Lear Siegler Puts Several of Its Businesses Up for Sale
The investment group that recently acquired Lear Siegler put several of its businesses up for sale Wednesday and said Lear Siegler’s Piper Aircraft unit continued to suffer huge losses.
Lear Siegler is looking for buyers for its Smith & Wesson handgun business, its Cal and O’Day sailboat units and manufacturers of farm equipment, recreational vehicles and Peerless truck trailers. Lear Siegler is also selling Producers Cotton Oil, a vegetable oil processor in Fresno.
Lear Siegler, a Santa Monica conglomerate with interests in aerospace and automotive equipment, was taken private in December by the New York investment firm of Forstmann Little and members of Lear Siegler management. The group paid $2.1 billion for Lear Siegler, outbidding several suitors, including a partnership formed by Irvine glass maker AFG Industries and Brown & Wagner, a Midland, Tex., oil and gas concern.
Early last month, Forstmann Little said it had no plans to break up the conglomerate but said it might change that decision after it completed the $92-a-share buyout. The deal was completed a week ago.
It was widely anticipated that Lear Siegler’s new owners would sell some of its less-promising businesses to help pay for the acquisition.
Thomas O. Lloyd-Butler, an analyst who follows Lear Siegler for Montgomery Securities in San Francisco, said the farm equipment businesses accounted for about $115 million in sales last year but lost money. He said the businesses that are for sale account together for about $300 million in annual sales. Lear Siegler reported sales of $2.5 billion for the year that ended last June 30.
A Lear Siegler spokesman said the businesses to be sold employ less than 10% of Lear Siegler’s 29,000 employees, including 600 at Producers Cotton in Fresno and 50 at a boat building operation in Santa Ana. Jack Cressman, the spokesman, said Lear Siegler intends to keep the automotive glass business that was coveted by AFG Partners, as well as its aerospace businesses. “They are really the key businesses,” he said.
$75-Million Charge
Lear Siegler said Wednesday that it suffered heavy losses in the second quarter of its current fiscal year, largely due to a $75-million charge against income related to reduced production at troubled Piper Aircraft. Of that, $31 million was a reduction in what accountants call good will--the difference between the market value of a business and the value of its assets. A decline in good will means that the market value has dropped.
The rest of the writeoff reflected costs associated with lowered production at Piper, which is suffering from a continued slump in the small airplane market. Last year, the Vero Beach, Fla., company produced just 330 planes and reduced its work force to 1,000 from 1,800 a year earlier.
As a result of the writeoff, Lear Siegler reported a loss of $65.6 million on sales of $699.7 million for the quarter that ended Dec. 31, 1986, compared to a profit of $17.1 million on sales of $599.1 million in the same quarter in 1985. For the first half of its fiscal year that ended on Dec. 31, 1986, Lear Siegler reported a loss of $49 million on sales of $1.27 billion, compared to a profit of $28.8 million on sales of $1.13 billion a year earlier.
