SI Technologies to Combine Like Business Units and Restructure Operations
19 May 1999
SI Technologies to Combine Like Business Units and Restructure Operations to Realize Greater Consolidation Efficiencies
SEATTLE--May 19, 1999--$0.18-$0.20 Per Share in Fiscal Third Quarter, Annualized Cost
Savings in Excess of $1.3 Million
SI Technologies, Inc. , which designs, manufactures and markets high-performance industrial sensors/controls and engineered equipment and systems, today announced a consolidation of business units and a restructuring of operations designed to significantly increase operating efficiencies in the future.
Key elements of the restructuring program include the consolidation of the Company's two specialty scale products business units, the Weighing Systems Division (Seattle, WA) and Allegany Technology (Cumberland, MD), and the consolidation of two load cell/sensor business units, Revere Transducers (Tustin, CA) and NV Technology (Seattle, WA). Allegany Technology, a leading designer, manufacturer and marketer of force measurement devices and specialty weighing equipment, and Revere Transducers, one of the world's four largest manufacturers of electronic weighing load cells, sensors and related devices, were both acquired by SI Technologies in July 1998.
"As a result of this restructuring program, our two scale business units will become one and our two load cell/sensor business units will become one," commented Rick A. Beets, president and chief executive officer of SI Technologies, Inc. "While we expect short-term costs associated with this restructuring of approximately $850,000 (pretax) to cause SI Technologies to report a loss of $0.18-$0.20 per share in the third fiscal quarter, we expect to realize annual reductions in overhead and operating costs of more than $1.3 million as a result of these actions. We will eliminate one entire factory and related infrastructure costs in this restructuring, while enhancing the future operating efficiencies of Allegany and Revere. We expect the benefits of these actions to become apparent in SI Technologies' operating results no later than the second quarter of our upcoming fiscal year."
"With this consolidation, all of our load cell and sensor products will be manufactured at Revere Transducer's production facilities in Tustin, California and Breda, the Netherlands, while our scale products will be manufactured at Allegany's facility in Maryland."
"While the near-term operating and related overhead expense saving of this facilities consolidation justify the investment on a stand-alone basis, we believe the greatest payback will derive from allowing these businesses to better realize the full benefits of our consolidation strategy," continued Beets. "These benefits should include significant purchasing and manufacturing efficiencies, pooling of technologies and engineering resources, and the enhanced revenue and cross-marketing opportunities provided by taking an expanded product line to a common customer base. We consider the realization of these higher-level consolidation benefits critical to the success of our overall business strategy."
"Under Generally Accepted Accounting Principles (GAAP), we are required to recognize all of the incremental costs associated with this restructuring immediately, even though we expect future annualized cost savings to significantly exceed the expenses directly associated with the restructuring," concluded Beets.
SI Technologies, Inc. is a rapidly growing designer, manufacturer and marketer of high-performance industrial sensors/controls and engineered equipment and systems. Its proprietary products enjoy leading positions in their respective markets, while sharing common technologies, manufacturing processes, and customers. Recent acquisitions have diversified the Company's revenue base and positioned SI Technologies as a consolidator of technologies, products and companies which are involved in the handling, measurement and inspection of goods and materials. SI Technologies' products are used throughout the world in a variety of industries, including aerospace, aviation, food processing and packaging, forestry, manufacturing, mining, transportation, warehousing/distribution, and waste management. The Company is headquartered in Seattle, Washington, and its common stock is traded on Nasdaq under the symbol "SISI".
This press release includes statements which may constitute "forward-looking" statements, usually containing the words "believe", "estimate" , "project", "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.