(MCTL) NEWS Cost Savings Expected to Exceed $525,000 Annually:
MicroTel Implements Facility Reduction in Connection With Sale of Real Estate Partnership Interest
Business Editors and High-Tech Writers
ONTARIO, Calif.--(BUSINESS WIRE)--Sept. 9, 1999--
Cost Savings for Planned Facility Reductions Are
Expected to Exceed $525,000 Annually
MicroTel International Inc. (OTCBB: MCTL) ("MicroTel") announced
today that its XIT Corporation subsidiary ("XIT") has sold its 50%
interest in a partnership that owns a 93,000 square foot facility in
Ontario, California. MicroTel's and XIT's headquarters operations and
its XIT Digitran division are presently housed in approximately
two-thirds of this facility. In connection with the sale, MicroTel's
and XIT's business operations will be relocated to substantially
smaller facilities in the city of Rancho Cucamonga, which is directly
adjacent to Ontario. XIT's ability to relocate to a smaller facility
resulted from its disposal and discontinuation of certain low-margin
product lines in late 1998. MicroTel expects the annual expense
reduction from this relocation to be approximately $355,000.
As part of the consideration for the sale, XIT has been released
from the remainder of its current seven-year lease, representing a
total obligation of approximately $3.2 million, and additionally, will
receive rent credits and cash with a total value of approximately
$285,000. The expense of the relocation will be more than offset by
the cash received from the transaction. MicroTel also expects to
report a gain in its third quarter ending September 30, 1999 as a
result of this sale. The relocation to the new facilities is expected
to be completed by November 1, 1999.
Additionally, as part of its overall domestic facility cost
reduction plan, MicroTel's CXR Telcom subsidiary located in Fremont,
CA will sublease approximately 45% of its current facility following
the consolidation of its Engineering and R&D staff in its St. Charles,
Illinois-based center. This transaction is expected to result in
annual savings of $173,000 and to be completed by September 30, 1999.
Commenting on the facility reductions, Carmine T. Oliva,
MicroTel's Chairman, President and CEO stated, "This marks a second
major action planned to return MicroTel to solid profitability and
brings the total annualized cost reductions announced for the previous
five months of 1999 to approximately $1.9 million and for the previous
ten months to approximately $2.9 million." Mr. Oliva further stated
"the final stage of the restructuring plan calls for the sale of
MicroTel's remaining two printed circuits operations which is
presently actively underway."
MicroTel International, Inc. is a holding company for its three
wholly owned subsidiaries -- CXR Telcom Corporation in Fremont, CA;
CXR, S.A. in Paris, France and XIT Corporation in Ontario, CA. and its
37% owned affiliate company Digital Transmission Systems, Inc. located
near Atlanta, Georgia. CXR Telcom Corporation, CXR, S.A. and Digital
Transmission Systems, Inc. design, manufacture and market electronic
telecommunication test instruments, wireless and wireline voice, data
and video transmission and networking equipment. XIT Corporation
designs, manufactures and markets information technology products,
including input and display components, subsystem assemblies and power
supplies. The Company operates out of facilities in the U.S., France,
England and Japan.
The statements in this press release relating to matters that are
not historical are forward-looking statements which involve risks and
uncertainties including, without limitation, economic and competitive
conditions in the markets served by the Company affecting the demand
for the Company's products, product pricing, market acceptance, access
to distribution channels and other risks detailed from time to time in
the Company's Securities and Exchange Commission filings. These risks
could cause actual results to differ materially from those anticipated
or described herein.
--30--JS/np* JV/np
CONTACT: MicroTel International Inc.
James P. Butler, CFO, 909/456-4321
Web site: microtelinternational.com
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