Standard Register (NYSE: SR) today reported its financial results
for the third quarter ended September 28, 2008. Results of
Operations Net Income from Continuing Operations for the third
quarter was $2.2 million, or $0.07 per share, compared to $2.0
million or $0.07 per share last year. Through nine months, the
Company reported Net Income on Continuing Operations of $6.0
million, or $0.21 per share, compared to a Continuing Operations
Net Loss for the same period in 2007 of $3.6 million, or $0.12 per
share. Revenue for the third quarter was $189.0 million, down 9.3%
compared to $208.3 million recorded for the comparable quarter of
2007. On a year-to-date basis, revenue was $595.0 million in the
current year, down 8.0% versus $646.9 million last year. The
economic slow-down accounted for the majority of the revenue
decreases. The Company�s cost reduction initiatives have helped to
improve earnings thus far this year, despite the revenue decrease.
Cost reduction actions yielding $40.0 million annually were
undertaken mid-year 2007. A new round of expense cuts was announced
this year, including a freeze of pension benefits, consolidation of
some print centers and warehouses, and a reorganization of field
sales support that total an additional $13.0 million in annualized
savings. Restructuring charges figured prominently in both years�
results. The effect on earnings of these charges plus the
amortization of past years� pension losses and pension settlement
charges are identified in the table that follows. � � ($ Millions,
rounded) Effect on 3QIncome Effect on YTDIncome CONTINUING
OPERATIONS 2008 � 2007 � Chg � 2008 � 2007 � Chg Operations before
Restructuring, Impairment � � � � Amortization of Past Pension
Losses & the Pension Settlement Charge 12.2 � 13.7 � -1.5 �
30.7 � 26.4 � 4.3 � Reconciliation to Net Income / (Loss):
Restructuring Expense -2.7 -3.6 0.8 -2.7 -7.7 5.0 Impairment
Expense 0.0 -0.1 0.1 -0.2 0.7 -0.8 Amortization of Past Pension
Losses -4.8 -5.5 0.7 -15.2 -19.7 4.4 Pension Settlement Charge 0.0
� 0.0 � 0.0 � 0.0 � -3.2 � 3.2 Income / (Loss) on Continuing
Operations 4.6 4.5 0.1 12.6 -3.6 16.1 � Interest & Other Income
/ (Expense) -0.4 � -1.0 � 0.6 � -1.6 � -2.6 � 1.0 Pretax Income /
(Loss) 4.2 3.4 0.7 11.0 -6.1 17.1 � Income Taxes 2.0 � 1.4 � 0.6 �
4.9 � -2.6 � 7.5 Net Income / (Loss) on Continuing Operations 2.2 �
2.0 � 0.2 � 6.0 � -3.6 � 9.6 � DISCONTINUED OPERATIONS 0.0 0.2 -0.2
0.0 0.3 -0.3 � � � � � � � � � � � TOTAL NET INCOME / (LOSS) 2.2 �
2.2 � 0.0 � 6.0 � -3.3 � 9.3 � Earnings Per Share on Continuing
Operations 0.07 � 0.07 � 0.01 � 0.21 � -0.12 � 0.33 Restructuring
& Impairment Expenses -0.06 -0.08 0.02 -0.06 -0.15 0.09 Pension
Loss Amortization/Settlement -0.10 -0.12 0.02 -0.32 -0.48 0.16 All
Other Continuing Operations 0.23 � 0.26 � -0.03 � 0.59 � 0.51 �
0.08 � Discontinued Operations 0.00 � 0.01 � -0.01 � 0.00 � 0.01 �
-0.01 Total Earnings Per Share 0.07 � 0.08 � 0.00 � 0.21 � -0.11 �
0.32 For the third quarter, Non-GAAP Adjusted Operating Income
(income on continuing operations before restructuring, impairment,
pension loss amortization, and pension settlement charges) was
$12.2 million versus $13.7 million in 2007. The decrease reflects
the lower revenue, partially offset by reduced costs. Adjusted
operating income through nine months was $30.7 million, compared to
$26.4 million in the prior year � an increase of $4.3 million in
earnings despite an almost $52 million decrease in revenue. This
improvement primarily reflects the significantly lower cost
structure established after mid-year 2007, plus ongoing 2008 cost
initiatives. Net debt ended the quarter at $40.4 million, up $9.0
million in the quarter, but $10.9 million below the level at the
outset of the year. Higher pension funding and an increase in
working capital contributed to the rise in net debt during the
quarter. The $10.9 million positive net cash flow during the first
nine months of this year was a product of improved operating
earnings, an increase in working capital turnover, and relatively
modest capital spending. �In this economy and market environment,
we must continue to closely manage costs and focus our energies and
investments on areas that hold opportunity for long-term growth.
