SAN JOSE, Calif. -- Align Technology, Inc. announced plans to consolidate its CAD/CAM services and scanner-related activities based in Carlstadt, NJ, with its existing manufacturing and shared services organizations in order to optimize efficiency, consolidate customer-facing functions, and reduce operating costs. All existing scanner research and development and manufacturing operations will remain in Or Yehuda, Israel. These actions include a phased transition of the following activities over the next few quarters:
- Consolidation of CAD/CAM services and scanner customer care into Align's existing shared services organization in San Jose, Costa Rica
- Transition of CAD/CAM services and scanner distribution and repair to Align's state-of-the-art Treat operations in San Jose, Costa Rica, and world-class manufacturing facilities in Juarez, Mexico
- Consolidation of accounting and finance functions at Align's corporate headquarters in San Jose, Calif.
- Closure of the New Jersey facility by the third quarter of 2012
"After acquiring Cadent, our initial integration focus was on identifying revenue synergies and leveraging Align's sales and marketing resources to better drive and support go-to-market initiatives for iTero and iOC scanners. Now, with the bulk of integration well underway, we can accelerate other initiatives such as enhancing the customer experience, improving operational efficiency, and reducing costs," said Thomas M. Prescott, president and CEO of Align Technology. "As a result of today's announcement, many valued employees will be impacted. These actions, while difficult, are necessary to create the most streamlined service for customers and optimize efficiency across the business. Once the consolidation is complete, we expect to realize annual net savings of approximately $4.0 million per year."
The consolidation of Align's New Jersey operations includes a total reduction of 119 full-time headcount in Carlstadt, NJ. The transition will begin in the fourth quarter of 2011 and is expected to be completed by the third quarter of 2012. As part of this consolidation, Align will incur costs for severance estimated to be approximately $2 million, of which approximately $1.1 million will be realized in 2011 and $0.9 million over the first three quarters of 2012. The company does not expect this to be material to its fiscal 2011 GAAP and non-GAAP diluted EPS. As of June 30, 2011, Align had a regular employee base of approximately 2,400 worldwide.
Align also announced that it has closed on the purchase of land and a manufacturing facility in Juarez, Mexico, adding approximately 150,000 square feet of space. This new property is in addition to the company's existing world-class manufacturing facility in Juarez. As previously disclosed, Align paid approximately $3.2 million in cash for the property and plans to transition its aligner fabrication and scanner-related activities into this facility in 2012.
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