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CSX Corp. to Take $778-Million Charge

July 02, 1988|From Reuters

RICHMOND, Va. — CSX Corp., the large shipping, railroad and energy company, on Friday took a $778-million charge against its second-quarter earnings to lay off nearly 25% of its work force, and reported a loss of $160 million, or $1.04 a share, for the quarter.

CSX will lay off about 8,200 workers, reducing its rail work force to about 30,000 employees, as part of an ongoing restructuring to streamline its rail operations, the company said.

Total sales for the second quarter inched up to $2.12 billion from $2.01 billion in the year-earlier period.

Excluding the pretax charge, CSX earned a profit of $332 million, or $2.12 a share, compared to a profit of $114 million, or 74 cents a share, in the same year-ago period.

For the first six months of 1988, CSX lost $95 million, or 64 cents per share, compared to a loss of $95 million, or 61 cents a share, for the same year-earlier period.

Severance Payments

CSX said its profit for the first half of the year would have been $397 million, or $2.52 a share, without the charge.

More than 4,000 employees will lose their jobs before the end of 1989, CSX said. The company said $592 million of the current second-quarter charge is for severance payments to certain railroad employees.

Employees who are laid off will be paid $30,000 to $50,000, except for locomotive engineers who are covered under an existing program that will pay $75,000, CSX said.

The balance of the charge, $186 million, covers costs and claims pending against CSX and certain subsidiaries, the company said.

Since CSX was formed in 1980, the company has drastically reduced its rail system operations by mothballing many of its locomotives and freight cars.

"This program is part of CSX Transportation's ongoing effort to match the number of rail employees with the operating requirements of the rail system," John Snow, CSX president and chief operating officer, said in a statement.

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