Standard Register Reports First Quarter Results, Announces Cost Reductions
Friday, April 25, 2003
DAYTON, Ohio---April 24, 2003--Standard Register today reported results for the 2003 first quarter ended March 30, 2003. Revenue in the 2003 first quarter was $236 million, down 10.5 percent from the $264 million in the 2002 first quarter. The lower revenue reflects the continuing weak economic conditions and reductions in the revenue base during 2002 related to residual effects of the company's 2001 restructuring. The lower revenue base, along with $3.8 million in increased pretax pension expense, contributed to a net loss in the quarter of $1.1 million or $0.04 per diluted share. The pension expense relates primarily to the decline in the market value of the company's pension assets in recent years. Net income in the 2002 quarter was $10.9 million or $0.39 per diluted share. "While disappointed with our quarter results, we see encouraging signs for the second half of the year," said Dennis L. Rediker, Standard Register president and chief executive officer. "Our order backlogs stabilized in the quarter, following several quarters of gradual decline since the restructuring. The sales and marketing initiatives we launched in recent months are driving increased activity across our businesses. Sales wins are up and we have a solid pipeline of new business opportunities." Cash flow was positive in the quarter with net debt (total debt less cash and short-term investments) declining from $80 million at year-end 2002 to $72 million as of March 30. Net debt to total capital was 19 percent at quarter-end, indicating a continuing strong financial condition. "We are committed to creating superior long-term value for shareholders, customers and associates," Rediker said. "We plan to maximize our return in our core business by increasing our efficiency, reducing costs and growing our market share. At the same time, we will be investing in consulting and enabling technology to exploit emerging growth opportunities." The company is taking several actions in the second quarter to align the company's cost structure with the expected revenue stream and provide for continuing investment in growth initiatives. It will consolidate certain Fulfillment Services operations to form a new state-of-the-art regional print-on-demand (POD) and fulfillment center in Dallas, Texas. Several warehouses will also be consolidated in response to shifting demand in favor of print-on-demand services. A rotary printing plant will also be closed to trim excess capacity. With these plant and warehouse closures plus the elimination of additional positions, primarily at headquarters, the company is eliminating approximately 500 net positions, including some reduction through attrition. These cost reductions are expected to generate annualized pretax savings of approximately $30 million, with about $17 million of savings realized over the balance of 2003. Restructuring and impairment charges are estimated to total $27 million to $30 million pretax, with most recognized in the second quarter of 2003. The estimated cost savings should recover the cash restructuring costs within six to eight months. "We're taking the actions we believe are necessary to align with business conditions while further strengthening our platform for long-term growth," Rediker said. "We are optimistic about our prospects."