Standard Register (NYSE: SR) today announced its financial
results for the first quarter, which ended April 4, 2010. The
Company reported revenue of $167.4 million and a net loss of $0.8
million, or $0.03 per share. The results compare to revenue of
$174.6 million and a net loss of $11.0 million, or $0.38 per share,
last year. Gross margin as a percent of revenue for the quarter was
32.0 percent compared with 31.1 percent in the prior year.
Revenue trends continue to improve across all segments due to
stabilization of the customer base, implementation of new
customers, and growth through priority solutions. The Industrial
business unit, in particular, posted revenue growth of 31.9 percent
for the quarter. Despite unfavorable pricing conditions, gross
margin improved across most business units due to cost containment
efforts initiated during the prior year. In addition, the Company
recognized a $1.7 million favorable LIFO adjustment related to the
reduction of inventories. SG&A was lower due to cost
containment efforts, but planned investments in technology,
materials science, and key expertise to support our market
development resulted in a net $2.3 million increase.
“Market focus is providing the clarity around where we need to
invest which will allow us to become a much stronger Company in the
future,” stated Joseph Morgan, president and chief executive
officer. “While we are making progress, we recognize the need to
accelerate our efforts in order to take advantage of the
opportunities that are presenting themselves within these
markets.”
The net loss in the first quarter of 2010 included $4.7 million
of pension loss amortization, or $0.10 per share after tax and $0.4
million of restructuring, or $0.01 per share after tax. The net
loss for the first quarter of 2009 included $4.7 million of pension
loss amortization, or $0.10 per share after tax; $19.7 million for
pension settlement losses, or $0.41 per share after tax, and $0.6
million of restructuring charges, or $0.01 per share after tax.
Excluding these items, non-GAAP adjusted net income was $2.3
million, or $0.08 per share, for the first quarter of 2010 compared
with non-GAAP adjusted net income of $4.1 million, or $0.14 per
share for the prior year.
Capital expenditures were $8.3 million through the first three
months utilizing a combination of $2.0 million in cash and $6.3
million through operating and capital lease agreements. Capital
expenditures are expected to end the year in the $17-19 million
range.
“Our capital investments during the quarter include the
expansion of capabilities within our product portfolio through the
upgrade of our entire digital Print On Demand network,” said
Morgan. “This transformation coupled with recent enhancements to
our web-based customer facing software SMARTworks® has positioned
us as a print–on-demand leader within our core markets.”
Pension funding was $7.0 million for the quarter and is expected
to end the year at approximately $29 million. Non-GAAP cash flow on
a net debt basis was $1.9 million positive for the quarter. During
the quarter, the Company entered into a $100 million, four-year
senior secured revolving credit facility that replaced the existing
facility due to expire in May 2010. The agreement, to be used for
general corporate purposes, increased the borrowing capacity of the
Company.
Dividend
On Thursday, April 29, 2010, Standard Register’s board of
directors declared a quarterly dividend of $0.05 per share to be
paid from capital surplus on June 4, 2010, to shareholders of
record as of May 21, 2010. Capital surplus consists of funds
legally available for the payment of dividends in the absence of
accumulated earnings and profits, or earned surplus. The board will
consider future dividend payments on a quarter-by-quarter basis in
accordance with its normal practice.
Conference Call
Standard Register’s President and Chief Executive Officer Joe
Morgan and Chief Financial Officer Bob Ginnan will host a
conference call at 10:00 a.m. EST on April 30, 2010, to review the
first quarter results. The call can be accessed via an audio web
cast 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. 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. The Company 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. A forward-looking
statement is neither a prediction nor a guarantee of future events
or circumstances, and those future events or circumstances may not
occur. All statements regarding our expected future financial
condition, revenues or revenue growth, projected costs or cost
savings, cash flows and future cash obligations, dividends, capital
expenditures, business strategy, competitive positions, market
shares, growth opportunities for existing products or products
under development, and objectives of management are forward-looking
statements that involve certain risks and uncertainties. In
addition, forward-looking statements include statements in which we
use words such as “anticipates,” “projects,” “expects,” “plans,”
“intends,” “believes,” “estimates,” “targets,” and other similar
expressions that indicate trends and future events. These
forward-looking statements are based on current expectations and
estimates. We cannot assure you that such expectations will prove
to be correct. The Company undertakes no obligation to update
forward-looking statements as a result of new information, since
these statements may no longer be accurate or timely. Because such
statements deal with future events, actual results for fiscal year
2010 and beyond could differ materially from our current
expectations.
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, results of
the MyC3 initiative and other 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 3,
2010.
Non-GAAP Measures Presented in This Press Release
The Company reports its results in accordance with Generally
Accepted Accounting Principles in the United States (GAAP).
However, we believe that certain non-GAAP measures found in this
press release, when presented in conjunction with comparable GAAP
measures, are useful for investors. 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. We discuss several measures of operating performance
including adjusted net income and earnings per share and cash flow
on a net debt basis which are not calculated in accordance with
GAAP. These non-GAAP measures should not be considered as
substitutes for, or superior to, results determined in accordance
with GAAP.
Management evaluates the Company’s results excluding pension
loss amortization, pension settlements, restructuring charges, and
asset impairments. We believe that this non-GAAP financial measure
is useful to investors because it provides a more complete
understanding of our current underlying operating performance, a
clearer comparison of current period results with past reports of
financial performance, and greater transparency regarding
information used by management in its decision making. Internally,
management and our Board of Directors use this non-GAAP measure to
evaluate our business performance and to establish incentive
compensation.
