- Plan aims to reduce supply chain complexity, increase flexibility to deliver competitive advantages to customers and consumers
- Pre-tax charge of US$14-US$16 million of which the majority to be taken in 2013 fourth quarter
- Anticipated annualized saving of US$6 million
TSX: DII.B, DII.A
MONTREAL, Jan. 23, 2014 /PRNewswire/ - In a continuation of its strategy to become the global leader in the recreation and leisure markets, Dorel Industries Inc. (TSX: DII.B DII.A) today announced that its Recreational/Leisure segment is restructuring its operations to enhance its competitiveness.
Among the global initiatives, toward the end of the current calendar year, the segment will close its assembly and testing facility in Bedford, PA and leverage the strengths and capabilities of its global resources, third party partners, and existing facilities to simplify and optimize its business model. Operations currently performed at Bedford, including manufacturing, assembly, testing, quality control and customer and technical services are expected to be redeployed by the end of calendar 2014.
In addition, Recreational/Leisure will relocate its research and development facility in Bethel, CT to the segment's new headquarters in Wilton, CT., and will convert its former retail lab in Bethel to accommodate GURU Academy activities. The value of the former Bethel headquarters will be written down to reflect the market value of the property.
As such, the segment will incur approximately US$14-US$16 million pre-tax in restructuring charges associated with its plan of which 70% are non-cash and expects to realize annualized cost savings of at least US$6 million once the restructuring is completed in late 2014. Approximately 100 employees will be affected globally once all changes are implemented.
"The objective is to accelerate operational excellence at our Recreational/Leisure segment by strengthening its working relationships with its global partners," said Peter Woods, Global CFO & Interim Recreational/Leisure President. "In particular, we want to significantly reduce development and supply chain lead times, improve cost structures and operating margins, and enhance quality while lowering warranty costs."
"Today marks the beginning of the next phase in Dorel's evolution as a global bicycle and apparel company. This plan will result in higher quality products and services for our customers and consumers," stated Jeffrey Schwartz, Chief Financial Officer.
Dorel Industries Inc. (TSX: DII.B, DII.A) is a world class juvenile products and bicycle company. Dorel creates style and excitement in equal measure to safety, quality and value. The Company's lifestyle leadership position is pronounced in both its Juvenile and Bicycle categories with an array of trend-setting products. Dorel's powerfully branded products include global juvenile brands Safety 1st, Quinny, Maxi-Cosi, Bébé Confort and Tiny Love, complemented by regional brands such as Cosco and Infanti. In Recreational/Leisure, brands include Cannondale, Schwinn, GT, Mongoose, Caloi, IronHorse and SUGOI. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has annual sales of US$2.6 billion and employs 6,300 people in facilities located in twenty-four countries worldwide.
Caution Regarding Forward Looking Statements
Certain statements included in this press release may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. Except as may be required by Canadian securities laws, Dorel does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements, by their very nature, are subject to numerous risks and uncertainties and are based on several assumptions which give rise to the possibility that actual results could differ materially from Dorel's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved. As a result, Dorel cannot guarantee that any forward-looking statement will materialize. Forward-looking statements are provided in this press release for the purpose of giving information about Management's current expectations and plans and allowing investors and others to get a better understanding of Dorel's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose.
Forward-looking statements made in this press release are based on a number of assumptions that Dorel believed were reasonable on the day it made the forward-looking statements. Factors that could cause actual results to differ materially from the Company's expectations expressed in or implied by the forward-looking statements include: general economic conditions; changes in product costs and supply channel; foreign currency fluctuations; customer and credit risk including the concentration of revenues with few customers; costs associated with product liability; changes in income tax legislation or the interpretation or application of those rules; the continued ability to develop products and support brand names; changes in the regulatory environment; continued access to capital resources and the related costs of borrowing; changes in assumptions in the valuation of goodwill and other intangible assets and subject to dividends being declared by the Board of Directors, there can be no certainty that Dorel's Dividend Policy will be maintained. These and other risk factors that could cause actual results to differ materially from expectations expressed in or implied by the forward-looking statements are discussed in Dorel's annual MD&A and Annual Information Form filed with the applicable Canadian securities regulatory authorities. The risk factors outlined in the previously mentioned documents are specifically incorporated herein by reference.
Dorel cautions readers that the risks described above are not the only ones that could impact it. Additional risks and uncertainties not currently known to Dorel or that Dorel currently deems to be immaterial may also have a material adverse effect on our business, financial condition or results of operations. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.
Except as otherwise indicated, forward-looking statements do not reflect the potential impact of any non-recurring or other unusual items or of any dispositions, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof. The financial impact of these transactions and non-recurring and other unusual items can be complex and depends on the facts particular to each of them. Dorel therefore cannot describe the expected impact in a meaningful way or in the same way Dorel presents known risks affecting the business.
SOURCE Dorel Industries Inc.