A Medical Device Daily
Steris (Mentor, Ohio) reported that it has initiated a program to boost profits and improve efficiency by generating annual operating savings of about $30 million.
The company expects to reduce its salary and benefits expenditures by "reducing management layers" though not reporting the number of staff cutbacks "eliminating redundancies and consolidating functions where appropriate." Other savings are anticipated to come from reduction in indirect overhead expenses through reduced consumption of goods and services and consolidation of service providers.
The company said that the program and estimated savings reflects a focus on North American operations but that other cost reductions will be identified in international operations.
The company said it will incur a pre-tax charge of about $15 million during the quarter ended March 31, 2008, related to severance benefits and asset write-downs. Excluding the charge, the company reiterated its previously reported earnings range of $1.30 to $1.35 per diluted share for FY08.
The company anticipates 50% to 70% of operating expense savings during its fiscal year ending March 31, 2009, and will provide more detail on expected FY09 performance in its May 7 earnings announcement.
"[I]t is important that we re-shape the operating model of the company to drive profitable growth," said Walt Rosebrough, president/CEO of Steris. "We very much appreciate the contributions of those employees who have been affected. However, it is important that we become more disciplined with our overhead expenditure levels, which ... have increased at a faster pace than revenues ... ."
Steris develops infection prevention, decontamination and health science technologies, products and services.
In other restructuring news: Synergetics USA (O'Fallon, Missouri), a maker of microsurgery devices, said it will close its Philadelphia plant and merge the operations and production of generator products into its plant in O'Fallon Missouri.
The company said the move is part of its strategy to improve product and component integration and increase operational efficiencies at all levels.
The Philadelphia plant currently has 25 employees and the company expects to record non-recurring, pre-tax severance and related costs associated with this action of about $400,000, with the majority of these being cash costs. Ongoing annual cost savings from the closing are expected to be about $1.5 million, or 5 cents a share.
Dr. Jerry Malis will remain as CSO and will lead five engineers and technicians in the further development of Malis generators and provide technical continuity.
Synergetics focuses on making instruments for vitreoretinal, neurosurgery and ear, nose and throat surgeries.