EXFO Lays Off 30%

Says restructuring plan will provide approximately US$10 million in annualized pre-tax savings

June 4, 2003

2 Min Read

QUEBEC CITY -- EXFO Electro-Optical Engineering Inc. (NASDAQ: EXFO, TSX: EXF) announced today a restructuring plan that will provide approximately US$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 US$18 million in quarterly sales.

Conversely, these measures will incur charges of approximately US$4.8 million, of which US$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 US$15 million for the third quarter ended May 31, 2003 compared to previously announced guidance of US$16 to US$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 US$0.02 to US$0.05 per share.

EXFO Electro-Optical Engineering Inc.

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