November 3, 2008 / 3:35 PM / 10 years ago

UPDATE 1-Transcontinental to cut staff, take charges

* To close Pennsylvania plant, cut 460 jobs

* To write down C$195 million in goodwill

TORONTO, Nov 3 (Reuters) - Canadian printer Transcontinental Inc (TCLa.TO) said on Monday it will close one of its direct mail facilities in Pennsylvania and cut 460 jobs because the financial crisis has damaged marketing programs.

The company said Transcontinental Direct USA Inc, its direct mail subsidiary in the United States, will shift production from its Warminster, Pennsylvania, facility to its plant in Hamburg, Pennsylvania. The transfer is expected to be complete by January 2009.

The company expects to take a pretax restructuring charge of $15 million ($12.6 million) to C$20 million in the fourth quarter and of C$10 million to C$15 million in future quarters. More than a third of this restructuring charge will have no impact on cash flow, Transcontinental said in a release.

The charge covers work force reduction costs, impairment of assets and transfer of equipment and other costs.

Transcontinental also said it plans to write off the goodwill associated with its U.S. direct mail business due to “a deterioration of market conditions”.

This will result in a total noncash charge of about C$195 million. Of the amount, C$139 million to C$142 million (C$1.69 to C$1.73 a share) will be taken in 2008; and C$7 million to C$10 million (9 Canadian cents to 12 Canadian cents a share) will be taken in future quarters.

“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,” Francois Olivier, president and chief executive, said in a release. ($1=$1.19 Canadian) (Reporting by Scott Anderson; Editing by Peter Galloway)

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