AMRI will reduce the company's workforce, right size capacity, and reduce operating costs in 2012. The actions will better align the business to current and expected market conditions and are expected to improve the company's overall cost competitiveness and increase cash flow generation.
The workforce reduction primarily affects personnel based in the company's U.S. operations and includes certain positions associated with the previously announced decision to wind down all internal R&D activities as the company enters 2012. In addition, the company will be terminating the lease of one of its U.S. facilities, which will result in a reduction in annual operating expenses related to this facility. AMRI expects that these cost-reduction initiatives will result in annual savings of approximately $10-11 million, including $7 million relating to the previously announced cessation of R&D activities, and that these savings will begin to be recognized in the first quarter of 2012.
AMRI expects to incur a pre-tax restructuring charge in the fourth quarter of approximately $5-6 million, primarily related to lease-termination and employee severance costs of which $5 million is a non-cash charge to write off fixed assets in association with the company's plans to consolidate operations.
"These actions will place AMRI in a more cost-competitive position while ensuring we continue to provide the highest quality service to our clients. We are moving quickly on these carefully considered actions and expect them to positively impact cash flow during the next year. Although our outlook for growth in outsourced contract services by global pharmaceutical companies remains positive, as evidenced by our recent strategic deals, we continue to evaluate our global infrastructure for additional opportunities to streamline our operations and reduce cost," said AMRI Chairman, president and CEO Thomas E. D'Ambra.