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) June 2, 2009
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Twin
Disc, Incorporated
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(exact
name of registrant as specified in its charter)
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WISCONSIN
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001-7635
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39-0667110
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(State
or other jurisdiction
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(Commission
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(IRS
Employer
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of
incorporation)
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File
Number)
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Identification
No.)
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1328
Racine
Street Racine,
Wisconsin 53403
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(Address
of principal executive offices)
Registrant's
telephone number, including area
code: (262)
638-4000
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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[
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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[
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[
]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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[
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain
Officers
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On June
2, 2009, the Compensation Committee of the Board of Directors of Twin Disc,
Incorporated (the “Company”) approved across-the-board reductions to annual base
salaries of the Company’s salaried employees, including the annual base salaries
of all named executive officers, effective as of July 1, 2009. The
current annual base salaries, the new base salaries and the percentage reduction
in base salaries for the named executive officers are as follows:
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Name
and Position
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Existing
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New
Base
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Percentage
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Base
Salary
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Salary
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Reduction
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Michael
E. Batten
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$546,000
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$475,000
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13%
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Chairman
and Chief
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Executive
Officer
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John
H. Batten
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$300,000
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$279,000
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7%
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President
and Chief
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Operating
Officer
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Christopher
J. Eperjesy
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$286,000
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$269,000
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6%
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Vice
President – Finance,
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Chief
Financial Officer
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and
Treasurer
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James
E. Feiertag
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$286,000
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$269,000
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6%
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Executive
Vice President
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H.
Claude Fabry
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$264,179
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$250,970
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5%
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Vice
President
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The
Compensation Committee has also decided not to implement an annual bonus plan
for salaried employees for the 2010 fiscal year. In prior years, the
Company has adopted an annual bonus plan, known as the Corporate Incentive Plan,
to provide a target annual bonus to executive officers of the Company, including
named executive officers.
Item
8.01 Other
Events
On June
3, 2009, the Company announced certain restructuring plans affecting its
domestic and international workforce. Through a combination of an
involuntary reduction in force and a voluntary separation program, the Company
will reduce its workforce by 16 salaried employees and 20 hourly employees at
its Racine operations, seven employees at its European manufacturing operations,
and seven employees at certain Company-owned distribution
facilities. In addition, the Company will implement rolling layoffs
for its hourly Racine workforce during fiscal 2010 and close its Racine
manufacturing facility for the month of July, 2009. The total
one-time restructuring charges, which will be taken in the fourth quarter of
fiscal 2009, will be approximately $1.4 million. It is estimated that
these restructuring efforts will result in savings of $5.0 million in fiscal
2010.
The above
plans supplement actions that the Company has previously taken at its European
operations, where the Company has utilized government-subsidized layoff programs
known as Chomage and Cassa Integrazione in Belgium, Italy and
Switzerland. Under these programs, the Company pays its employees for
time actually spent working at Company facilities, and the applicable government
pays the employees up to 80% of their pay for the time that the employees are
laid off. As a result of these actions, the Company expects that its
production in Europe will be reduced by up to 50%. The Company
estimates the use of these programs will reduce European operating costs by up
to $7.0 million.
On June
3, 2009, the Company also announced that it will freeze future accruals under
its defined benefit pension plans effective August 1, 2009. The
Company’s defined benefit plans benefit the Company’s domestic salaried and
hourly domestic employees, respectively, that were hired before October 1,
2003. Without the freeze in accruals, the projected pension expense
for fiscal 2010 was $8.3 million. As a result of implementing the
pension freeze, the expected pension expense for fiscal 2010 is $2.2 million,
for an estimated reduction of $6.1 million.
In
addition, the Company announced on June 3, 2009, that it will implement two new
defined contribution retirement plans effective August 1, 2009. One
of the plans will benefit domestic salaried employees of the Company hired
before October 1, 2003, and the other will benefit domestic hourly employees of
the Company hired before October 1, 2003. The plans are intended to
provide benefits that will approximate the additional benefits that would have
been provided under the Company’s defined benefit plans but for the freeze on
accruals described above. The combined expected expense for these
plans for fiscal 2010 is $1.0 million.
Finally,
the Company is taking several additional steps to reduce future
expenses. In addition to the salary reductions affecting named
executive officers discussed in Item 5.02 above, four other corporate officers
are taking a 5% reduction in their base salaries, and the Company will implement
a 3.5% reduction in base salaries of salaried employees at its Racine
headquarters and domestic manufacturing facilities. The Company is
also instituting a hiring freeze, is significantly reducing overtime, and
intends to reduce marketing, advertising, travel and entertainment expenses by
up to 50%. Several temporary positions at the Company will also be
reduced or eliminated. The combined expected savings from these
actions in fiscal 2010 are $7.0 million.
