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CHANDLER, Ariz.--(BUSINESS WIRE)--June 10, 1998--ADFlex Solutions Inc. (Nasdaq/NM:AFLX) Wednesday announced that, based on preliminary results, the company expects to report an operating loss for its second quarter which ends June 30, 1998, primarily due to weak demand for hard disk drive (HDD) products and increased price competition. The company indicated that results for the quarter also will include a one-time charge associated with implementing aggressive cost-reduction measures at plants in the United States and Mexico. Commenting on the preliminary results, ADFlex Chairman and Chief Executive Officer Rolando C. Esteverena stated: "We expect that revenues for the 1998 second quarter will be approximately 12 percent less than the first quarter as a result of significant weakness being experienced by some of our customers supplying the personal computer markets -- in particular, the HDD segment. "In addition, intense price competition has continued from Asian suppliers as they try to mitigate the demand void that was created by the Asian financial crisis. Also, the company has experienced higher than usual manufacturing yield losses resulting from accelerated production start-up ramps. Marketplace conditions have dictated that customers accelerate schedules for new product introductions in order to supplement the weakened revenues in their existing programs. "In response to these challenges, ADFlex has undertaken aggressive cost-reduction measures designed to maintain our long-term competitiveness. These measures will include the consolidation of administrative functions, a 10 percent reduction in staffing, and the transfer of selected programs from plants in Mexico to Thailand. "We expect to transfer programs of customers located in Southeast Asia who will obtain additional benefits from the unique, integrated single-source supplier capabilities that we offer. Including one-time charges, we expect to report a loss for the second quarter in the range of $3.0 million to $3.2 million. "On a positive note, in the last 60 days ADFlex has been awarded new program design wins and manufacturing contracts in the notebook computer products segment from Dell Computer, IBM and Compaq Computers; and in the consumer and storage products segments from Philips, Samsung and Iomega. We expect all of these new programs to ramp into volume production during the summer and anticipate this will contribute to the company's recovery during the second half of 1998." |
