The company incurred a cash loss for the quarter of $0.17 per diluted share, compared to cash earnings of $0.32 per diluted share in 2000. These results exclude the impact of restructuring and other special charges taken during the quarter and are slightly ahead of the updated guidance provided on June 6, 2001.
Total orders in the quarter were $64.1 million, less $33.7 million in customer cancellations. The resulting net orders were $30.4 million, with an ending backlog of $92.5 million.
The weak book-to-bill ratio in the quarter reflects a continuation of disappointing demand across the communication markets we serve, commented Artesyn’s President and CEO, Joseph M. O’Donnell. We have not yet seen any meaningful signs of improvement in the market and expect our third quarter financial performance to closely mirror second quarter results.
We are continuing to make progress in reducing the company’s costs in both the expense and overhead categories, continued O’Donnell. In addition, we made important progress in improving the balance sheet, as inventory levels were reduced by approximately $15 million versus the March quarter. While these are important steps towards improving Artesyn’s near term financial performance, it is also critical to continue investing in product development to support future growth. In June, we successfully launched a new line of high-efficiency quarter-brick and half-brick DC/DC converters resulting from last year’s Azcore acquisition. Given the current challenges in the market, I believe we are taking the right actions and making the appropriate investments to strengthen our competitive position and emerge, from this slowdown, a stronger company.
Earlier in the quarter, the company announced an aggressive cost reduction program to align operating costs with current market conditions. When fully implemented, actions will include the elimination of approximately 1,800 hourly and salaried positions globally and the closure of the Broomfield, Colorado and Huntington Beach, California facilities. The company expects to take a total pretax charge of $15 million related to these actions. During the second quarter, Artesyn recorded a portion of this charge in the amount of $8.2 million ($6.0 million after tax benefit or $.16 per share), with the balance of the charge expected in the third quarter. When fully implemented in the fourth quarter, these actions are expected to generate approximately $40 million in annual cost savings.
The company also incurred a special pretax charge to cost of sales during the second quarter of $10.0 million ($7.3 million after tax benefit or $.19 per share) to increase excess and obsolete inventory reserves. Including the impact of all items, the net cash loss in the quarter was $0.52 per diluted share.
