SL Industries Announces Further Restructuring, Seeks Potential Acquirers
SL Industries Inc. (Mt. Laurel, NJ) announced that its board of directors recently approved a series of business restructuring actions in its power eletronics group. These actions include adjusting manufacturing capacity and reducing personnel.
The first of these actions involves a personnel reduction of 175 employees at the company's Condor DC Power Supplies (Oxnard, CA) subsidiary, representing 27 percent of Condor's workforce. The reduction is in addition to the reduction of approximately 400 employees announced in April. Pre-tax charges of $700,000 associated with severance costs for this most recent reduction will be recorded in the third quarter ending September 30, 2001. The company expects to realize annualized pre-tax savings of approximately $6,000,000 as a result of the personnel reductions effected this year. Initial savings from the latest reductions will begin during the third quarter, ending September 30, 2001.
Actions to adjust the manufacturing capacity and dispose of underperforming assets are also being undertaken. In this regard, the company expects to incur pre-tax charges of approximately $3,200,000 associated with accrued operating losses of discontinued operations and anticipated asset-impairment charges relating to such discontinued operations. These charges will be recorded in the second quarter ended June 30, 2001. In addition, the company will take pre-tax charges of approximately $2,900,000 to write down excess inventory acquired or produced for customers in the telecommunications market. The write-down is the result of an internal review of anticipated inventory usage in light of program cancellations, delivery postponements and slow order activity in the telecommunications market.
Owen Farren, president and CEO of the company, commented, "SL Industries invested to meet the anticipated demand for telecommunications and data communications products throughout the world. The Condor business unit developed a manufacturing platform with sufficient capacity to accommodate robust growth at low incremental costs. Unfortunately, not only has the projected growth not materialized but it appears that the market will remain depressed for a prolonged period of time. While we deeply regret the impact of the personnel reductions on our employees, the company must take significant measures to adapt its asset and expense structure in the face of these poor conditions."
Farren concluded, "Despite the market downturn in the telecommunications and semiconductor industries, SL Industries is continuing its discussions with potential acquirers. Based on interest expressed by certain parties, the company has directed Credit Suisse First Boston to solicit interest in SL's power electronics group and power motion group separately, while it continues to work with us in pursuing the original process to sell the entire company. We anticipate that by the end of August, interested parties will have completed their due diligence reviews and submitted formal offers for evaluation."