted 1.13 0.33
 Extraordinary loss:
 Primary (0.05) ---
 Fully diluted (0.05)(A) ---
 Cumulative effect of changes
 in accounting principles:
 Primary (4.28) ---
 Fully diluted (4.28)(A) ---
 Net income (loss):
 Primary (3.17) 0.33
 Fully diluted (3.17)(A) 0.33
 Average shares outstanding 34,110,000 25,364,000
 (A) - anti-dilutive
 -0- 11/22/93
 /CONTACT: Andrea Rosen of Varity, 716-888-8037/

CO: Varity Corporation ST: New York IN: AUT SU: ERN

BM -- CL002 -- 6650 11/22/93 07:33 EST
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Publication:PR Newswire
Date:Nov 22, 1993

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