Martek Biosciences Announces Restructuring Plans for Winchester, Ky., Manufacturing Site
These actions are essential to Martek becoming a stronger and more efficient company that is better able to serve its customers, execute on its growth strategies, and create shareholder value.
1 Jul 2010 --- Martek Biosciences Corporation announced that it plans to restructure its Winchester, Ky., manufacturing facilities in an effort to streamline operations, improve capacity utilization, and reduce manufacturing costs and operating expenses. As part of the restructuring, to be completed by the end of fiscal 2010, Martek plans to reduce its workforce and transfer certain manufacturing and distribution processes currently being performed in Winchester, Ky., to the company's Kingstree, S.C., site. Martek plans to maintain a strong presence in Winchester after the restructuring, with approximately 50 highly skilled employees focused primarily on lab and pilot scale development, innovation and production, as well as supply-chain management.
These changes are consistent with the company's strategy to offset a significant portion of price reductions that result from its infant formula contract extensions by implementing manufacturing cost savings and product innovation initiatives, and by growing its non-infant formula business. Notwithstanding the plant restructuring, when combined with DSM's current ARA production capabilities, Martek's DHA and ARA production capacity will be substantially in excess of current and forecasted requirements for the next several years.
The company's workforce in Winchester will be reduced by approximately 45 people. In connection with this workforce reduction, Martek expects to incur total cash charges of approximately $1.5 million in fiscal 2010, of which $0.5 million will be recognized in the third quarter and $1.0 million in the fourth quarter of fiscal 2010. In addition, Martek is evaluating the potential sale or lease of a portion of its Winchester operations. Any such sale or lease would be contingent upon Martek's ability to maintain the necessary production redundancies through continuing access to certain key processes at the Winchester facility and/or arrangements with contract manufacturers.
Martek expects that the plant restructuring will likely result in a non-cash asset impairment charge or loss upon sale of $30 million - $40 million in the third or fourth quarter of fiscal 2010.
"These actions are essential to Martek becoming a stronger and more efficient company that is better able to serve its customers, execute on its growth strategies, and create shareholder value," said Steve Dubin, CEO of Martek Biosciences Corporation. "I continue to be encouraged by the demand for Martek's products as our base infant formula business is expected to post solid growth this year, our non-infant formula DHA business is growing rapidly, and our Amerifit division continues to perform well." Further information concerning the matters discussed in this press release will be provided on the company's third quarter fiscal year 2010 conference call which is expected to take place in early September.
