Westinghouse Posts $246-Million Loss
Westinghouse Electric Corp. said Friday that an accounting change for retirement benefits plunged the company into the red during the first quarter.
The conglomerate reported a net loss of $246 million, or 72 cents a share, for the period, contrasted with a profit of $98 million, or 34 cents per share, a year earlier.
Westinghouse Credit Corp., a subsidiary of Westinghouse Financial Services Inc., said separately that it posted a steep drop in earnings due to the nation’s weak real estate market.
The parent company’s loss, which Westinghouse said was expected, stemmed from a post-retirement benefit accounting charge of $742 million.
“First-quarter results were in line with our expectations,” Westinghouse Chairman Paul Lego said in a statement.
“While some of our businesses are recording slight improvements in order rates, most of our businesses are late cycle and have yet to experience increased order activity.”
Westinghouse stock was off 25 cents at $17.875 Friday on the New York Stock Exchange.
Analysts expressed optimism over signs that Westinghouse subsidiaries were responding to an economic upturn. But they also were disappointed that the results showed fewer benefits from cost-cutting than expected.
“The operating earnings were essentially flat, if you exclude that the company benefited from 4,000 people being laid off,” said Nicholas Heymann, an analyst at County NatWest.
“Operating earnings as relates to being driven by higher sales volume was flat.”
The company adopted the Statement of Financial Accounting Standards No. 106, which requires it to change the way it accounts for some post-retirement benefits, principally health care and life insurance.
The Pittsburgh-based company, involved in a wide range of industries from broadcasting to power generation, said that excluding the use of the new accounting standards, its net income for the quarter was $92 million.
Westinghouse said its broadcasting segment’s operating profit for the quarter rose because of lower costs, while revenues were flat.
Total revenues in the quarter rose to $2.83 billion from $2.78 billion a year earlier.
Westinghouse Credit said its first-quarter earnings fell to $4.2 million from $21.2 million a year earlier. Its revenues dropped to $195.7 million from $258.2 million.
The company attributed the fall in profits and revenues to an increase in non-earning assets and the sale of some assets.
Westinghouse took a $1.68-billion charge in the third quarter of 1991 to offset real estate losses in its Westinghouse Credit division.
