IntriCon Announces Strategic Restructuring to Accelerate Future Growth
June 13 2013 - 9:00AM
Business Wire
IntriCon Corporation (NASDAQ: IIN), a designer,
developer, manufacturer and distributor of miniature and
micro-miniature body-worn devices, today announced a global
strategic restructuring plan designed to accelerate the company’s
future growth by focusing resources on the highest potential growth
areas and reduce costs by approximately $3.0 million annually.
Specifically, the plan includes:
- Reducing investments in certain
non-core professional audio communications product lines;
- Aggressively transferring specific
product lines from Singapore to IntriCon’s lower-cost manufacturing
facility in Batam, Indonesia;
- Reducing global administrative and
support workforce;
- Transferring the medical coil business
from the company’s Maine facility to Minnesota to better leverage
existing manufacturing capacity, and exploring alternatives for the
remaining security and microphone business, including possible
sale; and
- Adding experienced professionals in
value hearing health and also focusing more resources in medical
biotelemetry.
“As a company, we needed to better align our cost structure with
current lower revenue levels—a trend that is continuing in the
second quarter,” said Mark S. Gorder, president and chief executive
officer of IntriCon. “These initiatives allow us to consolidate
operations, reduce our global manufacturing footprint, lower our
costs and provide greater focus on our strategic plan: growing the
value hearing health and medical biotelemetry opportunities that
hold the greatest potential to drive shareholder value.
“While challenges remain in the conventional hearing health
channel due to high device costs and inconveniences in the
distribution channel, we’re seeing opportunities for alternative
care models such as the insurance channel—as evidenced by our hi
HealthInnovations program—and the personal sound amplifier product
(PSAP) market. Devoting more talent and financial resources to
these channels, as well as adding sales, marketing and channel
expertise, will better position us for success.”
As part of the restructuring, IntriCon will complete a global
workforce net reduction of approximately 35 administrative and
support employees, resulting in immediate annual cost savings of
$2.0 million. The majority of the staff reductions are immediate,
except in the company’s Maine operation, where there will be a
phased approach. Impacted employees will receive financial support
and outplacement assistance.
Additionally, IntriCon will classify its Maine operations, which
include the company’s security, microphone and receivers
businesses, as discontinued operations for financial reporting
purposes. Certain Singapore assets that support the microphone and
receiver product lines also will be classified as discontinued.
The company expects to achieve an additional $1.0 million in
annual cost savings by the end of 2013, through the actions
detailed above. Combined, IntriCon anticipates total annual cost
savings of approximately $3.0 million.
The company expects to incur total cash charges ranging from
$200,000 to $250,000, or $0.04 per share, related to its
restructuring initiatives for the remainder of the 2013 fiscal
year.
“Change of this nature is hard, but necessary, for the health of
IntriCon,” said Gorder. “By right-sizing our organization, and
better leveraging our existing resources, we’ll be able to
aggressively drive our two largest growth opportunities—which we
expect will strengthen in the second half of the year.”
Gorder said the company can accommodate revenue growth and
deliver profitability through the capacity at its existing
facilities. IntriCon plans to announce second-quarter results in
the first half of August and will provide additional information on
the restructuring at that time.
About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation
designs, develops and manufactures miniature and micro-miniature
body-worn devices. These advanced products help medical, healthcare
and professional communications companies meet the rising demand
for smaller, more intelligent and better connected devices.
IntriCon has facilities in the United States, Asia and Europe. The
company’s common stock trades under the symbol “IIN” on the NASDAQ
Global Market. For more information about IntriCon, visit
www.intricon.com.
Forward-Looking Statements
Statements made in this release and in IntriCon’s other public
filings and releases that are not historical facts or that include
forward-looking terminology are “forward-looking statements” within
the meaning of the Securities Exchange Act of 1934, as amended.
These forward-looking statements may be affected by known and
unknown risks, uncertainties and other factors that are beyond
IntriCon’s control, and may cause IntriCon’s actual results,
performance or achievements to differ materially from the results,
performance and achievements expressed or implied in the
forward-looking statements. These risks, uncertainties and other
factors are detailed from time to time in the company’s filings
with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2012. The
company disclaims any intent or obligation to publicly update or
revise any forward-looking statements, regardless of whether new
information becomes available, future developments occur or
otherwise.
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