WebTech Wireless Inc.
TSX : WEW

WebTech Wireless Inc.

April 01, 2011 06:01 ET

WebTech Wireless Completes Restructuring of InterFleet

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 1, 2011) - WebTech Wireless Inc. (TSX:WEW), a leading provider of vehicle fleet location-based services and telematics technology, today announced that it has completed the previously announced review of its InterFleet operating subsidiary. The review has resulted in a restructuring of the InterFleet organization that is intended to eliminate more than $5,000,000 in annualized costs and expenses.

The restructuring involves significant changes to the Company's InterFleet operations including:

  • Reduction of approximately 20% of the Company's overall workforce;
  • Outsourcing of manufacturing formerly conducted at the Company's SMT (surface-mount technology) line in Toronto;
  • Closure of the New York City office;
  • Relocation of its Toronto office from the 20,000 square foot manufacturing and mixed-use office facility to a smaller office-only space;
  • Centralization of certain functions in the Vancouver headquarters of the Company and elimination of these functions at its Toronto and New York offices;
  • Greater coordination between the InterFleet® and Quadrant® development teams as the Company continues its telematics hardware and software integration programs; and
  • Continued investments in professional services and account management staff at Quadrant, InterFleet and NextBus®.

Total charges related to the restructuring are estimated at approximately $3,000,000 ($2,000,000 in cash and $1,000,000 in non-cash items). The full charge is expected to be recognized during the first quarter of 2011, with the cash to be paid out over the next several quarters. The cash charges relate to the outsourcing of the SMT line, staff reduction, reserves for office abandonment and other expense reserves and an expected non-cash charge related to the adjustment of inventory and other assets to Net Realizable Value.

"Since the change in leadership at InterFleet in early February, we have met with our key InterFleet customers to discuss their current and future product and service needs and subsequently determined that we can streamline operations without sacrificing our service levels or our ability to meet customer demand for product and services. These efficiencies support our goal of achieving profitability in the shortest time possible without impeding our ability to grow market share," said Scott Edmonds, President and CEO of WebTech Wireless. "These operational changes will allow us to improve our margins and operating results and decrease cash invested in inventory and capital assets. In addition, outsourcing the bulk of the production value chain will also allow us to improve product standards, increasing customer satisfaction and retention. An important metric we used in setting a target for these changes was to reduce our operating expenses such that they were lower than our recurring subscription revenues and we believe we have achieved that goal with these changes."

About WebTech Wireless®

WebTech Wireless Inc. (TSX:WEW) is a provider of vehicle fleet location-based services (LBS) and telematics technology. It develops, manufactures and supports end-to-end wireless solutions that improve the productivity, profitability, environmental compliance and safety of vehicle fleets. Its comprehensive suite of products and services include: automatic vehicle location (AVL), mapping, vehicle diagnostics, CO2 reporting, navigation, messaging, and mobile resource management. The Company serves customers of all sizes in the transport, government, service, insurance and OEM markets in over 45 countries, including Fortune 500 companies. Specialized products include: Quadrant® commercial fleet solutions, InterFleet® solutions for government, and NextBus® real-time passenger information services for transit fleets. For more information, please visit www.webtechwireless.com.

This News Release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements relate to, among other things, the reduction of costs and expenses, the size and timing of charges and the improvements in operating results, product standards and customer satisfaction anticipated to result from the restructuring, statements regarding the Company's business strategy, plans and profits and other expectations and intentions contained in this News Release that are not historical fact. The Company's expectations regarding the restructuring depend in part upon the Company's ability to terminate staff without issue, successfully relocate InterFleet's operations and improve its product standards and customer satisfaction. When used in this News Release, the words "intend", "plan" and "expect" and similar expressions generally identify forward-looking statements. These statements reflect the Company's current expectations. They are subject to a number of risks and uncertainties, including, but not limited to, the fact that it may cost more than anticipated to terminate staff and to relocate InterFleet's operations, it may take longer than anticipated to find a tenant to take on InterFleet's current lease, securing an outsourced manufacturer may result in a temporary or permanent increase in bill of materials and cost of sales, and the Company may have to replace certain terminated staff on a short term basis with external consultants. In light of the risks and uncertainties surrounding the restructuring, investors should understand that the Company cannot assure investors that the forward-looking statements contained in this News Release will be realized. All amounts in Canadian dollars (CAD$) unless otherwise noted. Trademarks are the property of their owners.

The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release.

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