biz.yahoo.com
Tuesday January 12, 4:14 pm Eastern Time
Company Press Release
SOURCE: Safeskin Corporation
Safeskin to Benefit From Completion of Previously Announced Manufacturing Consolidation to Thailand
Production Capacity to be Relocated From Malaysian and Vista, California Facilities
Move to Thailand Strengthens Company's Position as Low-Cost Producer
Consolidation of AQL Subsidiary to San Diego Completed
Takes One-Time Charges Totalling $16 Million in Fourth Quarter 1998
SAN DIEGO, Jan. 12 /PRNewswire/ -- Safeskin Corporation (Nasdaq: SFSK - news), a leading manufacturer of disposable latex and synthetic gloves for the healthcare, high-technology and scientific industries, today said that it expects to complete its previously announced plans to move all remaining examination, surgical, and synthetic glove production to the Company's newly opened manufacturing facility in Thailand from its Ipoh, Malaysia and Vista, California production facilities by the end of the first quarter of 1999.
Additionally, the Company said that it had completed the integration of AQL, Inc. in the fourth quarter of 1998. Safeskin acquired the Santa Maria, CA-based marketer of gloves for the high-technology/scientific market in February 1998, and relocated AQL's headquarters and employees to San Diego in the fourth quarter as part of its cost-reduction program.
In connection with the closure of facilities in Malaysia and Vista and Santa Maria, California, Safeskin reported that it would take a one-time $15 million charge in the fourth quarter of 1998. The Company will also take a charge of approximately $1 million in the same period related to the write off of capitalized finance costs pertaining to a 1998 financing. The consolidation of Safeskin's manufacturing to Thailand is expected to result in substantially reduced operating costs due to Thailand's lower cost structure, generating a rapid payback.
''As the low-cost producer in our industry, a major element of our strategy is to concentrate our manufacturing in Thailand, where we have lower costs for labor, overhead and materials in combination with greater operating efficiencies from state-of-the-art facilities,'' said Richard Jaffe, Chairman, President, and Chief Executive Officer of Safeskin. ''Upon completion of the move, Safeskin's average machine age will be less than two years, by far the lowest in the industry.
''The worldwide disposable glove market is growing rapidly,'' Mr. Jaffe continued, ''and our newest Thailand facility will enable us to meet growing demand for our existing products as well as to broaden our product offerings to meet the changing needs of healthcare, high-technology and scientific businesses. We intend to build on our success in the powder-free exam glove market to create leading positions in the synthetic, surgical and scientific markets, both in the U.S. and abroad.''
''Safeskin,'' Mr. Jaffe added, ''has established a powerful track record as the leader of the growing U.S. disposable glove industry by producing high-quality, high-value products. The essence of our strategy is to:
Be the low-cost producer of high-quality products;
Create a continuous flow of product innovations to anticipate and respond to changing customer needs;
Leverage our unique information and supply chain management and educational services to benefit our customers;
Rapidly address new markets for high-value glove products; and
Capture major growth opportunities in international and scientific markets.''
Increased Demand for Safeskin Products Delayed Move to Thailand
In December 1996, Safeskin announced its intention to transfer its examination glove production from Malaysia to Thailand during 1997 to take advantage of lower production costs. However, increased demand for Safeskin's exam glove products throughout 1997, and the time required to bring new production capacity on-line in Thailand, caused the Company to extend the planned use of the Malaysian facility. During 1998, Safeskin successfully increased its exam glove production capacity in Thailand, enabling the Company to begin this transfer.
The December 1996 announcement also indicated that Safeskin Malaysia would continue to operate as the Company's manufacturing source of higher-value synthetic, surgical and scientific products. In October 1998, Safeskin commenced operations at its new 54-acre manufacturing facility in Thailand, which will replace the Malaysian facility.
Also included in this move to Thailand is the Company's Tactylon® Synthetic surgical glove, which Safeskin acquired from Tactyl Technologies, Inc. in February 1997. This product is presently manufactured in Vista, California and has been awaiting the completion of the new facility in Thailand. The Vista facility will also be fully closed by the end of the first quarter.
Safeskin Corporation is the leading manufacturer of high quality disposable latex medical examination gloves for the United States market and believes that it is the world's leading manufacturer of high quality disposable powder-free examination gloves. The Company produces gloves at its manufacturing facilities in Southeast Asia using proprietary formulations and processes.
This press release contains forward-looking statements that involve risks and uncertainties, including references to the anticipated reduced operating costs and their ability to rapidly offset the restructuring charge, the successful move and subsequent start-up of production from Malaysia and California to Thailand, continued lower-cost manufacturing in Thailand, the Company's ability to leverage its market leadership position in powder-free exam gloves to create leading market positions in synthetic, surgical and high-technology and scientific markets worldwide. Actual results may differ materially from those anticipated in the above forward looking statements for various reasons including those and others that are identified in the Company's readily available and most recent Form 1O-Q and other filings with the Securities and Exchange Commission.
SOURCE: Safeskin Corporation
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