Standard Register Reports 2005 Second Quarter Results DAYTON, Ohio,
July 28 /PRNewswire-FirstCall/ -- Standard Register (NYSE:SR) today
reported financial results for the second quarter ended July 3,
2005. Results of Operations Standard Register today reported
revenue growth and significant operating profit improvements for
both the quarter and year-to-date periods. Revenue for the second
quarter 2005 was $225.5 million, a 2.1 percent increase over the
$220.9 million result for the same quarter of 2004. Through the
first half of the year revenue was $457.4 million, 3.7 percent
ahead of the $441.1 million reported for the first six months of
2004. For the quarter, pretax income from continuing operations was
$0.4 million compared to a pretax loss of $6.3 million in the prior
year. For the first six months of the year, pretax income from
continuing operations was $4.3 million vs. a loss in 2004 of $17.4
million. [Results appear in the table that follows.] "We have seen
revenue growth in our core business, despite a very competitive
marketplace, and have also seen good progress in the top line of
several of our new initiatives. We continue to make good progress
in recovering the higher paper costs levied over the past 18 months
and have trimmed costs and improved productivity, all of which has
helped our bottom line," said Dennis L. Rediker, Standard
Register's chief executive officer. The state of Ohio enacted new
tax legislation in June that had a significant unfavorable effect
on second quarter earnings after tax. The new legislation replaced
income and property taxes with a revenue based tax that effectively
wiped away most of the Company's Ohio deferred tax assets. This
change increased accrued income tax expense and reduced net income
by $2.9 million, equivalent to $0.10 per share. Going forward, the
new legislation is expected to have a neutral effect to Standard
Register's net income when compared to the prior tax calculation
methodology. An updated actuarial analysis, based on final 2004
census data, indicates lower total pension expense for 2005 than
originally estimated - $23.8 million vs. $27.2 million. A $0.9
million favorable adjustment was made in the second quarter to
conform the first half expense to 50 percent of the expected annual
amount. Approximately $19.0 million of the $23.8 million in annual
2005 expense relates to the non-cash amortization of past pension
losses. The Company also incurred $1.5 million of restructuring
expense in the quarter, most related to cost reductions undertaken
at InSystems. Revenue at InSystems showed modest growth in the
quarter on the strength of a pick-up in new license sales. In
addition, a $0.4 million after tax gain was recorded in the quarter
as an adjustment related to the previous sale of the Company's
equipment service business, as post-closing contract details are
being wound down. The effects on earnings of restructuring,
impairment, pension loss amortization, the Ohio tax law change, and
the adjustment to the gain on sale are displayed in the table
below. [$ millions] Effect on Effect on Second Quarter Income
Year-to-Date Income 2005 2004 Chg 2005 2004 Chg CONTINUING
OPERATIONS Restructuring Expense -1.5 -2.2 0.7 -2.0 -5.5 3.5
Impairment Expense 0.0 -0.8 0.8 0.0 -0.8 0.8 Pension Loss
Amortization -4.4 -4.3 -0.1 -9.5 -8.7 -0.8 All Other Operations 6.3
1.0 5.3 15.8 -2.4 18.2 Pretax Income/(Loss) 0.4 -6.3 6.7 4.3 -17.4
21.7 Ohio Tax Law Change -2.9 -2.9 -2.9 -2.9 Other Income Taxes
-0.2 3.2 -3.4 -1.9 7.5 -9.4 Net Income/(Loss) -2.7 -3.1 0.4 -0.5
-9.9 9.4 NET INCOME/(LOSS) ON DISCONTINUED OPERATIONS Operations
0.5 -0.5 0.8 -0.8 Gain on Sale 0.4 0.4 0.5 0.5 Total 0.4 0.5 -0.1
0.5 0.8 -0.3 Total Net Profit/(Loss) -2.3 -2.6 0.3 0.0 -9.1 9.1 On
a total basis, the Company reported a net loss in the quarter of
$2.3 million, or $0.08 per share, compared to a net loss in 2004 of
$2.6 million, or $0.09 per share. Through six months, the Company's
results are at break-even vs. a net loss last year of $9.1 million,
or $0.32 per share. Net cash flow was very strong in the quarter on
the strength of improved operations and working capital turnover.
