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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported) April 6, 1994
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LDI CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-15994 31-1179824
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(State or other (Commission (IRS Employer
jurisdiction) File Number) Identification No.)
One Cleveland Center, Cleveland, Ohio 44114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (216) 687-0100
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Not Applicable
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS. On March 31, 1994, LDI Corporation ("LDI") issued a
press release which stated the following:
LDI CORPORATION ANNOUNCES STRATEGIC BUSINESS PLAN
CLEVELAND, Ohio--For immediate release on March 31,
1994--LDI Corporation (NASDAQ:LDIC) today released details of its
comprehensive strategic business plan resulting from its business
review announced earlier this month.
In describing the plan, chairman and chief executive
officer Robert S. Kendall said, "We are narrowing the span of product
offerings of the Company by disengaging from our non-core businesses.
LDI will now focus on its core business of equipment leasing, and the
related services of maintenance and technical support for computers
and other high-technology equipment and short-term PC rentals. These
core products have consistently been among our most profitable and are
businesses that emphasize customer service. Revenues and assets for
the core business were approximately $210 million and $580 million,
respectively, for the year ended January 31, 1994. These amounts
represented approximately 60% and 90%, respectively, of total
consolidated revenues and assets.
"Historically, LDI's greatest strengths have been its
skill at leasing, providing service and technical expertise, and
building long-term relationships with our corporate customers. LDI
will focus its resources on continuing to improve these strengths and
enhance the value we provide to our customers," Kendall said.
"Rapid change in the computer industry, our new
business start-ups, and the fundamental economics of our industries
have contributed to declines in LDI's revenues and earnings over the
past seven quarters," said Kendall. "LDI's
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consolidated operations have been profitable in the past, and we are
implementing appropriate changes now to narrow the focus of the
Company and execute a cohesive, profitable strategy going forward."
PLAN CALLS FOR DISPOSITION OF NON-CORE BUSINESS UNITS
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The details of the plan announced today call for the
sale or other disposition of the remaining non-core businesses. These
actions are in addition to the previously announced exit from the
personal computer (PC) superstore business.
Kendall said, "Management is active in negotiations
to sell most of these non-core businesses. We currently have
agreements in principle to sell the retail information services unit
and LDI's open software distribution unit."
Other businesses which are targeted for sale or
discontinuation include LDI's catalog distribution and corporate PC
sales businesses, its PC brokerage operation and the retail PC outlet
stores, LDI's Canadian leasing subsidiary, and Sea-Tech, its
ship-to-shore satellite telecommunications venture.
"The final disposition of these units will not be
known for a few months," Kendall added, "but we are making significant
progress." The investment banking firm of Bear, Stearns & Co., LDI's
strategic business advisor, has been retained to assist in the sale of
the non-core businesses.
The remaining non-core businesses identified by LDI's
strategic business plan employ approximately 250 people. Many of
these individuals are likely to be retained by new owners of the
business units targeted for sale by LDI.
PLAN INCLUDES OPERATING COST REDUCTIONS
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The Company also announced that it will consolidate
its core business operations and corporate offices into its Technical
Center on Hinckley Industrial Parkway in the City of Cleveland. This
consolidation affects the Company's downtown corporate office at One
Cleveland Center, and its leasing and corporate
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operations center in Westlake. The Company plans to sell its
Westlake facility and vacate its leased downtown offices within the
next several months.
The facilities consolidation, employee terminations
and transfers, and certain other identified cost reductions will lower
future core business operating costs.
MANAGEMENT AND GOVERNANCE CHANGES
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"In recognition of the downsizing of the business as
a result of implementing the strategic plan, the Company is announcing
a corresponding restructure of its executive management to streamline
the decision making process," said Kendall.
As part of this management change, effective April 1,
Michael R. Kennedy, president and chief operating officer, Thomas A.
Cutter, senior executive vice president and vice chairman, and Jerry
E. Kish, executive vice president and chief financial officer, will
direct their joint efforts toward executing aspects of the strategic
business plan. On June 1, the three will relinquish their executive
titles but remain as members of the board of directors. In separate
actions, Kennedy and Cutter have expressed interest in purchasing
certain of the Company's non-core business units.
The board of directors has decided to hire a new CEO
to direct the long-term execution of the Company's strategic plan.
Kendall will continue to serve as chairman and chief executive officer
until the new CEO is selected, and thereafter continue as chairman of
the board of directors. A committee of board members has been
established to conduct the search for a new chief executive officer
and expects to complete the process by August.
Commenting on the restructuring of senior management,
Kennedy and Cutter stated, "We are all supportive of the strategic
business plan as the best direction for LDI and its shareholders. We
also recognize that a revised
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management structure is needed for a streamlined LDI". Kendall,
Kennedy and Cutter founded LDI in 1972, and together own
approximately 45 percent of all outstanding common stock.
The Company also announced the formation of an
executive management committee, with members from both management and
the board, to oversee the implementation of the strategic business
plan. It is anticipated that all material aspects of LDI's strategic
business plan will be implemented during the next four months.
ESTIMATED FOURTH QUARTER CHARGES
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The previously described actions necessary to
implement the strategic plan are expected to result in charges for
restructuring, discontinued operations, facilities consolidation,
employee severance, and related items. These charges are currently
estimated to range from $24 million to $27 million, net of tax. As a
result, LDI will report a substantial loss for its fourth quarter and
fiscal year ended January 31, 1994. It is expected that audited
financial results will be reported to shareholders in approximately
four weeks.
DIVIDEND ACTION
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The board of directors, in concert with the strategic
plan, has suspended payment of regular quarterly cash dividends on the
Company's common stock. A quarterly dividend of 4 cents per share was
last paid on January 28, 1994.
LENDER SUPPORT
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The Company has kept its lenders apprised of the
development of its strategic business plan and the estimated charges.
The strategic plan has the support of the Company's lenders, who have
provided interim waivers of any possible loan covenant violations that
may have resulted from the proposed actions. Lenders are working with
the Company to amend existing loan
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agreements by the end of April to be consistent with the Company's
strategic business focus.
The core business of LDI Corporation consists of
equipment leasing, and the related services of maintenance and
technical support for computers and other high-technology equipment
and short-term PC rentals.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LDI CORPORATION
By: /s/ Jerry E. Kish
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Executive Vice President and
Chief Financial Officer
Date: April 6, 1994
