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Accuride Corporation Announces Leadership Transition and Restructuring Initiatives


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EVANSVILLE, Ind., Sept. 23, 2008 - Accuride Corporation :

  • William M. Lasky appointed interim President and CEO following the resignation of John R. Murphy
  • Workforce reduction of approximately 11%, while maintaining capacity to service customer needs during peak build levels
  • One-time third quarter restructuring charges of approximately $14.3 million
  • Estimated annual cost savings of approximately $27.5 million
  • Creation of Aftermarket Division
  • Adjusted EBITDA guidance for 2008, excluding charges, is reaffirmed at the low end of previously announced range of $85 100 million

Today, Accuride Corporation , announced that John R. Murphy tendered his resignation as President and Chief Executive Officer, and as a Director of Accuride, effective September 22, 2008. Upon acceptance of Murphys resignation, Accurides Board of Directors appointed William (Bill) M. Lasky as interim President and Chief Executive Officer.

Lasky has been an independent Director of Accuride since October 2007 and will continue to serve as a Director during his employment as interim President and Chief Executive Officer. He has served as the Chairman of the Board of Stoneridge, Inc., a manufacturer of electronic components, modules and systems for various vehicles, since July 2006 and has been a director of Stoneridge since January 2004. Previously, Lasky served as the Chairman and President and Chief Executive Officer of JLG Industries, Inc., a manufacturer of aerial work platforms, telescopic material handlers and related accessories, from 1999 through late 2006, when JLG Industries was acquired by Oshkosh Truck Corporation. Prior to joining JLG Industries, he served in various senior capacities at Dana Corporation from 1977 to 1999.

Given Bills experience from his previous executive assignments at JLG, Dana, and Stoneridge, in conjunction with his work as an Accuride Board member, we are confident that he will drive initiatives to improve Accurides financial performance while maintaining uninterrupted customer service, said Terrence J. Keating, Chairman of the Board of Accuride.

Lasky commented, I appreciate the confidence of the other Board members in my abilities. Working with all of Accurides employees, I plan to have an immediate impact on the Companys direction, and will work with the Board to bring permanent leadership to the Company to continue these efforts.

Today, Accuride also announced a series of strategic restructuring initiatives to reduce expenses, increase competitiveness, strengthen customer relationships, and enhance shareholder value.

Accuride will conduct a conference call today, September 23, at 4:00 p.m. Central Time to discuss todays announcements.

Workforce Reduction and Asset Review

As a result of the restructuring initiatives, Accuride will eliminate a total of 392 positions, or 11 percent, of its total workforce:

  • 159 salaried positions, or 18 percent of current level
  • 233 hourly employees, or 9 percent of current level

The Company expects to incur a one-time restructuring charge of approximately $14.3 million in the third quarter of 2008 of which a total of $10.0 million will impact cash during 2008 and 2009. It is expected that the restructuring will save the Company an estimated $6.0 million in 2008 and generate annual cost savings of approximately $27.5 million thereafter.

We are extremely mindful of the impact that these difficult but necessary actions have on our employees, said Keating. However, given the current weak build rates and challenging macroeconomic environment, these initial restructuring steps are necessary to allow us to effectively compete in the markets we serve.

In addition to the workforce reduction, the Company reiterated that it would continue to pursue initiatives that would reduce overhead costs and improve asset utilization through the redeployment of equipment and rationalization of facilities, while maintaining sufficient capacity to service customer needs during peak build levels.

The restructuring plan is a culmination of months of work by management with the support and backing of the Board, said Lasky. In addition to these initiatives, we believe there are additional opportunities that merit further analysis and we will continue to press to reduce our costs, improve asset utilization, and accelerate organic growth.

Creation of Aftermarket Division

Accuride confirmed its commitment to the aftermarket today by announcing the creation of a dedicated Aftermarket Division to strengthen its services and offerings to its customer base.

In conjunction with this announcement, Accuride named Tony Pape as Vice President and General Manager of its Aftermarket Division, creating senior executive level focus and accountability for this important market segment. In addition, Phil Stolz was named Vice President, Truck OE Sales and Corporate Marketing to help ensure continued excellent OE support with an expanded focus on market development.

We look to Tony and Phil to take a dynamic approach in significantly strengthening our customer relationships by servicing both the aftermarket and OE service in a centralized fashion, said Rick Schomer, Accurides Senior Vice President, Sales and Marketing. To support these initiatives, we will be consolidating our existing warehouses to reduce freight and product handling costs and significantly improve our customer service offering for full mixed product truckloads to our aftermarket customers.

Business Outlook and Guidance

Overall, order boards within the Class 5-8 markets as well as the trailer market have not yet gained meaningful traction as the freight environment remains weak and trucker profitability remains low following record high fuel prices. Order boards within these markets saw month-over-month decreases in the second and third quarters. With backlogs failing to increase, some OEMs continue to reduce their build plans for the remainder of 2008. Currently OEM reported build rates translate into a North America Class 8 production of approximately 190,000 200,000 units for 2008 and Class 5-7 production of approximately 170,000 180,000 units.

While we believe the restructuring initiatives will have a $6.0 million positive impact to our earnings in 2008, there are mitigating factors that will keep our earnings under pressure including: a prolonged delay in certain revenue programs due to customer start-up difficulties; continued weak build rates; and a delay of a portion of our recovery of increased raw material costs to early 2009, said Lasky. It is anticipated that the negotiated raw material cost recovery delay will enable us to solidify our customer relationships in the near term and provide new longer-term business opportunities when the market returns to normal levels."