Standard Register (NYSE: SR) today reported its financial results
for the fourth quarter and total year ended December 30, 2007.
Results of Operations Fourth Quarter Revenue on continuing
operations for the quarter was $218.6 million, down $9.4 million or
4.1% compared to $228.0 million reported for the same quarter of
2006. �Despite a challenging environment for some business segments
and lower revenue, our operating result before restructuring,
impairment, pension loss amortization, and pension settlement
charges increased from $10.0 million last year to $19.0 million in
the current period. This was the second consecutive quarter that
this [non-GAAP] measure of operating earnings has been up sharply
from the prior year,� said Dennis Rediker, president and CEO of
Standard Register. �The cost reduction actions initiated in our
mid-year 2007 restructuring have provided improved operating
margins and cash flows and will also serve to finance future
investments essential for our long-term success,� added Rediker.
The gross margin was down $2.4 million as a result of the lower
revenue, but SG&A expense (excluding pension loss amortization
and settlement) was $11.8 million lower than the 2006 quarter,
producing the increase in operating income. This SG&A expense
improvement can be traced primarily to the mid-year 2007 cost
restructuring. There were also favorable non-recurring expense
items totaling $4.6 million, including a $2.7 million reversal of
accruals for previous restricted stock grants. Cash flow was strong
in the quarter, fueled primarily by the improved operating
earnings. Net debt was reduced by $12.4 million to end the year at
$51.3 million. There were no pension contributions in the quarter,
as the Company completed its planned $20 million in annual funding
during the first three quarters of the year. Current plans call for
$20.0 million in pension funding for 2008. Capital expenditures
ended 2007 at $21.6 million; capital spending for 2008 is currently
estimated at approximately $23.0 million. Total Year Revenue on
continuing operations was $865.4 million for the full year, down
$28.9 million or 3.2% compared to the $894.3 million reported for
all of 2006. This decrease was primarily in traditional products
within the Company�s Document Management and Label segments.
�Pension amortization and settlement charges obviously had a big
impact on our year, reducing earnings by $0.99 per share. Operating
income before these charges and before restructuring and impairment
costs was $45.4 million for the year � up $2.9 million despite the
nearly $29 million drop in revenue. This reflected a much stronger
second half following the mid-year restructuring,� said Rediker.
Outlook Our investments in 2008 will be focused in several areas.
We see long term growth opportunities in our label business and
will begin to report this business as a separate segment. In
addition, our print-on-demand business will continue as a major
focus, attracting a significant share of our capital. We also see
significant promise in our extensive secure document offering and
in our various software and service initiatives. Our investment
priorities and the natural forces in the marketplace will continue
to fuel a favorable shift in our revenue mix in 2008. However, as a
result of continuing pressure on some of our traditional products,
we do not expect a substantial change in our total year top line.
For the first quarter of the year, we expect to see a return to a
more traditional seasonal pattern of revenue with the first quarter
below that of the preceding fourth. Our mid-year restructuring
targeted a $15.0 million reduction in costs for the second half of
2007 versus the first half. We exceeded our target, which was a
major contributor to our stronger second half performance. On an
annualized basis, our cost savings currently stand at approximately
$35.0 million. As we move into 2008, we will reinvest a portion of
our cost savings on marketing, technology, people, and other
initiatives important to our long-term success. Our earnings goal
for the whole of 2008 is to see a low double-digit percentage
increase in operating income (before pension amortization and
before any pension settlement, restructuring, and impairment
charges). GAAP Reconciliation The net loss after tax for the
quarter was $4.0 million or $0.14 per share, compared to a net
income of $1.1 million or $0.04 per share in the prior year. For
the total year, the net loss was $7.3 million or $0.25 per share,
versus a net loss of $11.7 million or $0.41 in 2006. The table
below reconciles these GAAP results to [non-GAAP] operating
earnings before restructuring, impairment, pension loss
amortization, and pension settlement. [$ Millions, rounded] �
Effect on 4Q Income � Effect on YTD Income CONTINUING OPERATIONS
2007 � 2006 � Chg 2007 � 2006 � Chg � � � � � Operations before
Restructuring, Impairment Amortization of Past Pension Losses &
the Pension Settlement Charge 19.0 � 10.0 � 9.0 45.4 � 42.4 � 2.9 �
Reconciliation to Net Income / (Loss): Restructuring Expense -0.3
-0.3 0.0 -8.0 -2.7 -5.3 Impairment Expense -0.2 -1.1 0.9 0.4 -2.7
3.2 Amortization of Past Pension Losses -6.4 -6.5 0.1 -26.1 -25.6
-0.5 Pension Settlement Charge -17.7 � 0.0 � -17.7 -20.9 � -1.6 �
-19.3 Income / (Loss) on Continuing Operations -5.6 2.1 -7.7 -9.2
9.8 -19.0 � Interest & Other Income / (Expense) -1.0 � -0.6 �
-0.4 -3.6 � -2.1 � -1.5 Pretax Income / (Loss) -6.6 1.5 -8.1 -12.8
7.7 -20.5 � Income Taxes -2.6 � 0.9 � -3.5 -5.2 � 4.5 � -9.7 Net
Income / (Loss) on Continuing Operations -4.0 � 0.6 � -4.6 -7.6 �
3.2 � -10.8 � DISCONTINUED OPERATIONS 0.0 0.5 -0.5 0.3 -15.0 15.2 �
� � � � � � � � � TOTAL NET INCOME / (LOSS) -4.0 � 1.1 � -5.1 -7.3
� -11.7 � 4.4 � Earnings Per Share on Continuing Operations -0.14 �
0.02 � -0.16 -0.26 � 0.11 � -0.38 Restructuring & Impairment
Expenses -0.01 -0.03 0.02 -0.16 -0.11 -0.04 Pension Loss
Amortization & Pension Settlement -0.51 -0.14 -0.37 -0.99 -0.57
-0.41 Tax Adjustments -0.04 0.04 All Other Continuing Operations
0.38 � 0.19 � 0.19 0.89 � 0.84 � 0.05 � Discontinued Operations
0.00 � 0.02 � -0.02 0.01 � -0.52 � 0.53 Total Earnings Per Share
-0.14 � 0.04 � -0.18 -0.25 � -0.41 � 0.15 Pension loss amortization
and settlement charges accounted for a total of $24.1 million and
$47.0 million in expense for the quarter and total year periods,
respectively, equivalent to $0.51 and $0.99 per share. These
non-cash charges have their origin primarily in the weak stock
markets of 2001 and 2002 which reduced pension trust assets in
those years. Those losses, together with other actuarial gains and
losses are being amortized through subsequent years� income
statements. The current outlook for 2008 calls for significantly
lower pension amortization. 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. ET on February 22, 2008, to review the fourth quarter and
full-year results. The call can be accessed via an audio web cast
which is accessible at:
http://www.standardregister.com/investorcenter. Presentation of
Information in This Press Release This press release presents
information that excludes restructuring, impairment charges,
amortization of past pension losses, and pension settlement
charges. 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. 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. Employing nearly a century of
industry expertise, Lean Six Sigma methodologies and leading
technologies, the company helps organizations increase efficiency,
reduce costs, mitigate risks, grow revenue and meet the challenges
of a changing business landscape. It offers document and label
solutions, technology solutions, consulting and print supply chain
services to help clients manage documents across their enterprises.
