Keithley Instruments, Inc. (NYSE: KEI), a world leader in advanced electrical test instruments and systems, today announced that it is discontinuing its S600 Series parametric test product line. The Company will continue to accept orders for S600 Series testers until February 2010 and will continue to provide technical support, calibration, and repair services for five years through February 2014.
Joseph P. Keithley, the Company’s Chairman, stated, “The financial crisis that has precipitated the global economic recession has analysts now projecting capital equipment spending for semiconductor production applications down 25-40 percent in 2009 after contracting roughly 25 percent in 2008. Device companies continue to announce push-outs of new 300mm fabs to 2010 and beyond from dates given earlier. Semiconductor manufacturing foundries do not expect device demand to return to 2008 levels before 2012. Orders for our S600 Series product line serving these customers have been declining now for many quarters. Based on these facts and because we do not expect to be able to achieve results from this product line that are consistent with our business model, we have made the extremely difficult decision to discontinue the product line. We remain focused on managing our liquidity and aligning our cost structure with the current economic reality.”
“Keithley has been serving semiconductor customers for many decades with a broad range of products for research, development, and production applications. Our commitment to the semiconductor industry and to our customers remains strong despite this action. Although we will no longer pursue fully-automated high-volume parametric test applications, we remain focused on serving the industry’s R&D and low-volume production test applications with our DC instrumentation, Model 4200 Semiconductor Characterization System, and Automated Characterization Suite (ACS) family,” stated Keithley.
Sales from the Company’s S600 Series products have not represented a significant portion of total revenue since mid-2007. Furthermore, the product line has been characterized by quarterly order volatility over the years. The Company believes that exiting this product line should lessen the Company’s overall volatility.
The Company currently estimates that the annualized cost savings associated with this action will approximate $4 million. The estimated cost of this action is expected to be between $5 and $6 million on a pre-tax basis, which includes approximately $1.2 million for a six percent worldwide reduction in force and approximately $4 to $5 million for non-cash asset impairment charges. The majority of the costs are expected to be incurred during the Company’s second quarter of fiscal 2009.