Summa Announces Discontinuation of Electrical Components Segment
30 Septembre 2005 - 3:00PM
PR Newswire (US)
TORRANCE, Calif., Sept. 30 /PRNewswire-FirstCall/ Summa Industries
(NASDAQ:SUMX) announces that it has sold certain current assets of
its subsidiary, Plastron Industries, Inc., at their book value and
agreed to lease certain retained fixed assets of Plastron to a
Texas investor group. The business comprised Summa's entire
Electrical Components segment, and will now be reported as a
discontinued operation. Summa does not expect to report a material
gain or loss as a result of the transaction. Additional assets of
Plastron, principally real estate located in Illinois, will be
liquidated as soon as practical. Sales of the Electrical Components
segment have been in decline for several years, primarily due to
the migration of customer activity to China. In the past year,
significant losses were incurred, primarily related to the
relocation of the business from Bensenville, Illinois to Pharr,
Texas in a plan to better serve customers who had migrated to the
Rio Grande Valley, and to structurally reduce costs with a new
manufacturing process. Although the relocation and new process
implementation substantially reduced labor costs, the expected
savings have not been fully realized. This transaction will allow
Summa to eliminate negative operating cash flow and reinvest the
proceeds of the sale and cash flow from leases in businesses with
better margins and growth prospects. A substantial portion of the
consideration for the assets sold was in the form of a promissory
note due August 30, 2006. In the event the investor group fails to
fulfill its obligations under the note and the asset leases, the
Company will incur significant legal expenses and a substantial
loss in reclaiming and liquidating the assets. Summa's Board of
Directors will continue to review and consider strategic
alternatives aimed at increasing stockholder value, including
acquisitions, asset dispositions, dividends, stock repurchases and
other initiatives. Statements in this news release which relate to
future plans, financial results or projections, events or
performance are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and fall
under the safe harbor. These forward-looking statements include,
but are not limited to, statements regarding losses that may occur
if the investor group defaults on the promissory note or leases,
and the plans of the Company to sell real estate and expected
values to be realized from such sales. Actual results could differ
materially from those anticipated in the forward-looking statements
as a result of a number of factors, including, but not limited to
the failure of the investor group to successfully operate the
Electrical Components business and meet its obligations under the
note and various leases, the inability of the Company to divest one
or more parcels of real estate and other risks and uncertainties
described in detail under "Risk Factors" in Summa's Annual Report
on Form 10-K for the fiscal year ended August 31, 2004. For further
information, contact James R. Swartwout, (310) 792-7024; fax (310)
792-7079; ; or http://www.summaindustries.com/. DATASOURCE: Summa
Industries CONTACT: James R. Swartwout of Summa Industries,
+1-310-792-7024, or fax, +1-310-792-7079,
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