GLENVIEW, Ill., March 4, 1997 -- Zenith Electronics Corporation (NYSE:ZE) today reported a 1996 net loss of $178 million, or $2.73 per share, compared with a 1995 net loss of $90.8 million, or $1.85 per share.
Full-year 1996 results include approximately $80 million of unusual charges, reflecting aggressive actions taken by Zenith's new management team to stabilize the company's cost structure and improve operating performance. Sales in 1996 were $1.29 billion, up slightly from 1995 sales of $1.27 billion.
"We are confident that the actions we have taken position Zenith for major performance improvements in 1997 and beyond," said Peter S. Willmott, who was elected president and CEO last November. The 1996 charges were related to workforce reductions, inventory write-offs and other cost-reduction and productivity enhancement actions.
"In addition to taking actions that will permanently reduce our cost structure, we are investing in the future by making the capital investments necessary to improve efficiency and productivity in our plants," Willmott said.
Zenith made net capital investments of about $125 million in 1996, primarily to support the expansion and modernization of the company's Melrose Park, Ill., picture tube plant, and its Chihuahua, Mexico, plant for digital set-top boxes. Zenith expects these capital projects, scheduled for completion in the first half of 1997, to yield significant productivity improvements.
Operating results in 1996 suffered from delays in production of higher-end Consumer Electronics products, lower selling prices than in 1995, soft sales of Network Systems products, particularly analog set-top boxes, and higher expenses related to the launch of digital products in 1997. However, Zenith gained market share in its core domestic television business, with higher direct-view color TV unit sales in a down industry.
For the fourth quarter, the net loss was $69.3 million, or $1.05 per share, compared with a net loss of $23 million, or 42 cents per share, in the fourth quarter of 1995. Fourth-quarter 1996 results include approximately $40 million in unusual charges and reflect higher operating costs, compared with the same quarter in 1995. Fourth-quarter sales were $428 million, an 8 percent increase from $395 million in 1995. Consumer Electronics sales increased, while Network Systems sales declined.
Willmott predicted revenue growth for the second half of 1997 as a result of Zenith's focus on higher-margin home theater TV systems and new "convergence" TV products, as well as a multimillion-dollar national advertising campaign, the company's first in five years. In addition, he said Zenith expects to begin shipping high-resolution computer display tubes to computer monitor manufacturers by mid-year. The company also will begin initial shipments of new digital set-top boxes to telecommunications companies under the five-year, $1 billion Americast contract signed last August.
To support its 1997 business plan, the company is seeking financing for planned capital investment projects and working capital requirements. Zenith's existing credit agreements, amended at year-end 1996, continue in place as the company moves toward completing its new financing, which will be supported by Zenith's majority shareholder, LG Electronics Inc.
Zenith Electronics Corporation, based in Glenview, Ill., is a leading manufacturer and marketer of television and video products for consumer and professional markets; display devices including color television picture tubes, computer display tubes and components; and network systems products, including digital and analog set-top boxes and cable modems. Zenith is a leader in the development of digital high-definition television.
Zenith's largest shareholder is LG Electronics Inc. (LGE) which, together with its affiliate LG Semicon, owns 55 percent of the company's outstanding shares. LGE acquired its majority interest in November 1995 in a $351 million transaction. Zenith continues to operate as a U.S.-based, publicly traded company with shares listed on the New York Stock Exchange. |
