Emulex Announces $200 Mln Stock Buyback Program

(RTTNews) - Emulex Corporation (ELX) said Monday that its Board of Directors has approved a $200 million share repurchase program, which at current market prices represents about 30% of the company's outstanding shares.

The company expects that the initial $100 million will be completed through the combination of individually negotiated transactions and entry into an Accelerated Share Repurchase program.

The company also announced a cost savings program that is expected to generate $30 million in annual cost savings over the fiscal 2013 spending level, expanding on the previously announced $10 million cost savings initiative in its connectivity business. Emulex expects to complete the effort over the next few quarters.

Emulex expects to take a material incremental charge related to the further operating expense reductions in the Company's GAAP results and cash flows for the second quarter of 2014.

The company also said it is actively interviewing industry expert candidates that will be selected to fill three positions that will be identified in its proxy statement as independent nominees to the Board of Directors. Further, Emulex plans to reduce the size of its board from 12 to 11 directors.

Additionally, Emulex said its Executive Chairman, Jim McCluney, will be continuing with the company through February 6, 2014, after which he will depart in accordance with his employment agreement, and he will not stand for re-election to the board of directors at the next annual meeting of stockholders.

Separately, Emulex said it plans to offer up to $125 million aggregate principal amount of Convertible Senior Notes due 2018 in a private offering. The company expects to grant the initial purchaser for the offering an option to purchase up to an additional $18.75 million aggregate principal amount of notes from the company to cover over-allotments.

The company currently plans to use a portion of the net proceeds of the offering for general corporate purposes, including repurchases of shares of its common stock.