DAYTON, Ohio, March 6 /PRNewswire-FirstCall/ -- Standard Register today reported its financial results for the fourth quarter and total year ended January 1, 2006. This news release updates a February 23, 2006, announcement of the Company's preliminary unaudited pretax results for the quarter and year. The revenue, pretax profit, cash flow and other information included in the earlier announcement are unchanged in the final audited report.
Results of Operations
Revenue on Continuing Operations was $223.0 million in the quarter, compared to $236.2 million for the fourth quarter 2004. The prior year reporting period included an extra accounting week, which added an approximation of $17.0 million to 2004's fourth-quarter and total-year revenues. On a normalized 13-week quarter basis, revenue was up 1.8 percent. Total 2005 Revenue on Continuing Operations was $901.9 million, up 1.3 percent from the prior year; adjusting for the extra week, revenue increased by an estimated 3.3 percent.
Net Income was at break-even for the quarter, versus a profit last year of $13.4 million. The prior year fourth quarter included a $12.8 million after- tax gain on the sale of the Company's former equipment service business. For the total year, Net Income was $1.4 million, compared to a Net Loss in 2004 of $30.2 million. The gain on sale and the operating results of the equipment service business are reported as discontinued operations.
Net Income on Continuing Operations was at break-even for the fourth quarter, compared to a profit of $0.3 million in the prior year. The current quarter's results included an unfavorable income tax adjustment of $1.4 million to reserve against a Canadian deferred tax asset. For the year, Net Income on Continuing Operations improved from a loss last year of $44.7 million to a profit in 2005 of $0.8 million.
The Company's 2004 results included impairment charges of $48.5 million, including a $47.1 million charge to eliminate the goodwill of its InSystems subsidiary. The improved 2005 operating profit is attributed primarily to the increase in revenue, lower costs, and significantly reduced restructuring and impairment expenses.
The table isolates the effects of restructuring, impairment, and certain tax adjustments for the fourth quarter and total years 2005 and 2004.
Effect on Effect on [$ Millions] Fourth-Quarter Total-Year Income Income CONTINUING OPERATIONS 2005 2004 Chg 2005 2004 Chg Operations before Restructuring & Impairment 2.8 2.7 0.1 13.4 -8.5 21.9 Restructuring Expense -0.2 -1.6 1.3 -2.3 -13.6 11.3 Impairment Expense -0.1 -0.1 -0.1 -0.3 -48.5 48.2 Income / (Loss) on Operations 2.4 1.0 1.4 10.8 -70.6 81.5 Interest & Other Income / (Expense) -0.1 -0.6 0.6 -1.9 -2.4 0.5 Pretax Income / (Loss) 2.4 0.4 2.0 8.9 -73.1 82.0 Ohio Tax Law Change 2.9 2.9 Insystems Deferred Tax Adjustment 1.4 1.4 Other Income Taxes 1.0 0.1 0.9 3.8 -28.4 32.1 Net Income / (Loss) 0.0 0.3 -0.4 0.8 -44.7 45.5 DISCONTINUED OPERATIONS Operations After Tax 0.2 -0.2 1.7 -1.7 Gain on Sale After Tax 12.8 -12.8 0.6 12.8 -12.3 Total After Tax 0.0 13.0 -13.0 0.6 14.5 -14.0 TOTAL NET INCOME / (LOSS) 0.0 13.4 -13.4 1.4 -30.2 31.6
"We continued to make good operating progress in 2005," said Dennis Rediker, president and chief executive officer of Standard Register. "Setting aside restructuring and impairment charges, our 2005 Pre-tax Income on Continuing Operations increased $21.9 million over 2004 and was $36.0 million higher than in 2003."
Cash Flow
The Company continued to generate cash and pay down debt. "The Company netted positive cash flow of $15.9 million during 2005 -- after funding all of our operating needs, $20.2 million in capital expenditures, $15.0 million in pension contributions, $5.2 million in restructuring costs, and $26.6 million in dividend payments," said Rediker. The balance sheet remains very strong with net debt (total debt less cash and short-term investments) ending the year at $21.4 million. End-of-year net debt balances for 2004 and 2003 were $37.3 million and $48.1 million, respectively.
