Arco Will Take $450-Million Charge for Reorganization
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Little to the surprise of Wall Street analysts, Atlantic Richfield Co. said Monday that a companywide reorganization announced last fall would result in an after-tax charge of $450 million against the firm’s fourth-quarter earnings, which will be announced Jan. 24.
The portion of the charge representing an outlay of cash--$60 million--will be used for severance pay, insurance and other costs associated with layoffs, according to Al Greenstein, spokesman for the Los Angeles-based firm.
In Monday’s announcement, Arco also raised its estimate of jobs to be eliminated in the reorganization to as many as 1,300 by early next year. The company previously had estimated that 900 to 1,000 jobs would be cut.
Arco announced in October that it essentially would end its hunt for oil in the Lower 48 states in its most extensive restructuring since 1985.
“Arco has always been aggressive on a financial basis,” said Andrea Esposito, a director in corporate finance and an analyst at Standard & Poor’s who follows the oil and gas industry. “The charge is not a surprise to me, not even the size of it.”
Nevertheless, Arco shares slipped 37.5 cents to $107.625 on the New York Stock Exchange, after trading as low as $106.50.
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