EX-99 2 ex991.htm EXHIBIT 99.1 Converted by EDGARwiz


Standard Register



600 Albany St.  ·  Dayton, OH   45408

News media contact:

937.221.1000  ·  937.221.1486 (fax)

Lesley Sprigg· 937.221.1825

www.standardregister.com

lesley.sprigg@standardregister.com


Investor contact:

Robert J. Cestelli  ·  937.221.1304

robert.cestelli@standardregister.com

For Release on February 23, 2007 at 8 a.m. EST


Standard Register Reports Fourth Quarter and 2006 Financial Results

DAYTON, Ohio (February 23, 2007) – Standard Register (NYSE: SR) today reported its financial results for the fourth quarter and total year ended December 31, 2006.


Results of Operations


Revenue on Continuing Operations for the fourth quarter 2006 was $228.1 million, up 3.6 percent over the comparable quarter of 2005.  Total year 2006 Revenue on Continuing Operations was $894.9 million, compared to $890.7 million for the prior year.  


Revenue growth for both the quarter and total year was driven by strong performances in the Company’s Print-On-Demand Services, Commercial Print, and Document Systems business units, as indicated below.  Despite modest increases in label sales, the Document & Label Solutions (DLS) business unit reported overall decreases of 4.9 percent and 3.5 percent for the quarter and total year, reflecting a very competitive market for these traditional products.  Approximately 40 percent of the DLS decreases were isolated to a single customer account.  

[$ Millions, rounded]

4th Quarter

 

Total Year

Revenue by Business Unit

2006

2005

% Chg

 

2006

2005

% Chg

Document & Label Solutions

141.3

148.7

-4.9%

 

575.3

596.2

-3.5%

Print-on-Demand Services

70.3

57.9

21.4%

 

260.0

239.8

8.4%

Commercial Print

9.9

7.5

31.1%

 

35.6

29.7

20.1%

Document Systems

5.9

4.7

25.4%

 

21.1

20.9

1.1%

Digital Solutions

0.1

0.5

-78.2%

 

0.6

0.7

-15.9%

Other

0.6

0.9

-37.9%

 

2.3

3.5

-34.3%

Total

228.1

220.2

3.6%

 

894.9

890.7

0.5%


Gross margins also improved for both the quarter and total year 2006 periods as a result of the overall revenue increases and continuing improvement in manufacturing productivity.  Depreciation and amortization expenses were also lower, continuing the trend of recent years.  Increased investment in software development, higher sales and marketing compensation, and increased fringe costs pushed selling, general and administrative expense higher in both the quarter and total year.

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In addition, higher expense for restructuring, impairment, pension loss amortization, and pension settlement had a substantial unfavorable effect on 2006 reported earnings, as indicated in the table below.  Excluding these expense items, Income from Continuing Operations was $8.7 million for the fourth quarter 2006 versus $8.8 million for the comparable quarter of 2005; on the same basis, the total year Income from Continuing Operations was $37.3 million in 2006 compared to $37.7 million for 2005.  


Including these expense items and after Interest & Other Expenses and Income Taxes, the Company reported a Net Loss on Continuing Operations for the fourth quarter of $0.2 million or $0.01 per share, compared to a Net Profit of $2.4 million or $0.08 per share in the prior year.  For the total year 2006, Net Income on Continuing Operations was $0.2 million or $0.01 per share, versus $7.1 million or $0.25 per share in 2005.   


The Company sold its InSystems subsidiary in June 2006 and classified the former business unit as a discontinued operation.  Total Net Income, including the results of InSystems operations and its sale, was $1.1 million or $0.04 per share for the fourth quarter compared to a break-even result in the fourth quarter 2005.  For the whole of 2006, the Company reported a loss of $11.7 million or $0.41 per share, versus a profit of $1.4 million or $0.05 per share in the prior year.


