SR Spire Inc

DAYTON, Ohio, Oct. 27 /PRNewswire-FirstCall/ -- Standard Register (NYSE:SR) today reported its financial results for the third quarter ended October 1, 2006. Results of Operations Total revenue for the third quarter was $215.3 million, compared to $218.6 million for the prior year. Through three quarters, revenue was $666.8 million, versus $670.5 million for the comparable period of 2005. Aggressive bidding activity among a few large accounts has resulted in lower revenue and the Company also experienced a decline in revenue as a consequence of a customer's involvement in an acquisition. The decline in revenue, coupled with increases in pension-related expenses and income tax adjustments, contributed to reductions in net income for both the quarter and year-to-date periods. The Net Loss on Continuing Operations for the quarter was $3.7 million, versus a net profit last year of $2.1 million. For the nine-month period, Net Profit on Continuing Operations was $0.3 million, compared to $4.1 million a year ago. The table isolates several expense items that had noteworthy effects on reported net income. Excluding restructuring, impairment, amortization of past pension losses, and the pension settlement charge, income on continuing operations before interest and taxes was $4.8 million in the quarter versus $9.0 million last year; the decrease was primarily the result of the lower revenue. On the same measurement basis, the year-to-date result was $28.6 million, down $0.3 million from last year's result. [$ Millions, rounded] Effect on 3Q Income Effect on YTD Income 2006 2005 Chg 2006 2005 Chg CONTINUING OPERATIONS Operations before Restructuring, Impairment Amortization of Past Pension Losses & the Pension Settlement Charge 4.8 9.0 -4.2 28.6 28.9 -0.3 Reconciliation to Net Income / (Loss): Restructuring Expense -0.5 0.1 -0.6 -2.4 -0.8 -1.6 Impairment Expense -0.1 -0.2 0.1 -1.6 -0.2 -1.4 Amortization of Past Pension Losses -6.4 -4.7 -1.6 -19.1 -14.2 -4.9 Pension Settlement Charge -1.6 0.0 -1.6 -1.6 0.0 -1.6 Income / (Loss) on Continuing Operations -3.8 4.2 -6.3 3.9 13.7 -8.2 Interest & Other Income / (Expense) -0.5 -0.7 0.1 -1.4 -1.9 0.5 Pretax Income / (Loss) -4.3 3.5 -7.8 2.5 11.8 -9.4 Income Tax Adjustments -1.0 0.0 -1.0 -1.0 -2.9 1.8 Income Taxes 1.7 -1.4 3.1 -1.1 -4.9 3.8 Net Income / (Loss) on Continuing Operations -3.7 2.1 -5.8 0.3 4.1 -3.7 DISCONTINUED OPERATIONS -2.1 -0.8 -1.3 -13.2 -2.6 -10.5 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 0.1 0.1 TOTAL NET INCOME / (LOSS) -5.7 1.4 -7.1 -12.7 1.4 -14.2 The amortization of prior years' pension losses, primarily related to the weak stock market in 2001 - 2002 and declining interest rates, continues to negatively impact current periods' earnings. A pension settlement charge was also recorded in the quarter related to lump-sum payments made to retirees. These non-cash, pension-related expenses were substantial totaling $8.0 million and $20.7 million for the quarter and year-to-date, respectively. By comparison, pension loss amortization last year was $4.7 million and $14.2 million for the respective periods. The Company also recorded tax valuation allowances and adjustments in the quarter totaling $1.0 million for certain tax assets that are not expected to be realized in the future. During the quarter, the Company celebrated the opening of a new production facility in Monterrey, Mexico, to support U.S.-based companies with manufacturing operations in Mexico. The plant will provide label, on-demand printing, warehousing and kitting. The Company also unveiled to industry analysts its partnership agreement signed recently with Hewlett-Packard that is expected to expand market opportunities for both companies. Outlook "Although we expect fourth quarter revenue to rebound from the third quarter level, the third quarter's result alters our view for the total year. We now anticipate that full-year 2006 revenue will be relatively close to last year's total figure," said Rediker. "Pricing is expected to continue to be difficult in selected accounts for the fourth quarter, which will likely lower percentage gross margins below our first half 2006 rates," added Rediker. "Notwithstanding the news on the quarter, we are encouraged by the progress we are making on the opportunities in front of us. We have a solid strategy, a strong financial condition, and continue to invest confidently for the longer-term," said Rediker. Dividend Standard Register's board of directors declared on Oct. 26, 2006 a quarterly dividend of $0.23 per share to be paid on Dec. 8, 2006 to shareholders of record as of Nov. 24, 2006. Presentation of Information in This Press Release This press release presents information that excludes restructuring, impairment charges, pension settlement charges and amortization of past pension losses. 