Satcon Announces Restructuring Initiative; Will Reduce 35% of Workforce
Satcon Technology Corporation® (NASDAQ: SATC ) today announced a set of cost reduction initiatives as part of the company's strategic plan to improve its financial performance and align its global workforce and operations infrastructure.
Under the plan, Satcon will focus product development and marketing efforts on delivering the industry's highest performing turnkey solutions for the large scale commercial and utility solar markets with concentration on North America, China, India and Thailand as well as other emerging markets in the Asia-Pacific region. Through a combination of focused research and development, enhanced operational alignment, and continued improvements in the supply chain, Satcon will concentrate its product development resources on cost reduction and delivering best-in-class performance across its entire product portfolio, including an increased emphasis on Prism Platform, Satcon's next generation turnkey multi-megawatt medium voltage building block.
Satcon will also close its Canadian manufacturing facility, and is currently working to partner with a contract manufacturer to maintain Ontario production capacity for Satcon solutions to continue to satisfy Ontario's feed-in tariff requirements. In addition, Satcon has restructured its office and warehouse infrastructure in Europe, China and the United States in order to better align with market conditions and further reduce costs.
As part of the organizational restructuring, the company will reduce its workforce by 140 employees worldwide, or approximately 35%. This reduction, combined with the closure of the Canadian facility, will result in charges of approximately $2.8 million to $3.0 million. The majority of the charges are expected to occur in the fourth quarter of 2011, with the remainder taking place in the first quarter of 2012. The company expects ongoing savings of approximately $15 million to $17 million annually once all actions are implemented by the second quarter of 2012.
In addition to the restructuring charges, the company is currently analyzing its inventory and certain non-cancellable supplier-held inventory, and will write down the value or take a charge to reflect current market conditions. This will result in expected charges during the fourth quarter of 2011 of approximately $20 million to $26 million, with the majority of the charges comprised of non-cash items. These charges were not anticipated when the company provided its fourth quarter 2011 guidance.
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