GT Announces Realignment of Manufacturing, Engineering and Supply Chain Resources

GT Advanced Technologies Inc., GTAT, today announced a realignment of its manufacturing, engineering and supply chain resources to optimize effectiveness across its increasingly diversified business portfolio. The actions taken will align previously centralized personnel and operational resources directly with the company's various businesses, which include the rapidly ramping Arizona based sapphire materials business and expanding equipment businesses with applications ranging from solar and LED to power electronics, consumer electronics and industrial. In connection with these steps, GT expects to recognize cash charges of approximately $1.8 million and non-cash charges of approximately $11.6 million over its second and third quarters. As part of the action, and as previously announced, GT is focusing its Salem, MA sapphire facility exclusively on high volume, low cost ASF® sapphire crystal growth. As part of this initiative, the company is moving most of its sapphire fabrication activities to its Mesa, Arizona operation. The majority of the $13.4 million of one-time charges being taken this quarter are related to this move. In addition, while keeping in-house its most important process development, software, and controls engineering along with other critical IP domain expertise, the company will outsource more routine, non-proprietary engineering functions to third parties on an as needed basis. The company is also discontinuing its Kyropoulous sapphire growth program given the limited market it now sees for the KY platform. "GT has transformed itself into a highly diversified organization that serves a wide range of markets," said Tom Gutierrez, president and CEO. "This realignment positions our key resources in the geographies where they are likely to be most effective allowing the company to optimize its R&D skill mix and better take advantage of growth opportunities across our many business segments. "The emphasis here is on efficient use of the company's capital as we drive to accelerate new technology to market, rather than pure cost reduction. As such, we expect to re-invest most if not all of the cost savings derived from the realignment in our most promising growth programs," Gutierrez concluded. While these actions have resulted in the elimination of approximately 70 positions, the company's employment base continues to grow and reached an all-time high of more than 1100 employees as of the end of June, with over 1000 of those positions in the US. In addition, the company now has several hundred temporary employees, primarily in the US. Total one-time charges are expected to include approximately $4.5 million related to asset impairments, $4.3 million in facilities-related charges, $2.8 million related to inventory and $1.8 million for severance costs in connection with the elimination of approximately 70 positions. These charges, which will be reflected in the company's GAAP results, are not expected to impact the company's non-GAAP financial results. The company will provide additional details during its Q2 CY2014 earnings call, which is scheduled for August 5, 2014 at 8am ET. Dial in and webcast details for the earnings call will be released in the coming weeks.