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 (GAAP). This information is intended to enhance an overall understanding of the financial performance due to the non-operational nature of these items and the significant change from period to period. This presentation is consistent with the manner in which the Board of Directors internally evaluates performance. The presentation of non-GAAP information is not meant to be considered in isolation or as a substitute for results prepared in accordance with 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 October 27, 2006, to review the third 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 is a premier document services provider, trusted by companies to manage the critical documents they need to thrive in today's competitive climate. Relying on nearly a century of industry expertise, Lean Six Sigma methodologies and leading technologies, we help organizations increase efficiency, reduce costs, mitigate risks, grow revenue and meet the challenges of a changing business landscape. It offers document and label solutions, e-business solutions, consulting, and print supply chain services to help clients manage documents across their enterprise. 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 2006 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 1, 2006. 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 Third Quarter STATEMENT OF OPERATIONS Y-T-D 13 Weeks 13 Weeks (In Thousands, except 39 Weeks 39 Weeks Ended Ended Per Share Amounts) Ended Ended 1-Oct-06 2-Oct-05 1-Oct-06 2-Oct-05 $215,327 $218,643 TOTAL REVENUE $666,782 $670,514 144,739 144,241 COST OF SALES 436,376 441,861 70,588 74,402 GROSS MARGIN 230,406 228,653 COSTS AND EXPENSES Selling, General and 66,518 62,405 Administrative 200,270 188,044 7,276 7,733 Depreciation and Amortization 22,251 25,927 53 157 Asset Impairment 1,592 157 533 (76) Restructuring 2,397 790 74,380 70,219 TOTAL COSTS AND EXPENSES 226,510 214,918 INCOME (LOSS) FROM CONTINUING (3,792) 4,183 OPERATIONS 3,896 13,735 OTHER INCOME (EXPENSE) (555) (583) Interest Expense (1,592) (1,875) Investment and Other 40 (69) Income (Expense) 174 (20) (515) (652) Total Other Expense (1,418) (1,895) INCOME (LOSS) FROM CONTINUING (4,307) 3,531 OPERATIONS BEFORE INCOME TAXES 2,478 11,840 (651) 1,392 Income Tax Expense (Benefit) 2,135 7,785 NET INCOME (LOSS) FROM (3,656) 2,139 CONTINUING OPERATIONS 343 4,055 DISCONTINUED OPERATIONS Loss from discontinued (482) (757) operations, net of taxes (2,405) (3,179) Gain (loss) on sale of discontinued operations, (1,587) - net of taxes (10,755) 552 NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A (5,725) 1,382 CHANGE IN ACCOUNTING PRINCIPLE (12,817) 1,428 Cumulative effect of a change in accounting principle, net - - of taxes 78 - ($5,725) $1,382 NET INCOME (LOSS) (12,739) $1,428 Average Number of Shares 28,938 28,806 Outstanding - Basic 28,918 28,707 Average Number of Shares 28,938 28,897 Outstanding - Diluted 28,960 28,758 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE Income (loss) from continuing ($0.13) $0.08 operations $0.01 $0.14 (0.02) (0.03) Loss from discontinued operations (0.08) (0.11) (Loss) Gain on sale of (0.05) - discontinued operations (0.37) 0.02 ($0.20) $0.05 Net income (loss) per share ($0.44) $0.05 $0.23 $0.23 Dividends Paid Per Share $0.69 $0.69 BALANCE SHEET (In Thousands) 1-Oct-06 1-Jan-06 ASSETS Cash & Short Term Investments $3,129 $13,609 Accounts Receivable 120,571 123,006 Inventories 48,566 47,033 Other Current Assets 31,049 30,255 Total Current Assets 203,315 213,903 Plant and Equipment 119,894 129,989 Goodwill and Intangible Assets 8,288 16,866 Deferred Taxes 80,276 83,937 Other Assets 22,283 31,217 Total Assets $434,056 $475,912 LIABILITIES AND SHAREHOLDERS' EQUITY Current Portion Long-Term Debt $499 $611 Current Liabilities 84,933 99,437 Deferred Compensation 16,606 16,357 Long-Term Debt 38,833 34,379 Retiree Healthcare 41,049 43,885 Pension Liability 106,557 107,236 Other Long-Term Liabilities 65 555 Shareholders' Equity 145,514 173,452 Total Liabilities and Shareholders' Equity $434,056 $475,912 DATASOURCE: Standard Register CONTACT: Julie McEwan, +1-937-221-1825, 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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