Strategic restructuring expected to lower manufacturing and operating costs by approximately $15 million annually
Anadigics, the manufacturer of RF and optical products, is restructuring in order to lower its operating costs. As part of this process, it will be cutting 30 percent of its workforce, which will be around 140 positions throughout the company.
"With a strong infrastructure design-win trajectory, I'm pleased we're able to accelerate our strategy to expand in infrastructure markets, and with that, lower our fixed manufacturing and operating costs," said Ron Michels, chairman and CEO of Anadigics. "We believe that these steps, coupled with our previously announced $10 million cost-savings initiatives, should enable the Company to deliver significant EBITDA improvements and profitability leverage from a lower breakeven revenue level."
Since the 1Q14 earnings call, Anadigics says it has made stronger-than-expected progress in infrastructure-targeted activities and experienced a decline in demand for some of the company's legacy mobile products. In response, the company is expanding its presence in the infrastructure space (applications include cable television, cellular wireless small cell, WiFi and machine-to-machine) and reducing the fixed costs associated with the legacy mobile business, which includes RF power amplifier and front-end products for a variety of mobile applications including handsets, tablets and data cards in the cellular 3G/4G and WiFi markets. It will continue to focus on and support strategic mobile markets, and may expand its existing partnerships with external wafer foundries to benefit from the lower fixed cost business model those relationships can deliver.
Anadigics expects these measures will lower cash manufacturing and operating costs by over $15 million annually. These savings are in addition to a previously announced program targeting $10 million in annual savings. The company anticipates recording a cash workforce restructuring charge of approximately $2.3 million and a non-cash charge of approximately $5 million for fixed asset and inventory write downs. The proceeds from equipment sales are expected to substantially offset the cash costs of the restructuring. "We are aligning the Company's R&D investment focus and in-house manufacturing capacity toward a higher mix of infrastructure products," said Terry Gallagher, CFO of Anadigics. "The efficiencies gained through this action are expected to strengthen our presence in key infrastructure markets, reduce fixed costs and enable an expected EBITDA breakeven revenue level of approximately $26-27 million."