Methode Electronics, Inc. Announces U.S. Restructuring
January 24 2008 - 9:04AM
Business Wire
Methode Electronics, Inc. (NYSE:MEI), today announced a
restructuring at its U.S.-based automotive operations in Carthage
and Golden, IL. It will also discontinue producing legacy
electronic connector products in Rolling Meadows, IL. At their
peak, these automotive plants produced nearly sixty percent of
Methode�s sales. Today with offshore manufacturing being a
necessity to compete in the global automotive market, revenue
produced at these facilities has been severely diminished. The
Company has previously moved several programs to its foreign
operations and announced its decision to begin exiting several low
profit and unprofitable programs earlier this fiscal year. As a
result of fewer programs remaining for these plants and anticipated
continued reduction in customer production volumes, Methode is
taking this action to transfer the remaining programs from its U.S.
facilities. The automotive restructuring process is expected to be
completed by the end of this calendar year. The legacy electronic
connector exit should conclude in the next three to four months.
Once complete, these actions will result in the elimination of
approximately 700 jobs with only limited production and support
staff remaining in Carthage and Rolling Meadows. Affected employees
will be offered severance and outplacement support. Methode will
begin immediate discussions with customers affected by these
actions. Mr. Donald W. Duda, President and Chief Executive Officer
of Methode Electronics stated, �The decision to initiate this
restructuring was made with great difficulty as we are cognizant of
the number of Methode employees being affected by this action. It
is imperative, however, that we address this situation as these
operations are becoming unprofitable.� Continuing, Mr. Duda said,
�Our operations have made massive efforts to control costs. Despite
these efforts, U.S. economic conditions, coupled with volume
reductions from Methode�s legacy automotive customers, have become
too great an obstacle to overcome.� Methode estimates that it will
record a pre-tax charge during the fiscal years 2008 and 2009
between $19.0 million and $25.0 million ($11.0 million and $15.0
million net of tax), or between $0.30 to $0.40 earnings per share.
The cash portion of this charge will be between $11.0 million and
$14.0 million. Fiscal year 2008 guidance for�sales between $500.0
million and $515.0 million is reaffirmed. Previous earnings per
share guidance between $0.80 and $0.87 did not reflect any charge
for restructuring that will be recorded in Methode�s third or
fourth quarter of fiscal 2008. About Methode Electronics Methode
Electronics, Inc. (NYSE:MEI) is a global manufacturer of component
and subsystem devices with manufacturing, design and testing
facilities in the United States, Malta, Mexico, United Kingdom,
Germany, Czech Republic, China and Singapore. We design,
manufacture and market devices employing electrical, electronic,
wireless, sensing and optical technologies to control and convey
signals through sensors, interconnections and controls. We manage
our business on a segment basis, with those segments being
Automotive, Interconnect, Power Distribution and Other. Our
components are in the primary end markets of the automobile,
computer, information processing and networking equipment, voice
and data communication systems, consumer electronics, appliances,
aerospace vehicles and industrial equipment industries. Further
information can be found at Methode's website at www.methode.com.
Forward-Looking Statements This press release contains certain
forward-looking statements, which reflect management�s expectations
regarding future events and operating performance and speak only as
of the date hereof. These forward-looking statements are subject to
the safe harbor protection, provided under the securities laws.
Methode undertakes no duty to update any forward-looking statement
to conform the statement to actual results or changes in Methode�s
expectations on a quarterly basis or otherwise. The forward-looking
statements in this press release involve a number of risks and
uncertainties. The factors that could cause actual results to
differ materially from our expectations are detailed in Methode�s
filings with the Securities and Exchange Commission, such as our
annual and quarterly reports. Such factors may include, without
limitation, the following: (1) dependence on the automotive
industry; (2) dependence on a small number of large customers
within the automotive industry; (3) intense pricing pressures in
the automotive industry; (4) customary risks related to conducting
global operations; (5) increases in raw materials prices; (6) the
successful integration of acquired businesses; (7) dependence on
the appliance, computer and communications industries; (8) the
marketability of our intellectual property; (9) the seasonal and
cyclical nature of some of our businesses; and (10) our ability to
execute the above-mentioned restructuring as planned.
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