Commercial Vehicle Group, Inc. announced a restructuring plan with pre-tax annual cost reduction initiatives of approximately $10 million, including a salaried workforce reduction of 15 percent, a company-wide freeze on merit increases, the elimination of the company's employer match to certain 401(k) and other retirement programs for 2009 and the closure of five of its smaller manufacturing, warehousing and assembly facilities.
The facilities include its Kent, Washington, assembly and sequencing facility; Statesville, North Carolina, seat sequencing and assembly facility; Lake Oswego, Oregon, manufacturing facility; Concord, North Carolina, inventory and product warehouse; and its Seneffs, Belgium, seat assembly and distribution facility. The company estimates the cost of these actions to be approximately $2.5 million and expects to substantially complete the restructuring initiatives by April 2009.
Commercial Vehicle Group, Inc. announced a restructuring plan with pre-tax annual cost reduction initiatives of approximately $10 million, including a salaried workforce reduction of 15 percent, a company-wide freeze on merit increases, the elimination of the company's employer match to certain 401(k) and other retirement programs for 2009 and the closure of five of its smaller manufacturing, warehousing and assembly facilities.
The facilities include its Kent, Washington, assembly and sequencing facility; Statesville, North Carolina, seat sequencing and assembly facility; Lake Oswego, Oregon, manufacturing facility; Concord, North Carolina, inventory and product warehouse; and its Seneffs, Belgium, seat assembly and distribution facility. The company estimates the cost of these actions to be approximately $2.5 million and expects to substantially complete the restructuring initiatives by April 2009.
"Like many companies, we are facing the challenges of major market shifts, stock price declines, currency volatility and accounting-based non-cash impairment charges," said Mervin Dunn, President and Chief Executive Officer of Commercial Vehicle Group. "While we cannot control these challenges, we can control our operating costs, which was our focus throughout the fourth quarter and continues to be our focus into 2009.
"While we regret the personal hardship these actions will have on our employees, we must continue to reduce our cost structure and remain competitive in today's economic environment. With the current condition of the global economy, and in particular the commercial vehicle markets, cost reductions are necessary. We recognize that further deterioration in our end markets may require additional facilities to be closed or additional workforce reductions, which our management team and our employees will be prepared to manage."
CVG reported preliminary revenues of $763.5 million for the year ended December 31, 2008, compared to $696.8 million for the prior year period. Preliminary operating income for the year ended 2008 was $16.1 million, compared to $18.8 million for the prior year. These preliminary results for 2008 do not include any non-cash charges related to impairment of goodwill or other assets, the amount of which has not yet been determined.
Net debt (calculated as total debt less cash and cash equivalents) was approximately $157.6 million at December 31, 2008, compared to $149.9 million at December 31, 2007. Capital expenditures were $14.4 million, or 1.9% of revenues, for the year ended December 31, 2008.
In addition, the company reported that it will incur non-cash charges related to the impairment of its goodwill and certain intangible and other assets during the quarter ended December 31, 2008. Although the company has not finalized its analysis, it estimates the total non-cash impairment charge will be equal to all or a substantial portion of all of its goodwill and intangible assets as of December 31, 2008. The company will record the impact of the impairment charge in its 2008 financial statements to be included in its Form 10-K filing, which is due March 16, 2009.
"While the non-cash impairments are unfortunate, they are a sign of our times and a product of the economic environment which many companies are facing," said Chad M. Utrup, Chief Financial Officer of Commercial Vehicle Group, Inc. "Our focus remains on operational performance and adjusting our variable cost structure during these extended market declines. This, along with our fixed costs reduction initiatives announced today, is vital to ensuring we remain competitive and financially sound as we manage the business through these uncertain times.”