Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - STANDARD REGISTER CO | sr8k4q2010earningsrelease.htm |
Standard Register
600 Albany St. · Dayton, OH 45417
Investor and media contact:
937.221.1000 · 937.221.1486 (fax)
Shaun C. Smith · 937.221.1504
www.standardregister.com
shaun.smith@standardregister.com
For Release on February 25, 2011 at 8 a.m. EST
Standard Register Reports Fourth Quarter and Full Year 2010 Financial Results
Profit Trends Improved During Quarter and Positive for the Year
DAYTON, Ohio (February 25, 2011) – Standard Register (NYSE: SR) today reported its fourth quarter and total year 2010 results. For the quarter, the Company reported revenue of $172.7 million and a net profit of $2.2 million, or $0.08 per share. The current year fourth quarter 13-week results compare to last year’s 14-week revenue of $184.9 million and a net profit of $0.9 million, or $0.03 per share. For the year, the Company reported revenue of $668.4 million and a net profit of $2.6 million, or $0.09 per share. The current year 52-week results compare to last year’s 53-week revenue of $694.0 million and a net loss of $12.4 million, or $0.43 per share.
“We have made great progress during the year to stabilize revenue, improve profits and manage cash toward break-even,” stated Joseph Morgan, president and chief executive officer. “As a result, we are entering 2011 a financially stronger and more focused organization that will take advantage of the emerging opportunities in those markets in which we participate.”
Results of Operations
Revenue comparisons to the prior year are not consistent given the extra week reported during the fourth quarter 2009. However, during the quarter the Company continued to see expansion of its customer base through new contracts and growth in priority solutions even including the extra week from the prior year.
Gross margin as a percent of revenue was improved to 32.7 for the quarter versus 31.9 in the prior year. For the year, gross margin was at 32.0 percent of revenue versus 31.8 percent of revenue in the prior year. Favorable LIFO inventory adjustments were $1.2 million for the current quarter and $3.8 million for the year. This compares to favorable LIFO adjustments of $1.9 million and $4.9 million for the fourth quarter and total year
2009. Continuous improvement initiatives allowed the Company to enhance gross margin despite lower
revenue units.
Selling, general and administrative expenses are also not consistent given the extra week reported during the fourth quarter 2009. However, savings initiatives during the quarter continue to offset planned investments in technology, materials science, and key expertise to support our market development.
“All business units have shown great progress during the year in improving their operating profits,” noted Morgan. “It is encouraging to see that the investments we made previously to support these businesses are now beginning to provide the returns we had anticipated.”
Adjusting for pension loss amortization, pension settlement losses and restructuring and impairment charges, non-GAAP adjusted net income was $5.7 million, or $0.21 per share for the fourth quarter of 2010, compared with non-GAAP adjusted net income of $3.2 million, or $0.11 per share for the fourth quarter of 2009. On a year-to-date basis, adjusting for pension loss amortization, pension settlement losses and restructuring and impairment charges, non-GAAP adjusted net income was $15.5 million, or $0.54 per share compared with non-GAAP adjusted net income of $16.4 million, or $0.58 per share for the prior year.
Capital expenditures were $14.7 million for the year using a combination of $8.4 million in cash and $6.3 million through operating and capital lease agreements. In addition, the Company purchased the assets of Fusion Graphics, Inc. for $2.5 million during the second quarter. Pension funding was $24.0 million for the year. Non-GAAP cash on a net debt basis was $5.9 million negative for the year.
“We came short of our expectations for cash this year as our year-end receivables balance grew $13 million from the previous quarter,” commented Morgan. “On the upside, this has resulted in strong positive cash flow for the start of 2011.”
Conference Call
Standard Register’s President and Chief Executive Officer Joseph Morgan and Chief Financial Officer Bob Ginnan will host a conference call at 10 a.m. EST on February 25, 2011, to review the fourth quarter and year-end 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 may contain information that is 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. The presentation of non-GAAP information is not meant to be considered in isolation or as a substitute for results prepared in
accordance with accounting principles generally accepted in the United States. In particular, because our outstanding debt 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 receivable balances and letters of credit), we measure cash flow performance prior to debt borrowing or repayment. In effect, we evaluate cash flow as the change in net debt (total debt less cash and cash equivalents).