In addition, because our credit facility is borrowed under a
revolving credit agreement, which currently permits us to borrow
and repay at will up to a balance of $100 million (subject to
limitations related to receivables, inventories, and letters of
credit), we take the measure of cash flow performance prior to
borrowing or repayment of the credit facility. In effect, we
evaluate cash flow as the change in net debt (credit facility debt
less cash and cash equivalents).
The table below provides a reconciliation of these non-GAAP
measures to their most comparable measure calculated in accordance
with GAAP.
THE STANDARD REGISTER COMPANY CONSOLIDATED STATEMENTS OF
OPERATIONS (Dollars In Thousands, except Per Share Amounts)
(Unaudited)
Y-T-D 13 Weeks Ended
13 Weeks Ended 4-Apr-10 29-Mar-09
TOTAL REVENUE $ 167,423 $ 174,620
COST OF SALES 113,814
120,385 GROSS MARGIN 53,609
54,235 COSTS AND EXPENSES Selling, general,
and administrative
54,145 51,787 Pension settlement
losses
- 19,747 Asset Impairment
- -
Restructuring and other exit costs
432
601 TOTAL COSTS AND EXPENSES
54,577 72,135 LOSS
FROM OPERATIONS (968 ) (17,900 )
OTHER INCOME (EXPENSE) Interest expense
(390
) (303 ) Other income
2
48 Total other expense (388 )
(255 ) LOSS BEFORE INCOME TAXES
(1,356 ) (18,155 ) Income Tax
Benefit
(543 ) (7,179 )
NET LOSS $ (813 ) $ (10,976
) DISCONTINUED OPERATIONS Gain on sale of
discontinued operations, net of taxes
- -
NET LOSS (813 )
(10,976 ) Average Number of Shares
Outstanding - Basic
28,875 28,792 Average Number of
Shares Outstanding - Diluted
28,875 28,792
BASIC AND DILUTED LOSS PER SHARE $ (0.03 )
$ (0.38 ) Dividends declared for the period
per share
$ 0.05 $ 0.23 MEMO: Depreciation and
amortization
$ 6,087 $ 6,219 Pension loss amortization
$
4,668 $ 4,657
THE STANDARD REGISTER COMPANY CONDENSED
CONSOLIDATED BALANCE SHEETS (Dollars In Thousands) (Unaudited)
4-Apr-10 3-Jan-10 ASSETS
Cash and cash equivalents
$ 193 $ 2,404 Accounts and notes
receivable
102,778 108,524 Inventories
30,724 33,625
Other current assets
25,514 24,504 Total current
assets
159,209 169,057 Plant and equipment
86,013 85,740 Goodwill
6,557 6,557 Deferred taxes
103,731 104,691 Other assets
13,932 13,676
Total assets
$ 369,442 $ 379,721
LIABILITIES AND SHAREHOLDERS' EQUITY Current portion
long-term debt
$ 1,557 $ 35,868 Other current liabilities
72,272 77,349 Deferred compensation
7,372 7,699
Long-term debt
35,902 - Retiree healthcare obligation
7,335 7,425 Pension benefit obligation
193,775
202,146 Other long-term liabilities
7,203 7,080
Shareholders' equity
44,026 42,154
Total liabilities and shareholders' equity
$ 369,442
$ 379,721
THE STANDARD REGISTER COMPANY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
(Unaudited)
13 Weeks Ended April 4,
March 29, 2010 2009
Net loss plus non-cash items
$ 9,227 $ 11,863 Working
capital
7,919 2,482 Restructuring payments
(2,407
) (1,771 ) Contributions to qualified pension plan
(7,000 ) (6,000 ) Other (1)
(2,144
) (3,993 ) Net cash provided by operating activities
5,595 2,581 Capital
expenditures, net
(2,054 ) (3,390 ) Net
cash used in investing activities
(2,054 )
(3,390 ) Net change in borrowings under credit
facility
(4,119 ) 7,501 Principal payments on
long-term debt
(199 ) - Dividends paid
(1,456
) (6,642 ) Other
10 61 Other
-
- Net cash (used in) provided by financing activities
(5,764 ) 920 Effect of exchange
rate
12 (26 ) Net change in cash
$ (2,211 ) $ 85 (1)
Includes deferred compensation and non-qualified pension payments
and changes in other non-current assets and liabilities
THE
STANDARD REGISTER COMPANY Reconciliation of GAAP to Non-GAAP
Measures (In thousands, except per share amounts)
13 Weeks Ended April 4, March 29,
2010 2009 GAAP Net loss $
(813 ) $ (10,976 ) Adjustments, net of tax Pension loss
amortization 2,815 2,808 Pension settlement losses 11,907
Restructuring and impairment charges 260 362
Non-GAAP Adjusted Net Income $ 2,262
$ 4,101 GAAP Loss Per Share $ (0.03 )
(0.38 ) Adjustments, net of tax Pension loss amortization
0.10 0.10 Pension settlement losses 0.41 Restructuring and
impairment charges 0.01 0.01
Non-GAAP Adjusted Income Per Share $ 0.08 0.14
GAAP Net Cash Flow $ (2,211 ) $ 85 Adjustments
Credit facility paid (borrowed) 4,119 (7,501 )
Non-GAAP Net Cash Flow $ 1,908
$ (7,416 )
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