Net debt, total debt less cash, came down by $9.9 million in the
quarter after satisfying funding requirements for capital
expenditures, restructuring, dividends, pension funding, and all
other operations. Cash flow over the past 12 months has been
sufficient to reduce net debt by a total of $41.5 million. Outlook
The Company continues to expect modest revenue growth for the year,
in line with previous guidance, adjusted for the extra week in the
2004 accounting calendar. Good progress has also been made on
improving operating margins. Past guidance called for the Company
to improve its operating profit before restructuring and impairment
charges by 5 percentage points in relation to revenue from the
first-half 2004 to the second-half 2005. The first-half 2005 result
reflected a 3.8 percentage point improvement thus far over the
first- half 2004 base period. We expect to see further improvement
in the percentage operating margin in the second half of the year,
but our current outlook indicates we may fall short of our 5
percentage point goal as a result of investments in our Digital Pen
and Paper (DPP) and Print-on-Demand (POD) Services initiatives.
"DPP is an emerging market that shows promise. Although the initial
adoption rate is proving slower than originally expected, we are
encouraged by the results of our many customer pilots and the
growing list of channel partners. Our second half calls for
continued investment in product and market development," said
Rediker. "In addition, we have concluded that we must step up the
level of investment in our POD Services business in order to ensure
that we catch the building market momentum in this important growth
segment. This will translate into an up-tick in our capital
expenditures and SG&A expenses in the second half of the year,
vis-a-vis our first-half run-rate," said Rediker, adding, "We will
continue to strive for the 5 percentage point improvement, but that
goal must be secondary to our strategic long-term business
interests." Dividend Standard Register's board of directors today
declared a quarterly dividend of $0.23 per share to be paid on
September 9, 2005 to shareholders of record as of August 26, 2005.
Presentation of Information in This Press Release This press
release presents information that excludes restructuring and
impairment expense and amortization of prior years' pension losses
and the Ohio tax law change. These financial measures are
considered non-GAAP. Generally a non-GAAP financial measure is a
numerical measure of a company's performance, financial position,
or cash flows where amounts are either excluded or included not in
accordance with generally accepted accounting principles. Standard
Register believes that this information will enhance an overall
understanding of its financial performance due to the
non-operational nature in the above items and the significant
change from period to period. The presentation of non-GAAP
information is not meant to be considered in isolation or as a
substitute for results prepared in accordance with accounting
principles generally accepted in the United States. Conference Call
Standard Register president and chief executive officer Dennis L.
Rediker, and chief financial officer Craig J. Brown, will host a
conference call at 10 a.m. EDT on July 29, 2005, to review the
second quarter results. The call can be accessed via an audio
webcast which is accessible at:
http://www.standardregister.com/investorcenter. About Standard
Register Standard Register (NYSE:SR) is a leading information
solutions company, with more than 90 years of innovation in
improving the way business gets done in healthcare, financial
services, manufacturing and other industries. The company helps
organizations increase efficiency, reduce costs, enhance security
and grow revenue by effectively capturing, managing and using
information. Its offerings range from document and label solutions
to e-business solutions to consulting and managed services. More
information is available at http://www.standardregister.com/ . Safe
Harbor Statement This report includes forward-looking statements
covered by the Private Securities Litigation Reform Act of 1995.
Because such statements deal with future events, they are subject
to various risks and uncertainties and actual results for fiscal
year 2005 and beyond could differ materially from the Company's
current expectations. Forward-looking statements are identified by
words such as "anticipates," "projects," "expects," "plans,"
"intends," "believes," "estimates," "targets," and other similar
expressions that indicate trends and future events. Factors that
could cause the Company's results to differ materially from those
expressed in forward-looking statements include, without
limitation, variation in demand and acceptance of the Company's
products and services, the frequency, magnitude and timing of paper
and other raw-material-price changes, general business and economic
conditions beyond the Company's control, timing of the completion
and integration of acquisitions, the consequences of competitive
factors in the marketplace, cost-containment strategies, and the
Company's success in attracting and retaining key personnel.
