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VARITY UNIT'S FIRST ORDER FOR NEW 4-WHEEL ANTI-LOCK BRAKES FOR CARS VALUED AT $100 MILLION YEARLY

 VARITY UNIT'S FIRST ORDER FOR NEW 4-WHEEL ANTI-LOCK BRAKES
 FOR CARS VALUED AT $100 MILLION YEARLY
 BUFFALO, N.Y., May 29 /PRNewswire/ -- Varity Corporation's (NYSE: VAT) Kelsey-Hayes automotive components unit will supply its latest four-wheel anti-lock brake system to a major auto manufacturer in Europe starting in 1995 for the 1996 model year. The agreement is valued at $100 million yearly.
 Victor Rice, Varity chairman and chief executive officer, told shareholders attending the annual meeting here today that the order represents a breakthrough for Michigan-based Kelsey-Hayes; it is the first order for the new ABS for passenger cars since it was introduced at the Tokyo Motor Show in late 1991, and the first ABS supply agreement with a European customer.
 The new Kelsey-Hayes ABS "is off and running as a mainstay product for the Nineties," Rice declared. Kelsey-Hayes is already the world's leading producer of ABS, largely from its dominance in the market for two-wheel systems on light trucks and vans.
 He also disclosed that Varity has sold the site of the main Europe-based parts warehouse for its Massey Ferguson farm machinery and Perkins diesel engine groups in Manchester, England, and assigned responsibility for parts warehousing and distribution to a specialist company, Caterpillar Logistics Services.
 Proceeds of the sale amounted to approximately $25 million, Rice said. The company announced earlier this year that it intends to raise up to $175 million in the next 12 to 18 months to reduce debt and strengthen the balance sheet.
 Rice said the company was also encouraged by its operating performance in the three months ended April 30, 1992, when sales climbed 21 percent from a year earlier, operating income more than doubled to $44 million, and gross margins improved by 1.5 percentage points.
 Varity's previously announced plan to remove 1,300 positions from its worldwide payroll in 1992 is slightly more than halfway to its goal. These actions, affecting all the company's major businesses, will cut annual overhead costs by $45 million.
 While Varity's prospects are brightening despite the sluggish global economy, the company "is continuing to evaluate a number of strategic initiatives to make further significant progress" to improve the balance sheet and enhance profitability, Rice observed. He assured shareholders that the company will "improve on our 1991 operating performance substantially throughout the year, regardless of what the economy does."
 -0- 5/29/92
 /CONTACT: Andrea S. Rosen of Varity, 716-888-8037/
 (VAT) CO: Varity Corporation ST: New York IN: AUT SU: PDT


CG -- CL008 -- 5141 05/29/92 11:09 EDT
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Publication:PR Newswire
Date:May 29, 1992
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