Martek To Slash Work Force; Expects Charges In Q3, Q4 – Update
(RTTNews) – Martek Biosciences Corp. (MATK), Wednesday revealed plans to reduce its workforce as part of restructuring at the Winchester, Kentucky manufacturing facilities and expects to incur charges in this connection during the third and fourth quarters of fiscal year 2010.
The restructuring is slated for completion by the end of fiscal year 2010 and is aimed at streamlining operations, improving capacity utilization and reducing manufacturing costs and operating expenses.
Martek also said it was evaluating options for the potential sale or lease of a portion of its Winchester operations.
As part of restructuring, work force at the Winchester plant will be reduced to 45, while some of the manufacturing and distribution processes will be transferred to Kingstree.
Downsizing is expected to recognize a cash charge of around $1.5 million in fiscal year 2010, of which $0.5 million will be realized in the third quarter and $1.0 million in the fourth quarter. Plant restructuring is expected to incur a non-cash asset impairment charge or loss upon sale of $30 million – $40 million in the third or fourth quarter of fiscal year 2010.
However, Martek also said it intends to maintain a strong presence in Winchester, with around 50 highly skilled employees focused primarily on lab and pilot scale development, innovation and production, as well as supply-chain management.
Commenting on the restructuring, the company indicated the move as part of its strategy to offset a significant portion of price reductions by implementing manufacturing cost savings and product innovation initiatives, as well as growing its non-infant formula business.
Steve Dubin, CEO said, “I continue to be encouraged by the demand for Martek’s products as our base infant formula business is expected to post solid growth this year, our non-infant formula DHA business is growing rapidly, and our Amerifit division continues to perform well.”
MATK closed Wednesday’s regular trading at $23.71, up $0.07 or 0.30%, on a volume of 0.30 million shares. In after-hours, the stock gained $0.00 or 0.00%, trading at $23.89.
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