Despite the overall decline in the quarter�s revenue, we saw a 9.0%
increase in sales to the manufacturing market and only modest
decreases in the healthcare and financial sectors,� said Joe
Morgan, acting chief executive officer. �At this time, we do not
expect the recent acquisitions and disruptions that occurred to
date in the financial market to have a material adverse impact on
our business.� Outlook Our past guidance called for second half
revenue to slightly exceed that for the first half of the year. In
light of the third quarter results and our expectation that there
will be no significant change in economic or market conditions
during the fourth quarter, we now expect the second half revenue to
trail that for the first half. Past earnings guidance was for the
total year 2008 Non-GAAP Adjusted Operating Income (income before
restructuring, impairment, pension amortization, and pension
settlement) to come in above the prior year. Notwithstanding
on-going expense reduction initiatives, lowered second half revenue
outlook increases the likelihood that the adjusted operating income
will come in below that for 2007. Dividend Standard Register�s
board of directors declared on October 23, 2008 a quarterly
dividend of $0.23 per share to be paid on December 5, 2008, to
shareholders of record as of November 21, 2008. Conference Call
Standard Register�s acting chief executive officer Joseph P. Morgan
and chief financial officer Craig Brown will host a conference call
at 10 a.m. EDT on October 24, 2008, to review the third quarter
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, and 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 other 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 throughout their
enterprises. 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 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 � � � � � Q-T-D STATEMENT OF OPERATIONS
Y-T-D 13 WeeksEnded 13 WeeksEnded (Dollars In Thousands, except Per
Share Amounts) 39 WeeksEnded 39 WeeksEnded 28-Sep-08 30-Sep-07
28-Sep-08 30-Sep-07 � $189,008 $208,285 TOTAL REVENUE $595,020
$646,881 � 122,715 � 137,710 � COST OF SALES 392,019 � 433,206 � �
66,293 70,575 GROSS MARGIN 203,001 213,675 � OPERATING EXPENSES
52,345 55,903 Selling, General and Administrative 167,524 190,382
6,589 6,537 Depreciation and Amortization 19,991 19,782 - 98 Asset
Impairment 164 (653 ) 2,738 � 3,562 � Restructuring 2,743 � 7,720 �
� 61,672 � 66,100 � TOTAL OPERATING EXPENSES 190,422 � 217,231 � �
4,621 4,475 INCOME (LOSS) FROM CONTINUING OPERATIONS 12,579 (3,556
) � OTHER INCOME (EXPENSE) (487 ) (1,049 ) Interest Expense (1,771
) (2,732 ) 42 � 5 � Other income 171 � 172 � (445 ) (1,044 ) Total
Other Expense (1,600 ) (2,560 ) � � 4,176 3,431 INCOME (LOSS) FROM
CONTINUING OPERATIONS BEFORE INCOME TAXES 10,979 (6,116 ) � � 2,025
� 1,438 � Income Tax Expense (Benefit) 4,944 � (2,561 ) � 2,151
1,993 NET INCOME (LOSS) FROM CONTINUING OPERATIONS 6,035 (3,555 ) �
DISCONTINUED OPERATIONS - 194 Gain on sale of discontinued
operations, net of taxes 4 1,015 - (25 ) Loss from discontinued
operations, net of taxes - (750 ) � � � � � $2,151 $2,162 NET
INCOME (LOSS) $6,039 ($3,290 ) � � 28,766 28,705 Average Number of
Shares Outstanding - Basic 28,752 28,672 28,793 28,774 Average
Number of Shares Outstanding - Diluted 28,770 28,672 � BASIC AND
DILUTED INCOME (LOSS) PER SHARE $0.07 $0.07 Income (Loss) from
continuing operations $0.21 ($0.12 ) - - Loss from discontinued
operations - ($0.03 ) - � 0.01 � Gain on sale of discontinued
operations - � 0.04 � $0.07 � $0.08 � Net Income (Loss) per share
$0.21 � ($0.11 ) � $0.23 $0.23 Dividends Paid Per Share $0.69 $0.69
� � � BALANCE SHEET (In Thousands) 28-Sep-08 30-Dec-07 � ASSETS
Cash & Short Term Investments $332 $697 Accounts Receivable
112,562 130,212 Inventories 38,076 45,351 Other Current Assets
24,972 � 22,523 � Total Current Assets 175,942 198,783 � Plant and
Equipment 101,645 110,975 Goodwill and Intangible Assets 7,779
7,861 Deferred Taxes 73,883 82,272 Other Assets 18,051 21,075 � �
Total Assets $377,300 � $420,966 � � LIABILITIES AND SHAREHOLDERS'
EQUITY Current Portion Long-Term Debt $159 $21 Current Liabilities
73,216 87,342 Deferred Compensation 10,126 12,010 Long-Term Debt
40,619 51,988 Retiree Healthcare 19,195 19,496 Pension Liability
118,284 133,647 Other Long-Term Liabilities 5,104 5,083
Shareholders' Equity 110,597 111,379 � � Total Liabilities and
Shareholders' Equity $377,300 � $420,966 �
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