Altra Holdings Inc. (AIMC) filed Quarterly Report for the period ended 2009-09-26.
ALTRA HOLDINGS INC. through its wholly-owned subsidiary Altra Industrial Motion Inc. is a leading multinational designer producer & marketer of a wide range of mechanical power transmission products. The products are marketed under a variety of well recognized and established manufacturing brand names. These leading brands include Boston Gear Warner Electric TB Wood's Formsprag Clutch Ameridrives Couplings Industrial Clutch Kilian Manufacturing Marland Clutch Nuttall Gear Stieber Clutch Wichita Clutch Twiflex Limited Bibby Transmissions Matrix International Inertia Dynamics Huco Dynatork & Warner Linear. The Altra product portfolio includes industrial clutches brakes enclosed gear drives open gearing couplings machined-race bearings variable frequency & belted drives linear actuators & other related products manufactured for industries including automotive general industrial material handling aggregate & mining marine power generation oil & ga Altra Holdings Inc. has a market cap of $283.3 million; its shares were traded at around $10.63 with a P/E ratio of 13 and P/S ratio of 0.5.
Highlight of Business Operations:
In response to the continued challenging economic conditions of 2009, we have taken and continue to take swift and aggressive actions to reduce our expenses and maximize near-term profitability. Our cost-reduction initiatives are centered on three areas: workforce cutbacks, plant consolidations and procurement and other cost reductions. In February 2009, the Company’s discretionary 401(k) match was suspended and a temporary reduction in executive compensation was initiated. On June 1, 2009, the Company announced the temporary suspension of all Company contributions to the 401(k) plan. We also have announced a general hiring freeze, a freeze of all non-union employee salaries and reduced work schedules. During the year to date period ended September 26, 2009, we incurred $5.4 million of restructuring expense including a $2.0 million non-cash charge primarily related to impairment charges at the Mount Pleasant and South Beloit facilities that are expected to close in 2009 and in the first quarter of 2010, respectively. The remaining expense relates mainly to severance. We expect to incur between an additional $2.5 and $3.5 million of expenses associated with workforce reduction and consolidation of facilities in 2009 and between $1.3 million and $1.9 million of such additional expenses in 2010. Beginning in 2010, we expect to see annualized savings from the headcount reductions and consolidation of facilities of approximately $30 million. We expect savings in 2009 to be $17.9 million. Including procurement and other cost reduction efforts, annualized savings would be approximately $77 million (approximately $60 million in 2009). We estimate that once volume returns to prior year levels, between $10 and $12 million of these savings will be permanent in nature.
As a result of the goodwill impairment analysis, we recorded a goodwill impairment charge of $31.8 million at the TB Woods, Huco and Warner Linear reporting units as of December 31, 2008. The goodwill remaining at these reporting units, after the adjustment for goodwill impairments, was $23.5 million at TB Woods and there was no goodwill remaining at either Warner Linear or Huco. Due to prevailing market conditions at the time of the acquisitions of these three reporting units, the purchase price paid as consideration for these three acquisitions required a higher premium when compared to the prior 2004 Colfax acquisition and therefore created higher goodwill at these reporting units.
We considered whether the sum of the fair value of all of our reporting units was reasonable when compared to our market capitalization on the date of the goodwill impairment analysis. As of December 31, 2008, our estimated enterprise fair value was $274.2 million. Our market capitalization was $208.7 million. The difference between the fair value of the enterprise and our market capitalization represented a control market premium of between 25% and 35%. We determined that a control market premium of between 25% and 35% was appropriate based on historical experience with purchase and sales transactions, the historical market trends based on our industry and the control market premium paid in relation to these transactions.
AIMC is in the portfolios of John Keeley of Keeley Fund Management.
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