WALLA WALLA -- Key Technology Inc. cut roughly 11 percent of its work force Thursday and announced a stock repurchase program in a multifaceted strategy to financially strengthen the manufacturing firm.
"Recent results are not acceptable as benchmarks for future performance," Key President and Chief Executive Officer Jack Ehren said in the announcement. "We are committed to returning the company to profitability in the short-term, while also executing a long-term vision and strategy that will ensure sustainable success and results for our shareholders, customers and employees."
The changes came nearly one week after former CEO David Camp resigned, and Ehren was named his successor.
The company's stock on the NASDAQ Global Markets was trading at $12.51 per share the day the transition was announced. The price has fallen since, and closed Thursday at $9.50 per share.
Ehren said the reduction equates to roughly 45 or 50 positions, primarily in Walla Walla. Five to 10 of those were positions that had previously been vacated and are not being filled.
Employees affected by the change were notified Thursday, he said. The laid-off workers will receive severance packages, including career transition services. The job cuts were spread among the many levels of employment at Key.
The company expects to take a pre-tax charge of about $1 million against earnings for termination benefits related to the cuts.
About two-thirds of the operating expense reductions are estimated to be from work force cuts. The remainder will be in reducing costs in operations for the company, a designer and manufacturer of process automation systems used in food processing, industrial and pharmaceutical markets.
Ehren said he is "extremely aware" of the impact to the work force and families and said the company "lost very good people." He said no further job cuts are anticipated.
Further investment from shareholders could come through the stock repurchase program. The company's board of directors has authorized the purchase of up to 500,000 shares of outstanding common stock under a new program to be managed by Needham & Company.
"This stock repurchase program will provide increased liquidity opportunities for some of our shareholders, while also providing what we think will be a good investment for our continuing shareholders," Ehren said.
Vicki Hillhouse can be reached at firstname.lastname@example.org or 526-8321.