Any thoughts as to how this effects AWRE?
BW0425 JUN 29,1998 14:55 PACIFIC 17:55 EASTERN
( BW)(S&P) Rockwell International Rtgs Put on S&PWatch, Neg
Business Editors
NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/29/98--Standard & Poor's today placed its ratings on Rockwell International Corp. on CreditWatch with negative implications (see list below).
The CreditWatch placement follows the announcement of major restructuring actions. The Costa Mesa, Calif.-based firm intends to spin off its semiconductor unit, $1.4 billion of $7.8 billion revenues in fiscal 1997, to shareholders in a tax-free transaction. Also importantly for credit quality, in continuing automation and avionics businesses, Rockwell will record a $625 million pretax charge in the third fiscal quarter, ending June 30, 1998, relating to cost reductions and asset impairments. Cash outlays will be about $200 million.
Long-term profit challenges have emerged in continuing operations, prompting cost reductions and related charges. Sales are about flat in factory automation, with third quarter earnings expected to be about 10% below a year earlier. Avionics operations are performing strongly, with third quarter sales to be up 18% from a year earlier, but with earnings adversely affected by a $35 million government program charge.
The semiconductor operation spin-off will continue the trend of reduced business diversity at Rockwell. Aerospace/defense and graphics system units were sold in 1996, and automotive operations were spun off in 1997. Semiconductor operations have been struggling due to price pressures and difficult product transitions in modem chipsets.
Standard & Poor's will meet with Rockwell's management to assess the firm's future competitive position, profitability and cash generation prospects, and financial structure.--CreditWire
RATINGS PLACED ON CREDITWATCH NEGATIVE
Rating Rockwell International Corp Corporate credit rating AA- Commercial paper 3(a)3 A-1+ Commercial paper 4(2) A-1+ Senior unsecured debt AA- Rule 415 shelf prelim. AA- Reliance Electric Co. Corporate credit rating AA- $150 million 6.8% notes AA-
--30--lc/sd*
CONTACT: Martin Knoblowitz, 212/208-1614
For more information on criteria or subscriptions:
ratings.standardpoor.com
KEYWORD: NEW YORK CALIFORNIA
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS COMED
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