More information is available at 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 2008 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 December 30,
2007. 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 Fourth
Quarter (Dollars in thousands, except per share amounts) Y-T-D 13
Weeks Ended 13 Weeks Ended � 52 Weeks Ended 52 Weeks Ended
30-Dec-07 � 31-Dec-06 30-Dec-07 � 31-Dec-06 � $218,551 $228,012
TOTAL REVENUE $865,432 $894,291 � 144,176 � � 151,254 � COST OF
SALES 577,396 � � 587,529 � � 74,375 76,758 GROSS MARGIN 288,036
306,762 � COSTS AND EXPENSES 72,736 66,873 Selling, general and
administrative 263,104 263,441 6,793 6,371 Depreciation and
Amortization 26,575 28,128 214 1,146 Asset Impairment (439 ) 2,738
276 � 274 Restructuring 7,996 � � 2,671 � � 80,019 � � 74,664 �
TOTAL COSTS AND EXPENSES 297,236 � � 296,978 � � (5,644 ) 2,094
INCOME (LOSS) FROM CONTINUING OPERATIONS (9,200 ) 9,784 � OTHER
INCOME (EXPENSE) (1,031 ) (694 ) Interest expense (3,763 ) (2,285 )
36 � � 54 � Other income 208 � � 228 � (995 ) (640 ) Total Other
Expense (3,555 ) (2,057 ) � � INCOME (LOSS) FROM CONTINUING
OPERATIONS (6,639 ) 1,454 BEFORE INCOME TAXES (12,755 ) 7,727 � �
(2,615 ) � 858 � Income Tax (Benefit) Expense (5,176 ) � 4,500 � �
(4,024 ) 596 NET INCOME (LOSS) FROM CONTINUING OPERATIONS (7,579 )
3,227 � DISCONTINUED OPERATIONS (2 ) (229 ) Loss from discontinued
operations, net of taxes (752 ) (4,922 ) 11 � � 711 � Gain (loss)
on sale of discontinued operations, net of taxes 1,026 � � (10,044
) � NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A (4,015 ) 1,078
CHANGE IN ACCOUNTING PRINCIPLE (7,305 ) (11,739 ) � - � � - �
Cumulative effect of a change in accounting principle, net of taxes
- � � 78 � � ($4,015 ) � $1,078 � NET INCOME (LOSS) ($7,305 ) �
($11,661 ) � � 28,721 28,616 Average Number of Shares Outstanding -
Basic 28,684 28,543 28,721 28,635 Average Number of Shares
Outstanding - Diluted 28,684 28,579 � BASIC AND DILUTED INCOME
(LOSS) PER SHARE ($0.14 ) $0.02 Income (loss) from continuing
operations ($0.26 ) $0.11 - (0.01 ) Loss from discontinued
operations (0.03 ) (0.17 ) - � � 0.03 � Gain (loss) on sale of
discontinued operations 0.04 � � (0.35 ) ($0.14 ) � $0.04 � Net
income (loss) per share ($0.25 ) � ($0.41 ) � $0.23 $0.23 Dividends
Paid Per Share $0.92 $0.92 � � � BALANCE SHEET (In Thousands)
30-Dec-07 31-Dec-06 � ASSETS Cash & Short Term Investments $697
$488 Accounts Receivable 130,212 135,839 Inventories 45,351 49,189
Other Current Assets 22,523 � 32,507 � Total Current Assets 198,783
218,023 � Plant and Equipment 110,975 119,206 Goodwill and
Intangible Assets 7,861 8,107 Deferred Taxes 80,852 87,709 Other
Assets 21,075 20,033 � � Total Assets $419,546 � $453,078 � �
LIABILITIES AND SHAREHOLDERS' EQUITY Current Portion Long-Term Debt
$21 $358 Current Liabilities 87,342 100,210 Deferred Compensation
12,010 17,190 Long-Term Debt 51,988 41,021 Retiree Healthcare
19,496 20,398 Pension Liability 133,647 156,469 Other Long-Term
Liabilities 5,083 782 Shareholders' Equity 109,959 116,650 � �
Total Liabilities and Shareholders' Equity $419,546 � $453,078 �
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