Standard Register (NYSE:SR), a leader in the management and execution of mission-critical communications, today announced a strategic restructuring program to better align the Company’s resources in support of its growing core solutions business and to reduce costs to offset the impact of declining revenue in its legacy operations. The restructuring is expected to result in an estimated $45 million in annual savings and the elimination of 12% to 15% of its workforce over the next 6 to 9 months. Costs associated with the restructuring program are expected to reduce fourth quarter 2011 earnings by approximately $5.5 million, or $0.11 per share, net of tax. The balance of the costs will reduce 2012 earnings by approximately $1.5 million, or $0.03 per share, net of tax.
The Company will also record a non-cash charge to tax expense of $70 to $90 million to establish a valuation allowance against certain deferred tax assets, which will reduce earnings per share by $2.40 to $3.10 in the fourth quarter. The action is necessary under accounting standards that require recording a valuation allowance when it is more likely than not that a portion of the asset will not be realized. The valuation allowance will be maintained until sufficient evidence exists to support its reversal.
Additionally, the Company will record a non-cash actuarial loss of approximately $80 million to other comprehensive income within equity as a result of actual pension asset performance as compared to actuarial assumptions and liability increases caused by continued declines in the discount rate. The recording of this loss has no impact on 2011 earnings.
On a preliminary basis, the Company expects fourth quarter 2011 revenue to be $160 to $162 million and pretax losses to be ($9.6) to ($10.1) million. On a non-GAAP basis, pretax income (excluding the impact of pension amortization and settlement and restructuring costs) is expected to be $1.3 to $1.8 million representing growth as compared to the third quarter 2011 (which also excludes the impact of the postretirement plan amendment).
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