CHARTER POWER SYSTEMS ISSUES ANNOUNCEMENT
CHARTER POWER SYSTEMS ISSUES ANNOUNCEMENT PLYMOUTH MEETING, Pa., Nov. 14 /PRNewswire/ -- Charter Power
Systems, Inc. (AMEX: CHP) announced today it has completed the recently reported contract negotiations with AT&T (NYSE: T).
The Round Cell contract has been firmed up through March 31, 1994, at a reduced committed volume level, a new contract has been signed for purchase by AT&T of certain conventional Charter Power products through March 31, 1994, and the production contract for AT&T's proprietary valve-regulated battery will expire at year end. As a result, the company's sales to AT&T are likely to be reduced by about $13 million in 1992, excluding any potential benefit from an improvement in the U.S. economy. "Despite these changes and the continued weakness in the North American economic conditions, the improvements we have achieved in gross margins, operating expenses and interest expense should enable us to report earnings for this year that are comparable to those for last year, on somewhat lower sales. Based on our continued strong cash flow, we expect to achieve further debt reduction through the end of this year despite greater investments in new products and manufacturing processes," said Robert Alvine, chairman and chief executive officer of the company. "These new arrangements with AT&T, a key customer with whom Charter Power has had a long and traditionally strong relationship, open a range of new strategic opportunities for the company to pursue future growth. For example, the company will be making an $8 million investment at its Leola, Pennsylvania plant to launch in 1992 a new highly sophisticated, valve-regulated battery line for the telecommunications market. This investment should significantly enhance the long-term strategic position of the Leola plant that formerly was dedicated solely to AT&T production. "We believe that this and other new product and market developments, like the previously reported $4.5 million contract to deliver a new spinning reserve battery to the Puerto Rico Electric Power Authority in 1992, should enable the company to offset the effect of the lost sales to AT&T. Naturally, upsides to this could occur should several additional major opportunities in export business materialize. At the same time, drawing on the company's proven management capabilities, major market position, and technological and capital resources, we intend to pursue other growth opportunities, including related business acquisitions and strategic alliances." Charter Power Systems, based in Plymouth Meeting, is a major North American manufacturer and supplier of products and services to the standby power and motive power markets with seven production facilities in the United States and Canada. /delval/ -0- 11/14/91 /CONTACT: Donald L. Nevins Jr. (financial), 215-834-7334, or Robert Schechter (shareholders), 212-661-8030, both of Charter Power Systems/ (CHP T) CO: Charter Power Systems, Inc.; AT&T ST: Pennsylvania IN: SU: CON MK-CC -- PH037 -- 4547 11/14/91 16:04 EST
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|Date:||Nov 14, 1991|
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