On the heels of last year's $1.1 billion loss, directors of Westinghouse Electric Corp. slashed the company's dividend nearly in half yesterday and announced plans for a preferred stock offering to raise $500 million in capital.
The board cut the quarterly payout to 18 cents a share from 35 cents, which Westinghouse has paid since the second quarter of 1990. The new rate is payable March 1 to stockholders of record as of Feb. 8. There are about 6,500 Westinghouse shareholders in Maryland.
Westinghouse also said yesterday that it will adopt new accounting provisions covering post-retirement health benefits, a change that will cost the company $750 million after taxes in the first quarter.
Much of that charge will be offset, however, by a second accounting change related to income taxes that will add $450 million to its earnings.
"These steps are consistent with our determination to strengthen the company and complement our recent actions," said Paul E. Lego, chairman and chief executive.
The company is "determined to take every appropriate and financially prudent step to strengthen the balance sheet by reducing debt and building equity," he said.
As part of its fiscal belt-tightening, Westinghouse eliminated about 2,500 jobs at its Maryland operations last year. Company officials have said in recent weeks that no more layoffs are expected here.
The company said the accounting moves should have no effect on the company's retained earnings. It said $350 million has been added to shareholders' equity as a result of improvements in pension fund assets.
Westinghouse, traded on the New York Stock Exchange, closed yesterday at $18.625 a share, up 37 1/2 cents.
Westinghouse spokesman Jay McCaffrey said the offering price for the preferred shares had not been determined.
Called preferred equity redemption cumulative stock, the shares would provide a higher dividend than that paid on the common stock, he said.
The shares would be convertible to common stock within three years and would have a ceiling on their trading price.