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SPX cuts jobs, takes charge
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December 28, 1998: 1:58 p.m. ET
Office closings, restructuring costs related to purchase of General Signal
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NEW YORK (CNNfn) - Auto parts maker SPX Corporation said Monday it would take a fourth-quarter pretax restructuring charge of between $210 million and $250 million and cut 1,000 jobs in connection with its recent $2 billion acquisition of General Signal.
The company said it expects $20 million of incremental restructuring costs to be incurred in 1999.
SPX (SPW) said components of the charge include the closing of approximately 25 manufacturing, sales and administrative facilities as well as the Stamford, Conn., headquarters of General Signal. These closings, coupled with an early retirement program and other actions, will result in the reduction of 1,000 employees over the next six months, the company said.
SPX said costs related to certain asset valuations, in-process technology and potential environmental issues arising from the merger with General Signal would also be part of the fourth-quarter charge.
"With the anticipated savings from these restructuring actions, which mitigate the current economic trends in our global markets, we remain confident in our 1999 earnings guidance of $4.85 per share, excluding any special charges," said SPX chairman, president and CEO John B. Blystone in a statement.
Analysts tracked by the research firm First Call expect the company to earn $4.83 per share in 1999 and to record earnings of $1.04 per share in the fourth quarter of 1998.
By early afternoon on Monday, shares in SPX (SPW) were trading up 3-13/16 at 66-7/8.
David Garrity, an auto analyst with GVA Research, told CNNfn that SPX's consolidation efforts spell good news for shareholders.
"SPX management, since they came into control of the company - SPX - back in December 1996, has done a phenomenal job for shareholders in terms of creating shareholder value," Garrity said. "I'd argue that what we're seeing in today's reaction to the General Signal consolidation announcement is obviously that there's a strong year ahead for SPX in 1999." 
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SPX Corporation
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