Passive component maker AVX Corp., Myrtle Beach, S.C., reported that net sales were $305.5 million in the second quarter ended September 30, and that adjusted net income (before restructuring and special charges) was $3.7 million, or 2 cents per diluted share.
"The sales for the quarter were $30 million better than anticipated, declining only 16% from last quarter, and adjusted operating earnings were in line with the guidance provided when we announced the previous quarter's results in early July,"said Chief Executive Officer and President, John Gilbertson, in a prepared statement.
"AVX has been implementing worldwide cost reduction programs since the beginning of the calendar year and will continue to drive our costs down."
The total pre-tax charges related to the cost reduction programs for this fiscal year are estimated to be $60 to $65 million, of which, $3.7 million ($3.5 million after taxes) was recorded in the quarter ended June 30, 2001 and $48.6 million ($31.8 million after taxes) was recorded in the quarter ended September 30, 2001.
The charges are primarily non-cash related. These programs are expected to reduce annual operating costs by approximately $109 million.
The charges recorded in the quarter ended June were for restructuring costs incurred in connection with reductions in headcount. The charges recorded in the quarter ended September included $13.1 million in restructuring charges, $32.5 million in special charges to cost of goods sold, and $3.0 million in special charges to selling, general and administrative expenses.
These charges related to headcount reductions, facility
consolidations, and write-downs of equipment, inventory and customer receivables to reflect net realizable values.
As part of the program, AVX will be consolidating its ceramic component manufacturing operation located in Vancouver, Washington into other AVX facilities. The Vancouver facility currently employs approximately 340 people and it is expected that the facility will be shut down in stages during the balance of the year.
Gilbertson stated, "In response to the weak economic environment and unprecedented decline in the demand for our customers' products, AVX has decided to close the Vancouver manufacturing facility in order to better balance production requirements with our customers' needs and reduce costs. This action, although
unfortunate, is necessary. AVX has been reducing the number of personnel and other costs at all of its facilities around the world since the beginning of the calendar year."
Approximately $10 million of pre-tax charges related to the programs are expected to be recorded later in the fiscal year as additional cost savings initiatives are finalized.
The net result for the quarter, including the restructuring and special charges, was $28.1 million, or 16 cents per diluted share.
For the first six months of the fiscal year, net sales were $670.6 million and adjusted net income (before restructuring and other special charges) was $36.6 million, or 21 cents per diluted share. Net income for the first six months of the fiscal year, including the restructuring and special charges, was $1.3 million, or 1 cent per diluted share.
Gilbertson said, "The outlook for the next quarter suggests that the business climate will continue to be sluggish and expectations for growth have been pushed into calendar 2002."