REPEAT/KVH to Improve Operating Expenses With Strategic Cost, Staff Reductions
June 29, 1998 05:47 PM
MIDDLETOWN, R.I.--(BUSINESS WIRE)--June 29, 1998--KVH Industries, Inc. KVHI today announced that it has begun implementing a plan that is leveraging information technologies to integrate different divisions and business segments. As a result of the process reengineering, the company is reducing its costs by approximately 20 percent overall through restructuring certain practices and personnel reductions in manufacturing, research and development, sales and marketing and administration.
"The reengineering was a consequence of KVH's commitment to having world-class business practices at every level," said A. Nath Srivastava, COO. "It supports other strategies we have implemented recently, such as the Fiber Optic Group acquisition, to increase product depth and strengthen our international presence."
Efforts are underway to reduce inventory levels, consolidate staff responsibilities, increase focus on high-potential product lines and streamline administrative functions. Production and manufacturing changes resulting from KVH's shift to new markets has enabled the company to reduce staff positions by some 15 percent from 145 employees at its corporate headquarters in Middletown, Rhode Island. The company also is consolidating sales and marketing efforts and streamlining R&D and manufacturing processes. KVH anticipates that these activities will speed product development and manufacturing turnaround times, enhance corporate visibility in the appropriate markets and decrease overhead with the ultimate goal of increasing operating margins.
"We have devised a restructuring plan that will maximize our operational efficiencies over the long term, with an underlying strategy that reflects a shift in the company's focus towards the broadband communications and high-end navigation markets that hold significant promise for the future of KVH," said Martin Kits van Heyningen, president and CEO. "KVH is at a juncture where costs related to new-product introductions and intense technological development have been exerting pressure on our earnings, and we are particularly committed to controlling expenses during this interim period."
New satellite communications products are achieving increased market penetration and KVH expects these revenues will be an important factor in improving earnings, particularly in conjunction with the reengineering effort. Communications revenues will be augmented by TracVision 45, which KVH just began shipping for television viewing by European mariners. In the navigation business, orders for TACNAV systems have been increasing. The company is encouraged by the potential for its fiber optic gyroscopes to broaden its product range in the military market.
KVH expects to release financial results of its 1998 second quarter on July 17. Write-offs related to the restructuring will be reflected in second-quarter results.
KVH Industries utilizes its proprietary fiber optic, autocalibration and sensor technologies to produce navigation and mobile satellite communications systems for commercial, military and marine applications. The company has headquarters in Middletown, RI, (USA) with offices in Illinois, Florida and Denmark.
This press release contains certain forward looking statements that involve risks and uncertainties. The actual results realized by the Company could differ materially from the statements made herein. Factors that might cause such differences include, but are not limited to: competing products and technologies; implementation of mobile satellite communications technology; market potential and penetration; reliability of outside vendors, service providers and products; regulatory issues; maintaining appropriate inventory levels; disparities between forecast and realized sales; and design delays and defects. Additional factors are discussed in the company's Annual Report on Form 10K filed with the Securities and Exchange Commission on March 25, 1998. Copies are available from the company's Corporate Communications Department.
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