Plexus announces $10 to $13 Million restructuring program
Sep 23, 2004
Will close Seattle-area facility by Q2 FY'05
Establishes $37 Million Valuation Allowance for Deferred Tax Assets
Plexus Corp. (Nasdaq: PLXS) announced a $10 to $13 million restructuring program which includes the closing of its Bothell, WA ("Seattle") facility, the impairment of certain fixed assets and additional costs for previously announced actions.
Dean Foate, Plexus' Chief Executive Officer, commented, "As part of our efforts to align our service offering with the evolving preferences of our customers, we have successfully replicated the focused capabilities of our Seattle facility at other Plexus design and manufacturing locations that have higher productivity. We currently anticipate transferring key customer programs to other Plexus locations primarily in the United States."
"This restructuring will reduce our capacity by 100,000 square feet and affect approximately 160 employees," Foate continued. "We currently expect the consolidation efforts will be completed by the end of our fiscal 2005 second quarter, subject to customer timelines."
Gordon Bitter, Plexus' Chief Financial Officer, said, "We do not expect the Seattle closure to impact our fiscal 2004 fourth quarter revenue or EPS guidance (excluding restructuring charges and valuation allowance), which we currently expect to be at the low-end of our previously announced range of $270 to $280 million in revenue with EPS of $0.09 to $0.11."
"Ultimately," Bitter continued, "we expect this restructuring program to improve our capacity utilization and provide pre-tax savings of approximately $2.0 million per year. However, we currently expect that our operating performance will be impacted in our fiscal 2005 first and second quarters as we effect transfers from the Seattle site to other locations. We also expect to incur approximately $0.02 per share in start-up costs related to our new Penang, Malaysia facility in each of our fiscal 2005 first and second quarters."
"Additionally," Bitter added, "these restructuring actions have prompted a reassessment of the likely utilization of deferred tax assets. Consequently, we will establish a valuation allowance that will result in an additional tax provision of approximately $37 million in the September quarter. Although this non-cash valuation allowance reduces the value of the net deferred tax assets on the balance sheet, we will still be able to utilize these assets to reduce future tax obligations in profitable periods. Accordingly, we currently expect our effective tax rate for fiscal 2005 to be approximately 5 percent."