A Medical Device Daily
Implantable device components manufacturer Greatbatch (Clarence, New York) reported that it will consolidate its corporate and business unit, including the elimination of 40 positions.
It said the reduction is expected to enable it “to better match its human resources with the management and technical skill sets required to optimize operating performance.” A “significant portion” of the annual savings will be reinvested into R&D activities and business growth opportunities, it said.
Thomas Hook, company president/CEO, said, “We have successfully completed two-thirds of our three-year plan to consolidate facilities. It is now time to align our organization and cost structures to be consistent with our facilities footprint and the way we will manage our business. This planned organization change will enable more aggressive investment in core product technologies and other business opportunities ensuring Greatbatch’s continued growth.
“In addition, the organization change combined with the consolidation of facilities will substantially improve the company’s cost structure.”
The company estimated the savings is estimated to be $8 million to $10 million upon plan completion, and generate annual net savings of $2 million to $4 million. About $6 million will be reinvested in critical areas including R&D and product engineering, it said. The severance costs associated with the consolidation plan are estimated to be $2.1 to $2.3 million, the majority recorded in the Q406.
As a result, the company is decreasing its full year 2006 diluted DPS guidance by $0.06 from the range of $0.71 — $0.77 per share to $0.65 — $0.71 per share.