|
Montreal, November 03, 2008 – Transcontinental
Inc. today announced that Transcontinental Direct USA Inc.,
its direct mail subsidiary in the U.S., will consolidate production
from its Warminster, PA facility to its facility in Hamburg,
PA. One of fourteen groups currently operated by Transcontinental
Inc., this subsidiary represents about 10% of the Corporation’s
consolidated revenues.
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 must adjust
its capacity to current demand levels, thereby reducing its
overall cost base. The transfer of production will be complete
in January 2009, at which time Transcontinental Direct USA
will have a cost-effective production capacity of 3.5 billion
direct mail pieces per year, remaining a leader in the direct
mail industry in the United States.
A pre-tax restructuring charge of between $15M and $20M
(all figures quoted in Canadian dollars) will be charged to
income in the fourth quarter, and between $10M and $15M will
be charged to income in future quarters. More than a third
of this restructuring charge will have no impact on cash flow.
This charge covers workforce reduction costs, impairment of
assets and transfer of equipment and other costs. In light
of the significant deterioration of market conditions, the
Corporation also completed a goodwill impairment test for
its U.S. direct mail business. As a result, the Corporation
will completely write off the goodwill associated with this
business in the fourth quarter. The impairment amounting to
approximately $195M is a non-cash charge to income, and it
will not affect the Corporations’ liquidity, cash flows
from operating activities or debt covenants, or have any impact
on future operations. Net of related taxes, the impact of
these unusual items will total between $139M and $142M in
2008 (between $1.69 and $1.73 per share) and between $7M and
$10M in future quarters (between $0.09 and $0.12 per share).
“Following an extensive capacity review of our U.S.
direct mail operations, Transcontinental has acted to quickly
address the negative impact of current market conditions,
while continuing to meet the needs of our customers and giving
us the flexibility we need over the long-term,” said
François Olivier, President and Chief Executive Officer,
Transcontinental Inc. “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.”
Consolidation will result in the elimination of 460 positions
in Warminster. Affected employees will be offered separation
pay, outplacement assistance, and the opportunity to apply
for available positions in Hamburg.
Transcontinental Direct USA maintains its geographic footprint
in Pennsylvania, Texas and California, allowing customers
to control logistics costs, improve time to market and manage
their environmental impact. Combined with the company’s
various commingling operations, Transcontinental Direct USA
offers the most comprehensive national postal optimization
program in the industry.
About Transcontinental
The largest printer in Canada and sixth-largest
in North America, Transcontinental is also the country’s
leading publisher of consumer magazines and French-language
educational resources, and its second-largest community newspaper
publisher. Transcontinental distinguishes itself by creating
strategic partnerships that integrate the company into its
customers’ value chain, notably through its unique newspaper
printing outsourcing model and its value-added services. From
mass to highly personalized marketing, the company offers
its clients integrated solutions which include a continent-leading
direct marketing offering, a diverse digital platform and
a door-to-door advertising material distribution network.
Transcontinental is a company whose values, including respect,
innovation and integrity, are central to its operation.
Transcontinental (TSX: TCL.A, TCL.B) has more than 15,000
employees in Canada, the United States and Mexico, and reported
revenues of C$2.3 billion in 2007.
Note: This press release contains certain
forward-looking statements concerning the future performance
of the Corporation. Such statements, based on the current
expectations of management, inherently involve numerous risks
and uncertainties, known and unknown. We caution that all
forward-looking information is inherently uncertain and actual
results may differ materially from the assumptions, estimates
or expectations reflected or contained in the forward-looking
information, and that actual future performance will be affected
by a number of factors, many of which are beyond the Corporation’s
control, including, but not limited to, the economic situation,
exchange rate, energy costs, increased competition and the
Corporation’s capacity to implement its strategic plan
and cost-reduction program and make and integrate acquisitions
into its activities. The risks, uncertainties and other factors
that could influence actual results are described in the Corporation’s
Management’s Discussion and Analysis and the Annual
Information Form.
The forward-looking information in this release is based
on current expectations and information available as of November
3, 2008. The Corporation’s management disclaims any
intention or obligation to update or revise any forward-looking
statements unless otherwise required by the Securities Authorities.
-30-
For information:
Media
Nessa Prendergast
Director, Media Relations
Transcontinental Inc.
Telephone: (514) 954 2809
nessa.prendergast@transcontinental.ca
Financial Community
Jennifer F. McCaughey
Director, Investor Relations
Transcontinental Inc.
Telephone: (514) 954 2821
jennifer.mccaughey@transcontinental.ca
|
