WALTHAM, Mass., May 22 /PRNewswire-FirstCall/ -- Inverness Medical Innovations, Inc. (Amex: IMA - News) announced today that on May 16, 2006, as part of an ongoing review of its worldwide operations for the purpose of improving efficiency, lowering operating costs and improving margins, it committed to a plan to cease operations at its Applied Biotech Inc (ABI) and Scandinavian Micro Biodevices ApS (SMB) subsidiaries, and to write off certain excess manufacturing equipment at other impacted facilities. The Company made its final determination to implement the restructuring after completing its acquisition last week of a newly-constructed manufacturing facility in Hangzhou, China from ACON Laboratories, Inc. and certain of its affiliates.
After a period of transition, customers currently supplied with product manufactured at ABI will be supplied with product manufactured in the Company’s new facility in Hangzhou, China; while certain equipment and research activities currently conducted at SMB will be transferred to the Company’s Bedford, England and Stirling, Scotland facilities. The ABI shutdown and the closure of SMB were announced on May 22, 2006, and are expected to be completed during the first quarter of 2007.
Total charges to be incurred in connection with the plant closing are expected to be approximately $16.8 million, including severance costs of approximately $4.5 million, other cash expenditures of approximately $1.4 million, principally associated with lease termination costs, and non-cash fixed and current asset charges totaling approximately $10.9 million. Offsetting these charges, we expect to record a non-cash foreign exchange gain of approximately $5.2 million associated with the completion of the previously announced closure of our CDIL facility and a cash gain of approximately $1.0 million associated with the completion of the sale of our interest in CDIL’s former principal manufacturing facility. The charges, net of the gains noted above, will be recognized over the course of the plant closing consistent with accounting principles generally accepted in the United States of America and are expected to be approximately $6.6 million, $1.7 million and $2.0 million in the second quarter, third and fourth quarters of 2006 and $0.7 million in the first quarter of 2007.
Savings generated though lower manufacturing costs and reduced general and administrative expenses are expected to be $0.7 million during 2006 and approximately $6.2 million during 2007 and thereafter. Additional savings are anticipated to be derived from the benefits of manufacturing in the anticipated lower cost environment of the facility in Hangzhou, the timing and amount of which will depend on the timing of product transfers and substitutions over the balance of 2006.
Inverness Medical Innovations is a leading global developer of advanced diagnostic devices and is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications including immuno-diagnostics with a focus on women’s health, cardiology and infectious disease. Inverness’ new product development efforts, as well as its position as a leading supplier of consumer pregnancy and fertility/ovulation tests and rapid point-of-care diagnostics, are supported by the strength of its intellectual property portfolio. Inverness is headquartered in Waltham, Massachusetts.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com.
This press release may contain forward-looking statements within the meaning of the federal securities laws. These statements reflect Inverness’ current views with respect to future events and are based on management’s current assumptions and information currently available. Actual results may differ materially due to numerous factors, including without limitation, the ability of Inverness to transition the operations of its subsidiaries, Applied Biotech, Inc. and Scandinavian Micro Biodevices ApS, to its other facilities in an efficient, effective and timely manner; to successfully integrate into its facilities the manufacturing and distribution of new products and the operations of acquired companies or businesses; to expand, as planned, production at its recently acquired manufacturing facility in China; to avoid manufacturing problems or delays at its facilities or the facilities of its third party manufacturers, including problems with suppliers or access to necessary materials; to comply with regulatory, permitting or licensing issues at its facilities; and to otherwise manage the risks and uncertainties described in Inverness’ annual report on Form 10-K for the fiscal year ended December 31, 2005 and in its subsequent periodic reports filed with the Securities and Exchange Commission. Inverness undertakes no obligation to update any forward-looking statements.
Contact: Doug Guarino, Director of Corporate Relations 781 647 3900 Source: Inverness Medical Innovations, Inc.