Press release from Marketwire
Automodular Corporation: Ford Contract Update
Tuesday, May 14, 2013
Automodular Corporation: Ford Contract Update17:01 EDT Tuesday, May 14, 2013
AJAX, ONTARIO--(Marketwired - May 14, 2013) - Automodular Corporation (TSX:AM) ("Automodular" or the "Company") reports that it has been advised by Ford Motor Company ("Ford") that Ford intends to insource the sub-assembly and sequencing services currently performed by Automodular for its new program scheduled to commence in the second half of 2014. Automodular's existing contract with Ford expires June 30, 2014; however Ford has expressed a desire to have the Company continue to provide services until the fourth quarter of 2014. At that time, Automodular expects to close its two remaining operating facilities located in Oakville, Ontario.
The financial impact of the closure is estimated to be an after tax loss of approximately $6 million with the majority of those costs expected to be recorded in 2013. The Company expects some variation in the total costs as a result of the extended length of time between this announcement and the expected facility closures. Automodular will re-examine its cost estimates on a quarterly basis and will revise those estimates as circumstances change or additional information becomes available.
Automodular continues to be focused on its diversification efforts. The Company is starting to see some additional traction in its business development efforts in the wind energy space and is working with external consultants to identify and assess opportunities to leverage its operational skills and financial resources. Should Automodular be unsuccessful in these efforts, the Company will not have active operations following the closure of its Oakville facilities.
Automodular Corporation is a supplier of sub-assembly, sequencing and transportation services to the automotive industry. The Company has two operating facilities and employs approximately 525 people.
This press release contains forward-looking statements that involve a number of risks and uncertainties. Specific forward-looking statements in the document include those relating to Ford's request that Automodular continues to provide services to Ford until the fourth quarter of 2014, Automodular's expected closure of its facilities, and the financial impact of the closure estimate of $6 million after-tax with the majority of the costs expected to be recorded in 2013. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include changes in operating plans made by our customer and fluctuations in the estimated exit costs resulting from several factors including changes in staffing and efforts by Automodular to mitigate its financial exposure. Additional factors include market and general economic conditions and the risk factors detailed from time to time in the Company's periodic reports filed with the Canadian securities regulatory authorities and on SEDAR at www.sedar.com . Readers are cautioned not to rely on forward-looking statements. Except as required under continuous disclosure obligations, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Automodular does not provide financial outlooks.
FOR FURTHER INFORMATION PLEASE CONTACT:
Christopher S. Nutt
President and CEO