This two-year plan, when fully implemented, is expected to result in an approximate annualized savings or improvement to EBITDA (earnings before interest, taxes, depreciation and amortization) of $145 million, net of employee retention costs.
Effective immediately, in the first phase of the cost-reduction plan, Comdisco has cut its North American workforce by 10 percent or 250 positions. Approximately half of the eliminated positions are in its corporate headquarters in Rosemont, IL, primarily in infrastructure and support departments. The remaining reductions are taking place at 19 Comdisco locations throughout North America. As a result of this reduction, Comdisco will take a one-time charge in the range of $6 million to $8 million in its fiscal third quarter ending June 30, 2001. On an annualized basis, the first phase of the plan is expected to result in an estimated labor cost savings of approximately $20 million.
During our strategic review, it has become apparent that the growth and profitability of our core leasing and services businesses have been severely challenged by a number of factors, including our cost structure, said Norm Blake, Comdisco’s chairman and chief executive officer. This is a difficult decision because it affects many talented and dedicated people. We will continue to focus on our cost structure and on treating our employees fairly and compassionately, he said.
