Aegis Communication Reports Pretax Restructuring ChargeAegis Communications Group reports it will take a pretax restructuring charge of $13 million, or 16 cents per share, for the quarter ending Sept. 30 in connection with the recently completed stock-for-stock merger of ATC Communications Group Inc. and IQI Inc., which formed Aegis.
The charge is a natural result of the restructuring plan for the company to integrate each of ATC's and IQI's best practices and leverage existing infrastructure, said analysts. The company expects to achieve efficiencies and improve capacity utilization.
"The integration plan, which we have already begun executing, drives changes that will allow the fullest attainment of our combined companies' complementary operational strengths," said Stephen A. McNeely, president/CEO of Aegis. "By aggressively taking advantage of Aegis' merged strengths and migrating to a common information technology platform, we will accelerate growth."
The charge consists of one-time write-offs of redundant hardware and software; costs of conversion to common accounting, reporting and information technology platforms; and consolidation of certain functions including costs to relocate administrative offices and employees, costs to migrate certain locations, severance and other associated expenses.
In addition, Aegis said its fiscal year will end on Dec. 31 instead of June 30, while ATC will file its annual report on June 30.
The company also said it settled a $2.4 million judgment against it in a Kansas contract dispute for $1.9 million, rather than proceed with the original intention of appealing the case. "We continue to believe the judgment was in error," said the company in a released statement, but consideration of costs and potential distraction of management prompted the move. Dilutive effects are not expected, said analysts, because of the additional $4 million in financing contributed by Thayer Equity Investors III, the company's largest shareholder.
As part of the settlement, the plaintiff also agreed to exercise its option (granted on Dec. 21, 1994) to acquire 225,000 shares of the company's common stock for $1 per share by Sept. 15, 1998. In addition, the company obtained a full release and waiver of the plaintiff's claims in connection with the Kansas matter.
The merged company has more than 8,500 employees, 26 customer service centers and an Atlanta market research firm.