PolyOne Announces Steps to Reduce Cost Structure
January 14, 2003
CLEVELAND, Jan. 14 /PRNewswire-FirstCall/ -- PolyOne Corporation
(NYSE: POL), a leading global polymer services company, today announced
actions designed to improve profitability by reducing the Company's cost
structure and strengthening its competitive position with customers.
As part of the restructuring, the Company will eliminate approximately
400 salaried positions, primarily in administrative functions. PolyOne
projects that this reduction will lower selling and administrative (S&A)
costs, as classified on its income statement, between $30 million and
$35 million pre tax annually, effective with the second quarter of 2003. In
addition, PolyOne will implement approximately $5 million to $10 million in
reductions of non-personnel costs.
"The actions we are taking help us to achieve a position of low-cost
competitiveness within our industry," said Thomas A. Waltermire, PolyOne
chairman and chief executive officer. "Moreover, these actions are designed
to enable us to focus intensely on winning and supporting targeted customers
and their markets. We have taken great care to ensure that our customers get
the fast, reliable and cost-competitive service they require."
PolyOne is committed to reducing its selling and administrative costs to
less than 10 percent of sales from the current 12 percent. PolyOne's 2002
sales are estimated to be $2.6 billion.
Most of the staff reductions result from simplifying processes and
eliminating low-value activities throughout the organization. Additional
savings will come from further centralization of certain functional areas in
North America such as human resources, information technology, sourcing and
finance, and from the elimination of outside professional services. The
reductions are worldwide in scope, although nearly 90 percent of the affected
employees are in North America.
These actions will build upon PolyOne's previously announced initiatives
to reduce costs. In fact, the reductions announced today will complement the
program to consolidate and upgrade the Company's North American manufacturing
assets, resulting in further reductions in manufacturing costs and
improvements in product quality and service. Begun nearly two years ago, this
project is nearing completion.
PolyOne expects nearly all staff reductions to occur in the first quarter
of 2003. The Company projects that the total pre-tax first-quarter 2003
earnings charge from the job eliminations will be approximately $22 million.
Cash flows associated with termination benefits will be spread over the
year. The Company estimates that in the first quarter of 2003, these cash
payments will exceed cost savings from the terminations by approximately
$2 million to $3 million. In subsequent quarters, however, these actions
should result in improved cash flows as net cost savings exceed termination
PolyOne Corporation, with revenues approximating $2.6 billion, is an
international polymer services company with operations in thermoplastic
compounds, specialty resins, specialty polymer formulations, engineered films,
color and additive systems, elastomer compounding and thermoplastic resin
distribution. Headquartered in Cleveland, Ohio, PolyOne has employees at
manufacturing sites in North America, Europe, Asia and Australia, and joint
ventures in North America, South America, Europe, Asia and Australia.
Information on the Company's products and services can be found at
PolyOne Fourth-Quarter and Full-Year Earnings
PolyOne will release its fourth-quarter and full-year earnings at the
close of business on Thursday, January 30, 2003.
In this release, statements that are not reported financial results or
other historical information are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements give current expectations or forecasts of future events and
are not guarantees of future performance. They are based on management's
expectations that involve a number of business risks and uncertainties, any of
which could cause actual results to differ materially from those expressed in
or implied by the forward-looking statements. You can identify these
statements by the fact that they do not relate strictly to historic or current
facts. They use words such as "anticipate," "estimate," "expect," "project,"
"intend," "plan," "believe" and other words and terms of similar meaning in
connection with any discussion of future operating or financial performance.
In particular, these include statements relating to future actions;
prospective changes in raw material costs, product pricing or product demand;
future performance or results of current and anticipated market conditions and
market strategies; sales efforts; expenses; the outcome of contingencies such
as legal proceedings; and financial results. Factors that could cause actual
results to differ materially include, but are not limited to: (1) an inability
to achieve or delays in achieving estimated and actual savings related to
restructuring programs; (2) delays in achieving or inability to achieve the
Company's strategic value capture initiatives, including cost reduction and
employee productivity goals, or achievement of less than the anticipated
financial benefit from the initiatives; (3) the effect on foreign operations
of currency fluctuations, tariffs, nationalization, exchange controls,
limitations on foreign investment in local businesses and other political,
economic and regulatory risks; (4) changes in U.S., regional or world polymer
and/or rubber consumption growth rates affecting the Company's markets; (5)
changes in global industry capacity or in the rate at which anticipated
changes in industry capacity come online in the polyvinyl chloride (PVC),
chlor-alkali, vinyl chloride monomer (VCM) or other industries in which the
Company participates; (6) fluctuations in raw material prices, quality and
supply and in energy prices and supply, in particular fluctuations outside the
normal range of industry cycles; (7) production outages or material costs
associated with scheduled or unscheduled maintenance programs; (8) costs or
difficulties and delays related to the operation of joint venture entities;
(9) lack of day-to-day operating control, including procurement of raw
materials, of equity or joint venture affiliates; (10) partial control over
investment decisions and dividend distribution policy of the OxyVinyls
partnership and other minority equity holdings of the Company; (11) an
inability to launch new products and/or services that strategically fit the
Company's businesses; (12) the possibility of goodwill impairment; (13) an
inability to maintain any required licenses or permits; (14) an inability to
comply with any environmental laws and regulations; and (15) a delay or
inability to achieve divestitures necessary to achieve targeted debt levels .
We cannot guarantee that any forward-looking statement will be realized,
although we believe we have been prudent in our plans and assumptions.
Achievement of future results is subject to risks, uncertainties and
inaccurate assumptions. Should known or unknown risks or uncertainties
materialize, or should underlying assumptions prove inaccurate, actual results
could vary materially from those anticipated, estimated or projected.
Investors should bear this in mind as they consider forward-looking
We undertake no obligation to publicly update forward-looking statements,
whether as a result of new information, future events or otherwise. You are
advised, however, to consult any further disclosures we make on related
subjects in our Form 10-Q, 8-K and 10-K reports to the Securities and Exchange
Commission. You should understand that it is not possible to predict or
identify all such factors. Consequently, you should not consider any such
list to be a complete set of all potential risks or uncertainties. (Ref. #103)
SOURCE PolyOne Corporation
/CONTACT: Media & Investors, Dennis Cocco, Chief Investor &
Communications Officer of PolyOne, +1-216-589-4018/