[$ Millions, rounded]

Effect on 4Q Income

 

Effect on Annual Income

CONTINUING OPERATIONS

2006

2005

Chg

 

2006

2005

Chg

  Income from Continuing Operations

       

    Before Restructuring, Impairment,

       

    Pension Loss Amortization, & the

       

    Pension Settlement Charge

8.7

8.8

-0.1

 

37.3

37.7

-0.4

        

  Restructuring Expense

-0.3

-0.2

-0.1

 

-2.7

-1.0

-1.7

  Impairment Expense

-1.1

-0.1

-1.0

 

-2.7

-0.3

-2.4

  Amortization of Past Pension Losses

-6.5

-4.7

-1.8

 

-25.6

-19.0

-6.6

  Pension Settlement Charge

0.0

0.0

0.0

 

-1.6

0.0

-1.6

  Income / (Loss) on Continuing

       

    Operations

0.8

3.7

-2.9

 

4.7

17.4

-12.8

        

  Interest & Other Income / (Expense)

-0.6

-0.1

-0.6

 

-2.1

-2.0

-0.1

  Pretax Income / (Loss)

0.2

3.6

-3.5

 

2.6

15.5

-12.8

        

  Income Tax Adjustments

-0.1

0.2

-0.4

 

-1.4

-2.2

0.8

  Income Taxes

-0.2

-1.5

1.3

 

-1.0

-6.1

5.1

  Net Income / (Loss) on

       

    Continuing Operations

-0.2

2.4

-2.6

 

0.2

7.1

-7.0

        

DISCONTINUED OPERATIONS

1.3

-2.4

3.7

 

-11.9

-5.7

-6.1

        

CUMULATIVE EFFECT OF CHANGE

       

  IN ACCOUNTING PRINCIPLE

       
        

TOTAL NET INCOME / (LOSS)

1.1

0.0

1.1

 

-11.7

1.4

-13.1




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“Despite challenging industry conditions for traditional printed documents, we believe there is good business and cash flow in this industry segment if we continue our market focus and improvements in productivity.  We were pleased to see the increases in revenue and gross margin in our other business units, which underscores our shifting mix and our long-term growth opportunity,” said Dennis L. Rediker, Standard Register’s president and chief executive officer.  


Cash flow was a negative $19.5 million, primarily a result of higher year-end accounts receivable and 2006 pension contributions of $25 million that were twice the level of the prior two years’ average.  The higher receivables related to the timing of payments at a few large accounts and an increase in December’s revenue.  The balance sheet remained strong with a 25.7 percent ratio of net debt (total debt less cash and short-term investments) to total capital.

Outlook

“Looking forward to 2007, we expect revenue for the total year to increase in the low-to-mid single digit range overall with a continuation of the strategic mix change we witnessed in 2006.  Capital spending is expected to step up in 2007 to the $25 - $28 million range in order to support expected growth in the Print-On-Demand Services business, while contributions to the pension plan are expected to fall back to $20 million,” added Rediker.  

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. EST on February 23, 2007, to review the fourth quarter and full-year results.  The call can be accessed via an audio webcast which is accessible at:  http://www.standardregister.com/investorcenter.

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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 100 years 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, e-business solutions, consulting and print supply chain services to help clients manage documents across their enterprise.  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 2007 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 31, 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.  

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THE STANDARD REGISTER COMPANY

  
     

Fourth Quarter

 

STATEMENT OF OPERATIONS

 

Y-T-D

13 Weeks Ended

13 Weeks Ended

 

(In Thousands, except Per Share Amounts)

 

52 Weeks Ended

52 Weeks Ended

31-Dec-06

1-Jan-06

   

31-Dec-06

1-Jan-06

$228,122 

$220,226 

 

TOTAL REVENUE

 

$894,904 

$890,740 

            151,336 

            146,814 

 

COST OF SALES

 

            587,712 

           588,675 

              76,786 

              73,412 

 

GROSS MARGIN

 

            307,192 

            302,065 

   

COSTS AND EXPENSES

   

              68,041 

              61,438 

 

Selling, General and Administrative

 

            268,311 

            249,481 

                6,535 

                7,921 

 

Depreciation and Amortization

 

              28,786 

              33,848 

                1,146 

                   146 

 

Asset Impairment

 

                2,738 

                   303 

                   274 

                   208 

 

Restructuring

 

