Align Technology Inc. Q3 2008 Earnings Call Transcript

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2008-10-28 18:39:09.0

Tags: P&L, Savings, Call Transcript, Earnings, Costa Rica, Align Technology Inc., Seeking Alpha, P&L, Savings, Call Transcript, Earnings, Costa Rica, Align Technology Inc., Seeking Alpha

Question-and-Answer Session

Operator

Thank you. Ladies and gentlemen we will now be conducting the question and answer session. (Operator instructions). Our first question is from Mr. Tao Levy with Deutsche Bank, please proceed with your question.

Unidentified Analyst

This is Seth for Tao can you hear me okay?

Tom Prescott

Yes we can Seth go ahead.

Unidentified Analyst

Yeah I've got a little echo on my -- sorry. So to first, maybe if we could touch on the restructuring program you talked about and, specifically, the Shared Service organization. Could you talk a little bit about the jobs you are going to move to Costa Rica? And also you said you are going to have about $12 million to $15 million in annual savings, so when can we start to see those in the P&L?

Tom Prescott

I'll start and then ask Ken to provide some commentary on the numbers and how that phases into the P&L. We are moving a large part of our customer facing organization that includes customer care, that includes credit collections, as well some back office finance and a few other roles. In addition to that new Shared Services facility in Costa Rica will be putting in, we are also moving some software development to Moscow which is not part of that but part of our restructuring.

I'll ask Ken to speak to the numbers and how the phasing will occur.

Ken Arola

Hey Seth this is Ken, as far as the headcount reductions are concerned out of the 110 people about 52 of those people will be transitioning jobs down to Costa Rica. And that's going to occur between now and the middle of 2009. So the way you need to think about that is the phased approach of that and so we'll get about a half a year of savings out of that transition, after we factor in the fact that we are going to add people in Costa Rica, but at a lower cost base.

The other 48 or 50 people that are being released from the Company between now and the end of January will have a full year impact on headcount and salary savings. And that's about half of the overall savings that we described of $12 million to $15 million. The other half of the $12 million to $15 million is coming from discretionary spending [asset] Company.

Unidentified Analyst

Okay that helps. Also the -- you also mentioned 10 to 12 in savings from the other restructuring. Some of that, it sounded like, was due to the reduction of [plant] hires. So are there any sales force in those [plant] hires that are being reduced and again when can we expect that to hit the P&L as well?

 

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