Restructuring deals Fischer Imaging a loss

August 25, 1993

Fischer Imaging is restructuring operations to cut costs and realignits product lines and servicing, according to president and COORoberto A. Cascella. The restructuring has taken its toll on theDenver-based vendor's bottom line. A $1.3 million

Fischer Imaging is restructuring operations to cut costs and realignits product lines and servicing, according to president and COORoberto A. Cascella. The restructuring has taken its toll on theDenver-based vendor's bottom line.

A $1.3 million one-time charge that included the costs of therestructuring resulted in Fischer posting a $810,000 loss in thesecond quarter (end-July) against revenues of $19.4 million. Alongwith the $922,000 restructuring provision came a $365,000 chargefor settlement of a 1986 civil lawsuit. As a result, the vendorsuffered a loss despite a 17% increase in revenue over the sameperiod in 1992 and overall company profitability, Cascella said.

As part of the reorganization, the company will close its salesand service branches and create a central dispatch office thatwill cut overhead by consolidating all administrative servicestaff in Denver. The company is not pulling out of service, however,and is in fact adding service engineers on the East Coast, Cascellasaid.

All calls for service will now go directly to company headquartersin Denver, and the appropriate service engineer will be dispatchedfrom there. This will enable Fischer to better monitor the flowof service throughout the U.S., Cascella said.

Regional managers and service engineers will remain in theircurrent locations. Since most of those personnel do not work outof the service offices, the facilities' value was minimal, hesaid. Sales personnel will also not be affected as they typicallywork out of their home or on the road and have very little involvementwith the service offices, Cascella said.

As part of the restructuring, Fischer also moved manufacturingfor the Traumex product line and a mobile C-arm from Denver toits radiographic manufacturing facility in Addison, IL. Movinginto the Denver factory will be electrophysiology monitoring productsfrom the Reading, PA-based Bloom Associates subsidiary, whichwill be closed. Fischer hopes to combine its Epic electrophysiologyimaging computer with Bloom's Epace electrophysiology monitoringcomputer on one standard 486 platform, Cascella said.

"We felt (moving Bloom) had both an engineering and developmentbenefit as well as a cost-reduction and cost-containment benefit,"he said.

The Denver factory will now focus on the company's mammography,electrophysiology and special procedures equipment, Cascella said.

Between 30 to 40 layoffs will occur due to the restructuring,most of which have already taken place, Cascella said. The layoffswere primarily indirect manufacturing positions at the Denverfactory. In addition, senior management will take a temporary10% pay cut.

While sales of Athena, an upright diagnostic mammography unit,have remained flat, sales of Mammotest, a stereotactic breastbiopsy system, and Mammovision, a digital mammography system releasedlate last year, have gone very well, Cascella said (SCAN 10/07/92).

"A much higher percentage of new Mammotest orders aregoing with Mammovision than what we originally believed wouldoccur," he said.

The areas of breast biopsy, digital mammography and electrophysiologywill be Fischer's focus for the future, Cascella said.

Fischer's general x-ray products have suffered a downturn,due to market uncertainty caused by the coming health-care reforms,Cascella said.

"There is a lot of confusion as to what the results ofClintonomics will do to health reform, and I think a lot of peopleare just waiting to spend their money," he said. "That'snot a bad thing, but it certainly does have a ramification onour business. We really don't think that will resolve itself probablyuntil the first quarter of 1994."

The vendor sees Europe as a market with much potential, especiallyin the areas of breast biopsy and electrophysiology. In January,Fischer opened a sales and service office, Fischer Imaging EuropeA/S, in Copenhagen, Denmark. Fischer is devoting extensive resourcesto both researching and investing in European markets, Cascellasaid.

"We are in the process of hiring more people to coverour European interests," he said. "We believe the Europeanmarket holds much opportunity for us."

BRIEFLY NOTED:

  • The French government agency CEA-I flexed its muscle oversubsidiary Sopha Medical S.A. of France this month by removingRaymond Chastel as president of the MRI and gamma camera developer.The move had beneficial consequences for the head of Sopha's U.S.operations, however. Sopha's U.S. president, Colin J. McNaught,was tapped to replace Chastel as head of the French parent company.

CEA-I won control over Sopha's destiny after acquiring a majoritystake in the French company this spring (SCAN 4/7/93). CEA-I isthe for-profit division of the French government's Atomic EnergyCommission.

McNaught's appointment awaits approval by Sopha's board ofdirectors. He will continue to serve as president of Sopha's U.S.subsidiary, according to the company.

  • Lucky Goldstar Group of Seoul will sell its stake in jointventure Siemens Goldstar Medical Systems, according to a reportin The Asian Wall Street Journal. The South Korean conglomerateplans to cut the number of its subsidiaries to 41 from 54.

  • GE Medical System's Japanese joint venture Yokogawa MedicalSystem has purchased 68% of Tanaka Roentgen, a Japanese manufacturerof compact x-ray equipment, according to Comline News Service.Apart from adding some new products, YMS will expand its distributionnetwork with the acquisition. The new company will be named GETanaka Medical Systems.