VARITY REPORTS IMPROVED FIRST-QUARTER RESULTS BEFORE ACCOUNTING CHANGES
BUFFALO, N.Y., May 24 /PRNewswire/ -- Varity Corporation (NYSE: VAT) today reported fiscal first-quarter income before one-time charges for changes in accounting principles of $11.0 million, or $.20 per share. In the first quarter of 1992 Varity reported a net loss of $2.4 million, or $.28 per share. The first-quarter net loss of $135.1 million, or $4.50 per share, reflects $146.1 million in accounting changes, primarily the adoption of accounting standard SFAS No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions" by Varity and an affiliated company, Hayes Wheels International, Inc. First quarter sales in 1993 were $645 million versus $823.8 million in the same period a year ago. The lower sales in 1993 primarily reflect disposition of several businesses in actions carried out by Varity in the last year to reduce debt and fund future growth. After adjusting the prior period for dispositions, sales in the first quarter of 1992 would have been $641 million. "The results of our restructuring actions have had an immediate impact on our earnings," said Victor Rice, chairman and chief executive officer of Varity. "After reducing consolidated debt by more than $800 million last year, interest expense was $10.7 million in the first quarter, down over 70 percent from the $37.0 million incurred in the same quarter last year," he said. Kelsey-Hayes, Varity's automotive components unit, benefited from an 18 percent increase in North American light vehicle industry production, plus increased penetration of anti-lock brake systems (ABS) and light duty-brake products. Kelsey-Hayes recorded sales of $302 million and operating income of $25 million, 39 percent above a year ago, adjusted for the divestment of Hayes Wheels International and other businesses. Adjusted for these divestments, sales and operating earnings last year were $235 million and $18 million, respectively. Massey Ferguson lost $2 million in operating income in the first quarter on sales of $189 million. "Taking into consideration that the first quarter is typically the weakest in the farm equipment sector and that our major market, Europe, is down more than 10 percent from last year, Massey Ferguson had a respectable performance for the quarter," said Rice. Ai?ng in European markets in recessionary economic conditions, Perkins' operating income was about the same as the first quarter of 1992, reflecting continued cost reduction efforts and manufacturing efficiencies. Sales of $158 million were down 13 percent in dollar terms, but constant after adjusting for changes in European exchange rates. Order rates for shipment later in 1993 have improved significantly over year-ago levels. First-quarter results include $2.8 million representing Varity's 46 percent equity interest in the earnings of an affiliate company, Hayes Wheels International, which had net income before accounting changes of $6 million.
First quarter quarter results include the effects of its adoption of SFAS No. 106, SFAS No. 109, "Accounting for Income Taxes;" and SFAS No. 112, "Employers' Accounting for Postemployment Benefits." Varity elected to take one-time charges of $126.7 million to recognize the cost of post-retirement medical and life insurance benefits earned by active employees and retirees and $8 million for postemployment benefits. The total charge of $146.1 million also includes $11.4 million related to Hayes Wheels' accounting changes. Additionally, on-going, incremental expenses of $1.2 million related to SFAS 106 were incurred by Varity in the first quarter.
Rice said that higher North American automotive production schedules this year were a positive sign for Kelsey-Hayes ABS and light-duty brakes. "Continuing robust U.S. automotive production and worldwide acceleration of ABS applications are favorable developments for Va Varity Corporation had sales in 1992 of $3.4 billion and is one of the 150 largest U.S. industrial companies. Quarter to April 30 1993 1992 Sales and revenues USD$645,000,000 $823,800,000 Net loss (135,100,000) (2,400,000) Preferred stock dividends 4,600,000 4,700,000 Per share earnings (loss): Before accounting changes: Primary 0.20 (0.28) Fully diluted 0.20 (0.28)(A) Accounting changes: Primary (4.70) --- Fully diluted (4.70)(A) --- Net loss: Primary (4.50) (0.28) Fully diluted (4.50)(A) (0.28)(A) Average common shares 31,046,000 25,038,000 (A) - Anti dilutive -0- 5/24/93 /CONTACT: Jerry Hostetter of Varity Corporation, 716-888-8073/ (VAT)
CO: Varity Corporation ST: New York IN: AUT SU: ERN
AR -- CL014 -- 1905 05/24/93 18:07 EDT
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|Date:||May 24, 1993|
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