AMRI has taken several initiatives in 4Q11 intended to shrink 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,” according to an AMRI statement. In November 2011, the company announced that it would exit all internal R&D activities.

The workforce reduction primarily affects personnel based in the company’s U.S. operations. In addition, AMRI will terminate the lease of one of its U.S. facilities, which will result in a reduction in annual operating expenses related to this facility. The company 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 1Q12.

In connection with the actions, AMRI will incur a pre-tax restructuring charge in 4Q11 of approximately $5-6 million, primarily related to lease-termination and employee severance costs. Approximately $5 million is a non-cash charge to write off fixed assets in association with the company’s plans to consolidate operations.

“As we stated in our announcement in November, we are committed to taking the necessary actions to reduce the company’s operating expenses to focus on our core contract research and manufacturing business and to ensure profitability,” said AMRI chairman, president and chief executive officer Thomas E. D’Ambra. “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.”