CHICAGO – Methode Electronics Inc. reported a third-quarter net loss of $27 million, compared to a net income of $9.8 million year-over-year. The decline is due to a $32.7 million charge for impairment of goodwill and intangible assets, $3.8 million in restructuring charges and weakened market capitalization.
 
For the nine-month period, the net loss was $17.5 million, compared to a net income of $26.8 million in 2008.
 
Third-quarter net sales dropped 41.7% from last year to $80.8 million. Consolidated cost of products sold dropped 35.3% to $70.5 million, on lower sales volumes. For the nine-month period, net sales slid 15.1% to $336.6 million, and consolidated cost of products sold dropped 12.6% to $39.5 million.
 
The company has planned several cost-saving measures, including moving manufacturing to lower cost regions. Principal manufacturing operations will be located in Mexico, Malta and China. Ford Motor Company production will be moved to another supplier. TouchSensor manufacturing will be moved from Chicago to Monterrey, Mexico. Its Shanghai operations will be consolidated from three to two plants, and plans for a Morocco plant have been put on indefinite hold.
 
Approximately 850 workers will be affected. The restructuring is expected to create a pretax charge between $9 million and $18 million within the next two years.
 
“The increasingly challenging economic environment and the severe downturn in the worldwide automotive industry have negatively impacted our results in the third quarter of this fiscal year,” said Donald Duda, president and CEO. “In response, we have accelerated our strategy to reduce our exposure to legacy automotive business, particularly with the Detroit automakers.”
 
Methode is a global designer and producer of electro-mechanical devices, supplying connectors and bare boards to a number of industries. In 2005, 75% of the company's revenues were derived from the automotive industry. The company plans to reduce this to 40% by 2011.

One of the company's business units, Trace Labs, does testing and analysis for the PCB industry.

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