PROVO, Utah, January 7, 1998Larson-Davis Incorporated (Nasdaq: LDII) announced today a series of measures to restructure its operations including an approximate 15% reduction in personnel, the discontinuance of certain peripheral business activities, and the write down of certain assets. This will enable Larson-Davis to focus on its technical strengths and, with the successful launch of its new products, achieve profitable operations by the latter part of 1998.
This restructuring plan will result in non-recurring charges of between $5.5 million and $6.5 million in the fourth quarter. There is approximately $1.3 million included in these charges related to the recent management reorganization and the anticipated downsizing costs of the restructuring. The charges also include approximately $4.5 million related to the write down of certain assets due to changes in strategic direction of the Company and in management's estimates regarding the realizability of certain assets.
This restructuring plan is expected to result in annual savings of approximately $1.5 million, according to Larson-Davis' new CEO Andrew Bebbington.
"These actions, developed over the past 6 weeks and approved by the Board of Directors, are a critical part of our transformation of Larson-Davis. In 1997, the Company has sustained substantial losses due to its heavy investment in product development in the Sensar organization and also from operating losses in its acoustics business. This restructuring plan will return the acoustics business to profitability in 1998 and will position the Sensar business to move to profitability as revenues increase as a result of a successful launch in early 1998 of the Jaguar Time-of-Flight Mass Spectrometer and its Supercritical Fluid Chromatography Instrument and related accessories" Bebbington said.
The majority of the charge for the write down of certain assets relates to the impairment of intangible assets developed in connection with the environmental ("ENOMS") and airport ("ANOMS") noise monitoring businesses which were discontinued in 1995.
Larson-Davis over the past few years has entered into various agreements with strategic partners designed to commercialize new products. It remains the goal of Larson-Davis to partner with outside organizations to supplement its own resources and to develop its sales and distribution capabilities. Negotiations and activities continue in several areas with potential partners.
One such agreement currently in place is the development agreement regarding the Company's CrossCheck technology with Weidmann International. Although the agreement remains in place it would appear unlikely that this will lead to the launch of a product in the near future. Larson-Davis continues to explore other applications for this exciting technology. However, this work would be characterized as early stage development and may not lead to material revenue being generated in 1998.
It is the Company's intention to expand the Board by appointing industry experts from its key markets.
"The first quarter 1998 is an important period for the company. We have new product launches in both the acoustics and Sensar divisions which we anticipate will provide the volume growth necessary, particularly in the Sensar division, to move the Company towards profitability. The Company is now being sized from an overhead standpoint to be consistent with this revenue stream. We believe that by the latter part of 1998, the financial profile of our business will have improved substantially and be profitable.
By rescheduling our technology pipeline and focusing our efforts around a smaller number of projects at any one time, we believe that second generation and derivative products as well as new products will continue to be launched during 1999 to maintain Larson-Davis' profitable growth and to position the Company as a significant participant in the multi-billion dollar scientific instrument market" Bebbington concluded.
Larson-Davis Inc., headquartered in Provo, Utah, develops, manufactures, and markets leading edge, ultra-sensitive analytical instrumentation for the chemical, gas, acoustics and vibration market. Its customers are major industrial companies as well as government and military agencies.
This press release contains certain forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those statements. These risks include, but are not limited to, the Company's ability to secure necessary funding, the completion of commercial products within projected time frames, market acceptance of resulting products, technological change, the Company's ability to defend its intellectual property rights, dependence on independent market representatives, competitive pressures, and the Company's ability to enter into strategic alliances. These factors and other risks are discussed in detail in the Company's filings with the Securities and Exchange Commission. |
