RailAmerica Restructures Organization; Reduces Management; Next Step in Plan to Enhance Efficiency, Bolster Profits
June 22 2006 - 7:00AM
Business Wire
Implementing another step in its previously announced five-year
strategic plan to improve efficiency and enhance shareholder value,
RailAmerica, Inc. (NYSE:RRA) today announced the restructuring of
its organization into three business units from its current five
regions and two corridors. The three business units - RailAmerica
Operations East, RailAmerica Operations Central, and RailAmerica
Operations West - will each be headed by a newly appointed
president from within the ranks of management: RailAmerica
Operations East by Jan Polley, RailAmerica Operations Central by
Scott Hulstrom, and RailAmerica Operations West by Ray Stephens.
This reorganization will result in the immediate elimination of 20
positions, virtually all from upper and middle management. About
half the positions come from the corporate office; the other half
are from RailAmerica field locations. Prior to this, the company
had about 130 managers at the levels affected by the
reorganization. The restructuring of the organization will result
in a pre-tax charge of approximately $1.8 million in the second
quarter. "RailAmerica has achieved its growth during the last 20
years by acquiring other railroads, each with its own processes,
procedures, and structures," said Charles Swinburn, Chief Executive
Officer of RailAmerica. This has resulted in redundancies and
inefficiencies in our organization. "This reorganization - a key
piece of our Process Improvement Project - will create a leaner,
more profitable, and more competitive RailAmerica ... a company
that is even more responsive to our customers' needs," Swinburn
said. Under the restructuring plan, the company will move certain
of its corporate functions to a shared services model that will
provide more effective and efficient support across the three new
business units. "In addition to making us a leaner company with
fewer layers of management, this reorganization will give our
managers in the field the resources and responsibility to make
market- and customer-based business decisions without having to
involve higher levels of management," Swinburn said. As the next
phase in its Process Improvement Project, RailAmerica will put in
place new business processes through the remainder of 2006 to
support the new structure. The Process Improvement Project, which
the company will continue to implement during the remainder 2006,
is projected to result in operating expense and capital savings of
$10-$15 million annually, beginning in 2007. RailAmerica, Inc. is a
leading short line and regional rail service provider with 42
railroads operating approximately 7,800 track miles in the United
States and Canada. The company is a member of the Russell 2000(R)
Index. http://www.railamerica.com. Disclaimer Regarding
Forward-Looking Statements: This press release contains
forward-looking statements regarding future events that involve
risks and uncertainties that could cause actual results to differ
materially. Forward-looking statements speak only as of the date
the statement was made. The Company assumes no obligation to update
forward-looking information to reflect actual results, changes in
assumptions or changes in other factors affecting forward-looking
information. If the Company does update any forward-looking
statement, no inference should be drawn that the Company will make
additional updates with respect to that statement or any other
forward-looking statements. We refer you to the documents that
RailAmerica files from time to time with the Securities and
Exchange Commission, such as the Form 10-K, Form 10-Q and Form 8-K,
which contain additional important factors that could cause its
actual results to differ from its current expectations and from the
forward-looking statements contained in this press release.
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