xG Technology (XGTI) Sees $2M+ of Annual Cost Savings Following IMT Acquisition
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xG Technology, Inc. (Nasdaq: XGTI) announced that it is on track to record annual cost savings exceeding $2.0M resulting from synergies realized by the acquisition of Integrated Microwave Technologies (IMT). This is above the amount forecasted in February 2016 when the acquisition was concluded, and includes cost reductions that have already been recorded as well as ones that are still coming.
Among the areas where cost reductions have been and/or will be realized since IMT became a business unit of xG are the following:
- Rightsizing of staff levels to align headcount with near and mid-term realizable revenue opportunities. This has included replacing contractors used in both the xMax and IMT business units, and integrating the engineering talent of both business units to support product and technology development efforts for all product lines. This has resulted in a reduction in costs of approximately $700,000 annually;
- Relocation of all manufacturing of xMax products to IMT's facility in New Jersey, which will result in savings of up to $700,000 per year;
- Downsizing the company's Fort Lauderdale facility, resulting in savings of approximately $150,000 per year;
- Efficiencies resulting from unification of the sales operations of the xMax and IMT business units under common sales management, which will provide savings of approximately $175,000 annually;
- Expected continuing savings in lease and related costs as operations in New Jersey are rightsized, amounting to an additional $150,000 to $200,000 per year;
- Costs reductions realized in the Company's internal software application licensing contracts, web site development and hosting fees, and fees paid to external public relations and other contractors, resulting in savings of approximately $50,000 per year;
- Significant enhancements made to the Company's accounting processes and functions, resulting in increased efficiencies and better operational compliance.
In addition to driving cost savings, cross-training of personnel to provide integrated solutions incorporating both xMax and IMT products enables xG to identify and close on new business opportunities. The most recent example of this was the recently announced $3.0M award xG won in partnership with the Southwest Research Institute for a spectrum sharing technology prototype.
George Schmitt, CEO and Chairman of the Board of xG Technology, said, "We continue to streamline our operations consistent with the efficiencies we envisioned attaining when we acquired IMT. We are realizing significant savings in all key operational areas, including staff headcount levels, sales, manufacturing, production and technology development. We expect this trend to continue as we deliver on our goal of monetizing our technology assets and identifying new business opportunities."
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