4 June 2003 Quebec City, Canada Lightwave--Fiber-optic test equipment supplier EXFO Electro-Optical Engineering Inc., announced a restructuring plan that will provide approximately U.S. $10 million in annualized pre-tax savings.
In order to adjust its cost structure to current market realities, EXFO is reducing its workforce by 30%, rationalizing its business activities, and consolidating some of its manufacturing operations. These cost-reduction initiatives are expected to lower the company's pro forma break-even level (excluding the after-tax effect of amortization of intangible assets, restructuring charges and other related charges) to approximately U.S. $18 million in quarterly sales.
Conversely, these measures will incur charges of approximately U.S. $4.8 million, of which U.S. $350,000 will be recorded in the third quarter of fiscal 2003 and the remainder mostly in the fourth quarter.
"EXFO has developed a strong market presence with network service providers around the world for almost 18 years and has extended this leadership into protocol-layer testing," said Germain Lamonde, chairman, president and CEO of EXFO. "However, continued depressed spending levels in the telecommunications industry, geo-political and economic uncertainty, and the impact of SARS lead us to adjust our cost structure in order to accelerate our return to profitability."
EXFO also revised its financial outlook for the third quarter of fiscal 2003. The company now anticipates sales of approximately U.S. $15 million for the third quarter ended May 31, 2003 compared to previously announced guidance of U.S. $16 million to $19 million.
Pro forma net loss is now expected to be between $0.06 and $0.07 per share, excluding the potential impact on earnings following a review of the carrying value of the company's assets. Prior guidance called for a pro forma net loss of U.S. $0.02 to U.S. $0.05 per share.
As stated above, EXFO is reviewing the carrying value of its assets including future income tax assets, goodwill, intangible assets, and inventories. Any adjustment, which would be recorded in the third quarter, will affect earnings.
The company will report third-quarter results for fiscal 2003 on June 26, 2003.