COPYRIGHT
AGGRESSIVE MOVES AND NEW DIRECTIONS PUT WESTINGHOUSE BACK ON TRACK BY FREDRIC G. REYNOLDS (BB A '72), FORMER CHIEF FINANCIAL OFFICER AND EXECUTIVE VICE PRESIDENT, CBS

In January 1994, after 13 years at PepsiCo, Fredric G. Reynolds was recruited by Westinghouse CEO Mike Jordan to help bring the Pittsburgh, Pa.-based company back from the brink of economic disaster. He quickly set about cutting costs, raising capital, divesting businesses and, ultimately, acquiring CBS Corp. We had to take on a very tough task. Westinghouse was very overstaffed. We couldn't maintain that level of employment. Within my first 90 days I realized that we had to lay off 10,000 employees. And we did.

A number of businesses also had to be divested. We were fortunate that interest rates had been lowered due to the liquidity crisis and that strategic buyers were able to acquire those assets at a rapid pace and at a good value.

Within nine months, we were able to bring our debt down from $11 billion to $6 billion. Then one day I was complaining to the former treasurer about something and he said, "If you think that's bad, we're distributting $50 million a month out of the pension plan because people are taking lump-sum payments." I said, "That's $600 million a year.

The assets in the plan are only $3 billion. We'd better get a real assessment." It turned out that what we thought was a $1 billion underfunding of the pension plan ended up being a $3 billion underfunding. The plan's assets were being depleted in part because, with the company in dire financial straits and getting weaker by the minute, everyone opted to take the lump-sum payment upon retirement. In 1994, we were third on the list of the most underfunded pension plans in America.

Spring 2017
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