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December 20, 2000
HAUPPAUGE, N.Y.--Plagued recently by lawsuits brought by its shareholders and a delayed third quarter fiscal report due to an investigation into an inventory discrepancy, Twinlab Corp. (NASDAQ:TWLB) announced Dec. 19 that it plans to cut 12 percent of its workforce, or roughly 144 jobs, in an effort to reduce costs in the midst of an "industry slowdown." The move will result in a $500,000 charge to the company's fourth quarter. Twinlab also plans to consolidate and streamline its direct-to-consumer channel, including its Bronson catalog and Changes direct selling divisions.
This news comes after a recent flurry of bad news for Twinlab. On Nov. 15, the company filed for an extension in reporting third quarter results, which were delayed due to an inventory shortage in its Utah facility. Twinlab reported third quarter results five days later, including 6.7-percent revenue decrease compared to the same quarter last year, as well as a net loss of $11.1 million or $.39 per share. These results including a $16 million charge that included the effects of the $8 million inventory shortage. Two days later, the lawsuits began. Shareholders filed class actions against the company, alleging that Twinlab's management made false and misleading statements in press releases and filings about its business, earnings, financial condition and prospects. Specifically, the suits accuse the company of overstating its inventory through recording nonexistent and obsolete inventory, inflated its reported financial condition and results of operations during the Class Period by at least $16 million. In December, the company reported that it had received an amendment and credit waiver, which bought it some time to solidify a new credit facility. Under the waiver, Twinlab has until Feb. 15 to fix its credit situation. On the same day, the company announced the layoffs.
"We have been affected by a general slowdown taking place in the industry and have determined to set rigorous new objectives for the company," said Ross Blechman, president and chief executive officer. "The action steps outlined today are designed to capitalize on the strength of the Twinlab brand and our premium products, as well as the resources and abilities that exist in this company."
By late in the trading day on Dec. 19, TWLB shares were down to 1-3/16, off a 52-week high of 9-7/16 but up from a low of 15/16.
For more information, contact Bill Rizzardi at (631) 467-3140.
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