"Second quarter results, while even with last year on an Adjusted EBITDA basis, were at the low end of our expectations," said John F. Barlow, Safelite's Chief Executive Officer. "Low industry demand and continuing industry-wide pricing pressures in a soft market environment prevented us from achieving earnings improvement."

    In October, Allstate Insurance advised Safelite that it does not intend to renew its Best Effort Agreement with Safelite for auto glass repair, replacement, and administrative services when the current contract expires in October 2000. Sales to Allstate during the fiscal year ended March 1999 totaled $120 million or 14% of sales for the fiscal year.

    In light of this development and current industry conditions, Safelite is taking actions to reduce its overall cost structure. These actions include closing of 110-150 unnecessary service center locations, streamlining field based administrative functions, and reducing corporate administrative activities. The Company expects that it will record restructuring charges of between $25 million and $30 million in the quarter ended January 1, 2000 related to this effort.

    "While we are obviously disappointed with Allstate's decision, we believe that we will be able to retain some portion of this business after our contract expires," stated Barlow. "Although overall sales volume will likely be reduced by a significant amount, we are taking the actions necessary to appropriately re-align our cost structure to reflect this development as well as the soft market conditions.

    In addition, we will continue our focus on sales growth, enhancing our key client relationships, growth of Repair Medics and expansion into secondary markets through our Mobile Pro initiative."