Hayes Lemmerz Initiates Major Restructuring to Enhance Competitive Position
07 April 2006 - 11:00PM
PR Newswire (US)
NORTHVILLE, Mich., April 7 /PRNewswire-FirstCall/ -- Hayes Lemmerz
International, Inc. (NASDAQ:HAYZ) announced today a series of
actions to strengthen its competitive position, improve
profitability and increase long-term value for its shareholders.
Curtis Clawson, President, Chief Executive Officer and Chairman of
the Board said, "The last several years have seen profound changes
in the competitive landscape of the automotive industry. We are
aligning our organization to recognize the realities in the U.S.
and to assure continued success in the global automotive
marketplace." Today's announcements include: * Consolidation of its
components operations into an Automotive Components Group *
Reduction of its wage and benefit costs The Company previously
announced: * Strategic realignment of its wheel business into a
Global Wheel Group * Rationalization of its aluminum wheel
manufacturing capacity in the U.S. * Amendment to its $625 million
senior secured credit facility Consolidation The Company announced
today that it is consolidating its Suspension Components business
unit and its Automotive Brake and Powertrain Components business
unit, creating an Automotive Components Group. This move is aimed
at improving the Company's market focus and streamlining its
organizational structure, resulting in a reduction in its corporate
and business unit staffs by approximately 45 employees and reducing
related costs. As part of this reorganization, the Company
appointed Daniel M. Sandberg to the new position of President of
the Automotive Components Group. Mr. Sandberg had been President of
the Automotive Brake and Powertrain Components business unit. "We
are operating in a highly competitive and challenging business
environment," said Mr. Clawson. "This restructuring will make Hayes
Lemmerz a leaner, more competitive company that can respond more
effectively to business needs and changing market conditions."
Revised Wage and Benefit Plans As part of its continuing efforts to
cut costs, the Company announced today that it is reducing several
of its employee wage and benefit programs, primarily at its U.S.
locations. These actions include reducing base pay up to 7.5% for
its U.S. employees, 10% for the Company's President and Chief
Executive Officer and 20% for the Company's Board of Directors,
temporarily suspending Company contributions to employee 401(k)
plans and restructuring the Company's short term incentive
compensation plans for hourly and salaried employees. "While the
wage and benefit changes are difficult, they are necessary for our
business to effectively compete against foreign competition," said
Mr. Clawson. "The actions announced today will reduce our operating
costs, and as part of Hayes Lemmerz' overall cost-improvement
initiative, help increase the long-term value of the Company. We're
being fiscally responsible, while continuing to provide a fair and
competitive compensation package." Strategic Realignment As
announced in January, the Company strategically realigned its wheel
business to strengthen coordination and synergies worldwide. The
move combined the Company's North American and International Wheel
business units, creating a Global Wheel Group. This move has
already resulted in a reduction of over 15% of its staff in the
U.S., in the first quarter of 2006. "We will continue to look at
additional efficiencies in the organization as capacity is adjusted
and launches are completed," said Fred Bentley, Chief Operating
Officer and President of the Global Wheel Group. U.S. Aluminum
Wheel Capacity Rationalization As announced in March, the Company
will close its aluminum wheel manufacturing facility in Huntington,
Indiana. Remaining production will be transferred to the Company's
other aluminum wheel facilities in North America. The Huntington
facility will operate through the Company's second quarter of 2006
to service existing contracts and assist in transitioning
production. The decision to close the plant was part of the
Company's ongoing plan to maximize capacity utilization and overall
cost efficiencies. About 185 employees will be affected by this
action. Financial Impact Hayes Lemmerz expects the combined cost
savings from all of the restructuring actions, including the wage
and benefit reductions, to generate annual cost savings of at least
$35 million. Credit Agreement Amendment The Company also recently
announced that it has amended its $625 million senior secured
credit facility. Among other changes, the amendment favorably
modifies certain financial covenants. "This amendment provides the
Company with additional financial flexibility to execute our
strategy of product leadership and growth in select geographic
regions. We appreciate our lending group's continuing support of
our strategic direction and financial priorities," said Mr.
Clawson. 2006 Outlook In 2006, the Company will continue its focus
on improving free cash flow and controlling capital expenditures,
which are targeted at less than $100 million. The Company expects
sales for 2006 to be approximately $2 billion, primarily due to
reductions in North American volumes. The Company expects adjusted
EBITDA and free cash flow to improve in 2006 versus 2005. Hayes
Lemmerz International, Inc. is a world leading global supplier of
automotive and commercial highway wheels, brakes, powertrain,
suspension, structural and other lightweight components. The
Company has 35 facilities and approximately 10,000 employees
worldwide. This press release includes forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended,
which represent the Company's expectations and beliefs concerning
future events that involve risks and uncertainties which could
cause actual results to differ materially from those currently
anticipated. All statements other than statements of historical
facts included in this release are forward looking statements.
Factors that could cause actual results to differ materially from
those expressed or implied in such forward looking statements
include the factors set forth in our periodic reports filed with
the SEC. Consequently, all of the forward looking statements made
in this press release are qualified by these and other factors,
risks, and uncertainties. DATASOURCE: Hayes Lemmerz International,
Inc. CONTACT: Marika P. Diamond of Hayes Lemmerz International,
Inc., +1-734-737-5162 Web site: http://www.hayes-lemmerz.com/
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