The financial market turmoil has forced Montreal-based printer and direct-mail company Transcontinental Inc. to close a U.S. plant, cutting 460 jobs, and taking hits on both the profit statement and balance sheet.
The company said Monday that the Warminster, Pa., plant operated by its U.S. direct-mail subsidiary will be closed by January 2009.
"The turmoil affecting financial markets is having a major impact on the marketing programs of financial institutions, which represent a large portion of Transcontinental's direct mail customers in the U.S.," Transcontinental said in a news release.
The company will take a pre-tax restructuring charge of between $15 million to $20 million this year, and $10 million to $15 million in future quarters to cover the cost of layoffs, impairment of assets and transfer of equipment.
It will also write off about $195 million in goodwill associated with the U.S. direct mail business. After taxes, that unusual item will cost Transcontinental between $139 million ($1.69 a share) and $142 million ($1.73 a share) in 2008, and $7 million to $10 million in future quarters.
Work at the Warminster plant in being moved to the company's operation in Hamburg, Pa. It will still be able to produce 3.5 billion direct mail pieces a year in the United States.
"We believe that direct mail will remain a valued marketing tool for our clients in the future. These immediate decisions are not easy and we are sensitive to the impact they have on our employees and their families," president and CEO François Olivier said.
The Warminster employees will be offered separation pay, outplacement assistance and the chance to apply for jobs in Hamburg.
Transcontinental Class A shares closed up 32 cents at $12.52 in TSX trading.
Transcontinental is the largest printer in Canada and sixth-largest in North America. It also publishes consumer magazines, French-language educational materials, and community newspapers. It has more than 15,000 employees.