Additional information concerning factors that could cause actual
results to differ materially from those projected is contained in
the Company's filing with The Securities and Exchange Commission,
including its report on Form 10-K for the year ended January 2,
2005. The Company undertakes no obligation to revise or update
forward-looking statements as a result of new information since
these statements may no longer be accurate or timely. THE STANDARD
REGISTER COMPANY STATEMENT OF OPERATIONS (In Thousands, except Per
Share Amounts) Second Quarter Y-T-D 13 Weeks 13 Weeks 26 Weeks 26
Weeks Ended Ended Ended Ended 03-Jul-05 27-Jun-04 03-Jul-05
27-Jun-04 $225,458 $220,853 TOTAL REVENUE $457,437 $441,129 147,060
140,111 COST OF SALES 294,930 277,418 78,398 80,742 GROSS MARGIN
162,507 163,711 COSTS AND EXPENSES 2,378 3,747 Research and
Development 5,044 7,352 62,794 69,085 Selling, General and
Administrative 129,071 144,922 10,735 10,712 Depreciation and
Amortization 20,908 21,331 - 789 Asset Impairment - 789 1,472 2,195
Restructuring 2,000 5,536 77,379 86,528 TOTAL COSTS AND EXPENSES
157,023 179,930 1,019 (5,786) INCOME (LOSS) FROM CONTINUING
OPERATIONS 5,484 (16,219) OTHER INCOME (EXPENSE) (631) (642)
Interest Expense (1,297) (1,332) (15) 79 Investment and Other
Income 84 129 (646) (563) Total Other Expense (1,213) (1,203) 373
(6,349) INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 4,271 (17,422) 3,087 (3,218) Income Tax Expense (Benefit)
4,777 (7,485) (2,714) (3,131) NET LOSS FROM CONTINUING OPERATIONS
(506) (9,937) DISCONTINUED OPERATIONS - 510 Income from
discontinued operations, net of taxes - 817 406 - Gain on sale of
discontinued operations, net of taxes 552 - ($2,308) ($2,621) NET
INCOME (LOSS) $46 ($9,120) 28,771 28,558 Average Number of Shares
Outstanding - Basic 28,657 28,521 28,771 28,558 Average Number of
Shares Outstanding - Diluted 28,668 28,521 BASIC AND DILUTED
EARNINGS (LOSS) PER SHARE ($0.09) ($0.11) Income (loss) from
continuing operations ($0.02) ($0.35) - 0.02 Income from
discontinued operations - 0.03 0.01 - Gain on sale of discontinued
operations 0.02 - ($0.08) ($0.09) Net income (loss) per share $0.00
($0.32) $0.23 $0.23 Dividends Paid Per Share $0.46 $0.46 BALANCE
SHEET (In Thousands) 03-Jul-05 02-Jan-05 ASSETS Cash & Short
Term Investments $8,228 $44,088 Accounts Receivable 121,080 128,396
Inventories 46,468 51,796 Other Current Assets 31,211 27,960 Total
Current Assets 206,987 252,240 Plant and Equipment 138,145 147,160
Goodwill and Intangible Assets 18,306 19,746 Deferred Taxes 81,443
86,505 Other Assets 34,343 37,322 Total Assets $479,224 $542,973
LIABILITIES AND SHAREHOLDERS' EQUITY Current Portion Long-Term Debt
$552 $80,549 Current Liabilities 89,622 108,475 Deferred
Compensation 15,118 16,832 Long-Term Debt 40,592 867 Retiree
Healthcare 45,318 46,826 Pension Liability 86,264 83,273 Other
Long-Term Liabilities 605 746 Shareholders' Equity 201,153 205,405
Total Liabilities and Shareholders' Equity $479,224 $542,973
DATASOURCE: Standard Register CONTACT: Media, Julie McEwan,
+1-937-221-1845, or , or Investors, Robert J. Cestelli,
+1-937-221-1304, or , both of Standard Register Web site:
http://www.standardregister.com/
http://www.standardregister.com/investorcenter
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