Business News
Franklin Electronic Publishers Slashes Operating Costs
Wednesday 11. March 2009 - Franklin Electronic Publishers, Incorporated (NYSE Alternext US: FEP) today announced the reduction of 22% of its global workforce.
Combined with other operating cost reductions, the Company expects to realize an annualized net savings of approximately $3,600,000 in future periods inclusive of the cost cutting initiative executed in mid-2008.
The Company expects to take a charge to earnings of $600,000 during the current quarter consisting of separation payments and other one-time costs associated with these cost reductions. The company is also expected to take a non-cash goodwill impairment charge of $500,000 related to the goodwill allocated to its data conversion subsidiary, Kreutzfeldt Electronic Publishing GmbH (KEP) in Hamburg, Germany.
The Company had previously instituted a global hiring and salary freeze in face of the continued economic turmoil and its impact on consumer spending in its global markets. These personnel and operating cost reductions are across the board in virtually all operating areas of the Company including warehouse operations, product development, marketing, finance, sales, licensing and European operations as well as legal costs.
The workforce reductions in product development are in both the US and in Europe with the opening of insolvency proceedings by the managing directors of KEP, our data conversion subsidiary in Hamburg, Germany, which has been unable to sustain enough third party business to fund its ongoing operations. The Company will transition some of these product development functions to its Hong Kong facility and outsource certain others.
“This is the most difficult part of my job as CEO. We are a ‘small big’ company and I have personally known all of the affected individuals. With our employees being the most important asset of our Company, I want to thank each and every one not only for their contribution over the years but for their dedication, loyalty and support. The Franklin family will surely miss them,” said Barry J Lipsky, Franklin’s president and CEO. “We are witnessing economic upheaval not experienced in a generation, and it calls for unprecedented and difficult decisions. I am confident, however, that with these cost reductions our Company can continue to generate cash and ultimately build a better and stronger future,” he added.