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 2011 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, results of continuous improvement 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 that will be filed for the year ended January 2, 2011. 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 | ||||||
(Dollars in thousands, except per share amounts) | ||||||
Fourth Quarter | Y-T-D | |||||
13 Weeks Ended | 14 Weeks Ended | 52 Weeks Ended | 53 Weeks Ended | |||
2-Jan-11 | 3-Jan-10 | 2-Jan-11 | 3-Jan-10 | |||
$ 172,684 | $ 184,853 | TOTAL REVENUE | $ 668,377 | $ 694,016 | ||
116,207 | 125,863 | COST OF SALES | 454,796 | 473,446 | ||
56,477 | 58,990 | GROSS MARGIN | 213,581 | 220,570 | ||
COSTS AND EXPENSES | ||||||
50,684 | 54,270 | Selling, general and administrative | 204,613 | 205,270 | ||
370 | - | Pension settlement losses | 370 | 20,412 | ||
- | 2,407 | Environmental remediation | (803) | 2,513 | ||
- | 326 | Asset impairments | - | 1,176 | ||
243 | 748 | Restructuring and other exit costs | 1,733 | 11,513 | ||
51,297 | 57,751 | TOTAL COSTS AND EXPENSES | 205,913 | 240,884 | ||
5,180 | 1,239 | INCOME (LOSS) FROM OPERATIONS | 7,668 | (20,314) | ||
OTHER INCOME (EXPENSE) | ||||||
(572) | (273) | Interest expense | (2,189) | (1,197) | ||
(536) | 35 | Other (expense) income | (333) | 390 | ||
(1,108) | (238) | Total other expense | (2,522) | (807) | ||
4,072 | 1,001 | INCOME (LOSS) BEFORE INCOME TAXES | 5,146 | (21,121) | ||
1,887 | 129 | Income Tax Expense (Benefit) | 2,503 | (8,724) | ||
$ 2,185 | $ 872 | NET INCOME (LOSS) | $ 2,643 | $ (12,397) | ||
28,948 | 28,859 | Average Number of Shares Outstanding - Basic | 28,917 | 28,836 | ||
28,955 | 28,914 | Average Number of Shares Outstanding - Diluted | 28,944 | 28,836 | ||
$ 0.08 | $ 0.03 | BASIC AND DILUTED INCOME (LOSS) PER SHARE | $ 0.09 | $ (0.43) | ||
$ 0.05 | $ 0.05 | Dividends per share declared for the period | $ 0.20 | $ 0.20 | ||
MEMO: | ||||||
$ 5,507 | $ 6,901 | Depreciation and amortization | $ 23,255 | $ 25,044 | ||
$ 4,668 | $ 2,844 | Pension loss amortization | $ 18,672 | $ 14,598 | ||
SEGMENT OPERATING RESULTS | ||||||
(Dollars in thousands) | ||||||
Fourth Quarter | Y-T-D | |||||
13 Weeks Ended | 14 Weeks Ended | 52 Weeks Ended | 53 Weeks Ended | |||
2-Jan-11 | 3-Jan-10 | 2-Jan-11 | 3-Jan-10 | |||
REVENUE | ||||||
$ 43,892 | $ 50,857 | Financial Services | $ 175,677 | $ 193,203 | ||
43,644 | 46,227 | Commercial Markets | 165,888 | 170,107 | ||
87,536 | 97,084 | Total Commercial | 341,565 | 363,310 | ||
66,315 | 70,357 | Healthcare | 250,963 | 265,850 | ||
18,833 | 17,412 | Industrial | 75,849 | 64,856 | ||
$ 172,684 | $ 184,853 | Total Revenue | $ 668,377 | $ 694,016 | ||
GROSS MARGIN | ||||||
$ 13,105 | $ 14,791 | Financial Services | $ 52,244 | $ 56,184 | ||
11,276 | 11,088 | Commercial Markets | 42,963 | 44,971 | ||
24,381 | 25,879 | Total Commercial | 95,207 | 101,155 | ||
24,771 | 26,230 | Healthcare | 91,926 | 96,475 | ||
6,112 | 4,950 | Industrial | 22,675 | 18,024 | ||
1,213 | 1,931 | LIFO adjustment | 3,773 | 4,916 | ||
$ 56,477 | $ 58,990 | Total Gross Margin | $ 213,581 | $ 220,570 | ||
NET INCOME (LOSS) BEFORE TAXES | ||||||
$ 2,438 | $ 1,851 | Financial Services | $ 7,361 | $ 7,914 | ||
(502) | (2,090) | Commercial Markets | (4,011) | (3,981) | ||
1,936 | (239) | Total Commercial | 3,350 | 3,933 | ||
6,676 | 6,027 | Healthcare | 19,575 | 22,553 | ||
660 | (355) | Industrial | 239 | (1,304) | ||
(5,200) | (4,432) | Unallocated | (18,018) | (46,303) | ||