Outlook
"The market for many of our products and services, particularly our traditional printed products, remains very price competitive. Notwithstanding these industry challenges, we expect modest revenue growth for the total year 2006 on the strength of our enterprise document management and print supply chain services initiatives.
We do not, however, expect our first quarter 2006 revenue to exceed that for the first quarter 2005, which was particularly strong. We will also continue to focus on productivity improvements, asset management, and maintaining a strong balance sheet," said Rediker.
Presentation of Information in This Press Release
This press release presents information that excludes restructuring, impairment, the Ohio tax law change, and the InSystems deferred tax adjustment. 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). We believe that this information will enhance an overall understanding of our 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 our 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 Brown, will host a conference call at 10:00 a.m. EST on March 7, 2006, 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.
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, we help 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 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 2006 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 January 1, 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.
THE STANDARD REGISTER COMPANY
Fourth Quarter STATEMENT OF OPERATIONS Y-T-D
13 Weeks 14 Weeks (In Thousands, except Per Share
Ended Ended Amounts) 52 Weeks Ended
01-Jan-06 02-Jan-05 01-Jan-06 02-Jan-05
$223,030 $236,162 REVENUE $901,915 $890,249
145,589 153,297 COST OF SALES 583,303 565,980
77,441 82,865 GROSS MARGIN 318,612 324,269
OPERATING EXPENSES
3,521 2,660 Research and development 11,041 12,900
61,873 66,355 Selling, general and 254,956 276,995
administrative
9,241 11,183 Depreciation and amortization 39,217 42,909
- - Goodwill impairment - 47,059
146 77 Asset impairment 303 1,418
224 1,552 Restructuring 2,266 13,609
75,005 81,827 TOTAL OPERATING EXPENSES 307,783 394,890
2,436 1,038 INCOME (LOSS) FROM CONTINUING 10,829 (70,621)
OPERATIONS
OTHER INCOME (EXPENSE)
(603) (716) Interest Expense (2,483) (2,646)
524 77 Investment and other income 560 209
(79) (639) Total Other Expense (1,923) (2,437)
2,357 399 INCOME (LOSS) FROM CONTINUING 8,906 (73,058)
OPERATIONS BEFORE INCOME TAXES
2,384 56 Income tax expense (benefit) 8,057 (28,362)
(27) 343 NET INCOME (LOSS) FROM 849 (44,696)
CONTINUING OPERATIONS
DISCONTINUED OPERATIONS
- 195 Income from discontinued - 1,658
operations, net of taxes
(2) 12,820 Gain (loss) on sale of 550 12,820
discontinued operations,
net of taxes
$(29) $13,358 NET INCOME (LOSS) $1,399 $(30,218)
28,829 28,543 Average Number of Shares 28,738 28,536
Outstanding - Basic
28,829 28,570 Average Number of Shares 28,766 28,536
Outstanding - Diluted
BASIC AND DILUTED EARNINGS
(LOSS) PER SHARE
$- $0.01 Income (loss) from continuing $0.03 $(1.57)
operations
- 0.01 Income from discontinued - 0.06
operations
- 0.45 Gain on sale of discontinued 0.02 0.45
operations
$- $0.47 Net income (loss) per share $0.05 $(1.06)
$0.23 $0.23 Dividends Paid Per Share $0.92 $0.92
BALANCE SHEET
(In Thousands)
01-Jan-06 02-Jan-05
ASSETS
Cash & cash equivalents $13,609 $44,088
Accounts receivable 123,006 128,396
Inventories 47,033 51,796
Other current assets 30,255 27,960
Total current assets 213,903 252,240
Plant and equipment 129,989 147,160
Goodwill and intangible assets 16,866 19,746
Deferred taxes 83,937 86,505
Other assets 31,217 37,322
Total assets $475,912 $542,973
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion long-term debt $611 $80,549
Other current liabilities 99,437 108,475
Deferred compensation 16,357 16,832
Long-term debt 34,379 867
Retiree healthcare 43,885 46,826
Pension liability 107,236 83,273
Other long-term liabilities 555 746
Shareholders' equity 173,452 205,405
Total liabilities and
shareholders' equity $475,912 $542,973