                2,671 

                   998 

              75,996 

              69,713 

 

TOTAL COSTS AND EXPENSES

 

            302,506 

            284,630 

                   790 

                3,699 

 

INCOME FROM CONTINUING OPERATIONS

 

                4,686 

              17,435 

   

OTHER INCOME (EXPENSE)

   

                  (693)

                  (590)

 

Interest Expense

 

               (2,285)

               (2,465)

                    54 

                   519 

 

Investment  and Other Income (Expense)

 

                   228 

                   499 

                  (639)

                   (71)

 

Total Other Expense

 

               (2,057)

               (1,966)

       
   

INCOME FROM CONTINUING OPERATIONS

   

                   151 

                3,628 

 

BEFORE INCOME TAXES

 

                2,629 

              15,469 

                   340 

                1,255 

 

Income Tax Expense

 

                2,475 

                8,323 

                  (189)

                2,373 

 

NET (LOSS) INCOME FROM CONTINUING OPERATIONS

 

                   154 

                7,146 

   

DISCONTINUED OPERATIONS

   

                   556 

               (2,399)

 

Income (Loss) from discontinued operations, net of taxes

 

               (1,849)

               (6,297)

                   711 

                     (3)

 

Gain (loss) on sale of discontinued operations, net of taxes

 

             (10,044)

                   550 

   

NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A

   

                1,078 

                   (29)

 

CHANGE IN ACCOUNTING PRINCIPLE

 

             (11,739)

                1,399 

                     -    

                     -    

 

Cumulative effect of a change in accounting principle, net of taxes

 

                    78 

                     -    

$1,078 

($29)

 

NET INCOME (LOSS)

 

             (11,661)

$1,399 

       

              28,616 

              28,829 

 

Average Number of Shares Outstanding - Basic

 

              28,543 

              28,738 

              28,635 

              28,829 

 

Average Number of Shares Outstanding - Diluted

 

              28,579 

              28,766 

   

BASIC AND DILUTED EARNINGS (LOSS) PER SHARE

   

($0.01)

$0.08 

 

Income (loss) from continuing operations

 

$0.01 

$0.25 

$0.02 

                 (0.08)

 

Income (Loss) from discontinued operations

 

                 (0.07)

                 (0.22)

                  0.03 

                     -    

 

Gain (Loss) on sale of discontinued operations

 

                 (0.35)

                  0.02 

$0.04 

($0.00)

 

Net income (loss) per share

 

                 (0.41)

$0.05 

$0.23 

$0.23 

 

Dividends Paid Per Share

 

$0.92 

$0.92 

     
    
  

BALANCE SHEET

 
   

(In Thousands)

31-Dec-06

1-Jan-06

   

ASSETS

   
   

Cash & Short Term Investments

 

$488 

$13,609 

   

Accounts Receivable

 

135,839 

120,491 

   

Inventories

 

49,242 

47,033 

   

Assets of Discontinued Operations

 

                   -    

25,706 

   

Other Current Assets

 

              32,201 

28,692 

   

Total Current Assets

 

217,770 

235,531 

       
   

Plant and Equipment

 

119,339 

128,601 

   

Goodwill and Intangible Assets

 

8,168 

8,115 

   

Deferred Taxes

 

86,710 

80,599 

   

Other Assets

 

20,092 

23,066 

       
   

Total Assets

 

$452,079 

$475,912 

       
   

LIABILITIES AND SHAREHOLDERS' EQUITY

   
   

Current Portion Long-Term Debt

 

$358 

$611 

   

Liabilities of Discontinued Operations

 

$0 

$5,756 

   

Current Liabilities

 

100,956 

94,236 

   

Deferred Compensation

 

17,190 

16,357 

   

Long-Term Debt

 

41,021 

34,379 

   

Retiree Healthcare

 

20,398 

43,885 

   

Pension Liability

 

153,953 

107,236 

   

Other Long-Term Liabilities

 

36 

                     -    

   

Shareholders' Equity

 

118,167 

173,452 

       
   

Total Liabilities and Shareholders' Equity

 

$452,079 

$475,912