$ 4,072 | $ 1,001 | Total Net Income (Loss) Before Taxes | $ 5,146 | $ (21,121) | ||
BALANCE SHEET | ||||||
(Dollars in thousands) | ||||||
2-Jan-11 | 3-Jan-10 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ 531 | $ 2,404 | ||||
Accounts and notes receivable | 122,308 | 108,524 | ||||
Inventories | 29,253 | 33,625 | ||||
Other current assets | 20,953 | 24,504 | ||||
Total current assets | 173,045 | 169,057 | ||||
Plant and equipment | 74,149 | 85,740 | ||||
Goodwill and intangible assets | 8,822 | 6,557 | ||||
Deferred taxes | 102,996 | 104,691 | ||||
Other assets | 10,819 | 13,676 | ||||
Total assets | $ 369,831 | $ 379,721 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current portion long-term debt | $ 1,467 | $ 35,868 | ||||
Other current liabilities | 77,296 | 77,349 | ||||
Deferred compensation | 6,306 | 7,699 | ||||
Long-term debt | 42,926 | - | ||||
Retiree healthcare obligation | 4,931 | 7,425 | ||||
Pension benefit obligation | 185,174 | 202,146 | ||||
Other long-term liabilities | 6,883 | 7,080 | ||||
Shareholders' equity | 44,848 | 42,154 | ||||
Total liabilities and shareholders' equity | $ 369,831 | $ 379,721 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
(Dollars in thousands) | ||||||
52 Weeks Ended | 53 Weeks Ended | |||||
2-Jan-11 | 3-Jan-10 | |||||
Net income (loss) plus non-cash items | $ 48,128 | $ 54,369 | ||||
Working capital | (4,112) | 3,618 | ||||
Restructuring payments | (5,409) | (9,872) | ||||
Contributions to qualified pension plan | (24,000) | (20,600) | ||||
Other | (2,819) | (8,341) | ||||
Net cash provided by operating activities | 11,788 | 19,174 | ||||
Capital expenditures, net | (8,403) | (8,844) | ||||
Acquisition | (2,464) | - | ||||
Proceeds from sale of equipment | 359 | 634 | ||||
Net cash used in investing activities | (10,508) | (8,210) | ||||
Net change in borrowings under credit facility | 4,019 | 2,010 | ||||
Principal payments on long-term debt | (1,477) | (159) | ||||
Dividends paid | (5,807) | (11,026) | ||||
Other | 153 | 201 | ||||
Net cash used in financing activities | (3,112) | (8,974) | ||||
Effect of exchange rate | (41) | 132 | ||||
Net change in cash | $ (1,873) | $ 2,122 | ||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES | ||||||
(Dollars in thousands, except per share amounts) | ||||||
Fourth Quarter | Y-T-D | |||||
13 Weeks Ended | 14 Weeks Ended | 52 Weeks Ended | 53 Weeks Ended | |||
2-Jan-11 | 3-Jan-10 | 2-Jan-11 | 3-Jan-10 | |||
$ 2,185 | $ 872 | GAAP Net Income (Loss) | $ 2,643 | $ (12,397) | ||
Adjustments: | ||||||
4,668 | 2,844 | Pension loss amortization | 18,672 | 14,598 | ||
370 | - | Pension settlement losses | 370 | 20,412 | ||
758 | 1,074 | Restructuring and impairment charges* | 2,248 | 12,689 | ||
(2,302) | (1,556) | Tax effect of adjustments (at statutory tax rates) | (8,454) | (18,941) | ||
$ 5,679 | $ 3,234 | Non-GAAP Net Income | $ 15,479 | $ 16,361 | ||
$ 0.08 | $ 0.03 | GAAP Income (Loss) Per Share | $ 0.09 | $ (0.43) | ||
Adjustments, net of tax: | ||||||
0.10 | 0.06 | Pension loss amortization | 0.39 | 0.31 | ||
0.01 | - | Pension settlement losses | 0.01 | 0.43 | ||
0.02 | 0.02 | Restructuring and impairment charges* | 0.05 | 0.27 | ||
$ 0.21 | $ 0.11 | Non-GAAP Income Per Share | $ 0.54 | $ 0.58 | ||
GAAP Net Cash Flow | $ (1,873) | $ 2,122 | ||||
Adjustments: | ||||||
Credit facility borrowed | (4,019) | (2,010) | ||||
Non-GAAP Net Cash Flow | $ (5,892) | $ 112 | ||||
*includes impairment recorded in other income | ||||||