FORWARD
LOOKING STATEMENTS
The
disclosures in this report on Form 8-K and in the documents incorporated herein
by reference contain or may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. The
words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,”
“likely,” “will,” and similar expressions identify such forward-looking
statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of the Company (or entities in which the
Company has interests), or industry results, to differ materially from future
results, performance or achievements expressed or implied by such
forward-looking statements. Certain factors that could cause the
Company’s actual future results to differ materially from those discussed are
noted in connection with such statements, but other unanticipated factors could
arise. Readers are cautioned not to place undue reliance on these
forward-looking statements which reflect management’s view only as of the date
of this Form 8-K. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events, conditions or circumstances.
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Item
9.01
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Financial
Statements and Exhibits
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(c) Exhibits.
EXHIBIT
NUMBER
DESCRIPTION
99.1 Press
Release dated June 3, 2009.
SIGNATURE
Pursuant
to the requirements of section 13 or 15(d) 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.
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Date:
June 3, 2009
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Twin
Disc, Inc.
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/s/ THOMAS E.
VALENTYN
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Thomas
E. Valentyn
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General
Counsel & Secretary
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FOR IMMEDIATE
RELEASE
Contact: Christopher
J. Eperjesy
(262)
638-4343
TWIN
DISC, INC.
ANNOUNCES
OPERATING EXPENSE REDUCTIONS
RACINE,
WISCONSIN—June 3, 2009—Twin
Disc, Inc. (NASDAQ: TWIN), today announced that it will reduce operating
expenses through a number of corporate cost cutting initiatives. These changes
are the result of declines in demand for the Company’s products and current
economic and market uncertainty at its domestic and international
operations. Management estimates the cumulative savings of these cost
cutting initiatives to be $25 million for fiscal year 2010.
These
actions include a reduction of annual base salaries of the Company’s salaried
employees including all executive officers, removal of the fiscal 2010
bonus/incentive plan, changes to several benefit programs, an across-the-board
reduction of marketing, advertising, travel and entertainment expenses, and
staff reductions and layoffs.
Through a
combination of an involuntary reduction in force and a voluntary separation
program, the Company will reduce its workforce by 16 salaried employees and 20
hourly employees at its Racine operations. It will also be implementing rolling
layoffs for its Racine workforce throughout fiscal year 2010 and will be closing
its Racine manufacturing facility for the month of July, 2009. These measures
supplement additional layoffs and cost cutting measures being implemented at the
Company’s European operations in Belgium, Italy and Switzerland. The Company
will be offering outplacement and transition benefits to affected
employees.
More information about the details of the Company’s cost containment programs can be found in an 8K filed today with the Securities and Exchange Commission. As a result of these cost reduction programs, the Company expects to incur costs of severance and similar personnel-related expenses aggregating approximately $1.4 million which will be accrued in the fiscal 2009 fourth quarter.
Michael
E. Batten, Chairman and Chief Executive Officer, stated, “Like many global
manufacturing companies today, the breadth of the economic recession has
impacted all facets of our business. While it appears that the recession is
beginning to moderate, the underlying market trend has softened and has resulted
in slowing sales, order rates and backlog.
“We
believe that proactively implementing these cost control initiatives will enable
us to effectively address the global economic downturn and ensure a strong
financial position in the future. We recognize that the layoffs will be
difficult for the affected employees and their families. While we wish we didn’t
have to take these difficult actions, they’re unfortunately necessary to secure
Twin Disc’s short and long-term stability and success.
“Even
with the changes we’re making today, the fundamentals of our business remain
strong. We are confident in the long-term viability of our businesses
and remain committed to our employees, customers and the markets in which we
operate.”
Twin
Disc, Inc. designs, manufactures and sells marine and heavy-duty off-highway
power transmission equipment. Products offered include: marine
transmissions, surface drives, propellers and boat management systems, as well
as power-shift transmissions, hydraulic torque converters, power take-offs,
industrial clutches and control systems. The Company sells its
products to customers primarily in the pleasure craft, commercial and military
marine markets, as well as in the energy and natural resources, government and
industrial markets. The Company’s worldwide sales to both domestic
and foreign customers are transacted through a direct sales force and a
distributor network.
This
press release may contain statements that are forward looking as defined by the
Securities and Exchange Commission in its rules, regulations and releases. The
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. All forward-looking statements are based on current
expectations regarding important risk factors including those identified in the
Company’s most recent periodic report and other filings with the Securities and
Exchange Commission. Accordingly, actual results may differ materially from
those expressed in the forward-looking statements, and the making of such
statements should not be regarded as a representation by the Company or any
other person that the results expressed therein will be achieved.