Business News

Standard Register Reports Third Quarter 2008 Financial Results

Monday 27. October 2008 - 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.


Effect on 3Q Effect on YTD
($ Millions, rounded) Income Income
—————– —————–
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.