Westinghouse plans $975 million charge against earnings

February 27, 1991|By Dow Jones

PITTSBURGH -- Westinghouse Electric Corp. said today it would take a $975 million charge against fourth-quarter earnings, changing its previously announced fourth-quarter profit to a $449 million loss.

The electrical giant said the loss, which amounts to $1.53 a share, compared to the originally reported profit of $284 million, or 97 cents a share. Fourth-quarter net income in 1989 was $270 million or 92 cents a share.

Westinghouse said it was taking the charge as part of a plan approved by its board to downsize and restructure its Westinghouse Financial Services Inc. subsidiary.

Westinghouse said its adjusted net income for all of 1990 was $268 million, or 91 cents a share, compared to the originally reported $1 billion or $3.41 a share. Net income for 1989 was $922 million or $3.15 a share.

Westinghouse said that under the new approach, Westinghouse Financial Services will adopt a new operating plan by which it will exit the high-yield securities market and limit new lending to secured, current-yield portfolios.

The unit will also reduce its commercial paper exposure by as much as $1.5 billion by the end of the year and reduce its asset size by about $3 billion through the sale or other liquidation of underperforming assets over the next several years.

The company said the unit will change its strategy from one of seeking growth and holding undeperforming assets over several years to one of significantly downsizing through liquidation, thus improving the quality of its ongoing portfolio.

As part of the plan, Westinghouse Electric will make a cash equity contribution of $525 million to the financial unit by the end of the first quarter of this year and will extend to June 1994 its existing support agreement with the unit's principal subsidiary, Westinghouse Credit Corp.

Westinghouse also said it expected to issue common stock o about $600 million, $500 million of which will be through apublic offering in the near future. The share-repurchase program announced in May 1990 will be terminated.

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