Standard Register Announces Strategic Restructuring, Workforce Reduction
Costs associated with the restructuring program are expected to reduce fourth quarter 2011 earnings by approximately $5.5 million net of tax. The balance of the costs will reduce 2012 earnings by approximately $1.5 million net of tax.
Standard Register will also record a non-cash charge to tax expense of $70-$90 million to establish a valuation allowance against certain deferred tax assets. 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 its fourth quarter 2011 revenue to be $160-$162 million and to post a pretax loss o -$9.6 million 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-$1.8 million representing growth as compared to the third quarter 2011 (which also excludes the impact of the postretirement plan amendment).
Standard Register also announced the suspension of its quarterly dividend in keeping with Ohio law, which requires that cash dividends be paid only out of a corporation’s statutory surplus. Because of the decline in book equity related to additional fourth quarter actuarial losses in the company’s pension plan and the valuation allowance established against deferred tax assets, there is not currently a statutory surplus.
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