Imaging player Analogic cuts 90 employees in China manufacturing move, offers SEC settlement
Analogic ($ALOG) is working to get its house in order as it launches a restructuring and offers a settlement to the Securities and Exchange Commission (SEC) to settle charges that date back to 2011. The company is moving some of its manufacturing to an existing facility in Shanghai, China, from Peabody, MA, and is trimming its R&D staff in its security business. All told, the reduction in force will hit 90 employees from the Peabody facility.
These moves come as the imaging company reports results for its 2015 fiscal year, which ended on July 31. It had revenues of $540 million, which were up 4% over 2014, and a non-GAAP EPS of $4.05, a gain of $0.53.
"We have decided to transfer production of selected subsystems in the Medical Imaging segment from Peabody to Shanghai where we expect more end customer demand. The transfer will enable our success in this fast growing market. Our Peabody facility will remain as our core manufacturing center," Analogic VP, interim CFO and treasurer Michael Bourque said on a Sept. 16 earnings call.
The restructuring is expected to result in about $6 million in pretax charges in fiscal 2016, with about $3 million of that to come in the first quarter. The company expects to save about $4 million during fiscal 2016 and an additional $9 million in fiscal 2017 due to the restructuring.
The company also disclosed as part of its earnings that it has offered a $1.6 million settlement to the SEC over issues that date back to 2011 regarding its Danish subsidiary and other foreign distributors. The company cautioned that even if it settles with the SEC, the U.S. Department of Justice or the Danish government may still seek sanctions or penalties.
Analogic said that it had started settlement talks with the SEC last quarter. The settlement was included as a reserve in the most recent quarter with an unfavorable impact of $0.12 to EPS on a GAAP basis.
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