Standard Register Reports Q3 Loss: Sales Down 12%
Monday, October 27, 2003
DAYTON, Ohio--Oct. 24, 2003--Standard Register today reported results for the 2003 third quarter and nine months ended Sept. 28, 2003. Revenue in the 2003 third quarter was $222.1 million, down approximately 12 percent from the $252.7 million in the 2002 quarter. Revenue in the nine-month period was $691.2 million, approximately 10 percent below the $770.3 million reported for the same period of 2002. "Our financial performance in the quarter continued to be hampered by reduced unit demand and pricing pressure," said Dennis Rediker, president and chief executive officer. "However, we are optimistic about the future. We are getting traction with our sales initiatives. We have a strong pipeline of opportunities. And we won several major contracts that will begin to translate into revenue in coming quarters as we work through customer inventories and implementation schedules. We remain confident in our long-term growth potential and continue to invest in emerging growth opportunities." The company's investments for growth included technology, talent and capabilities to further strengthen sales effectiveness and bolster its digitization and print-on-demand offerings. During the quarter, Standard Register introduced its ExpeData(TM) suite of digital information solutions. This leading-edge offering includes imaging services, intelligent electronic forms solutions, and innovative digital pen and paper technology that automatically converts written input into digital information. Initial applications of these solutions include drug sample tracking, emergency department triage and other applications where efficient, accurate information capture and business process automation are critical. Standard Register is working with Microsoft, HP and other leading companies to take these solutions to market. Other technology initiatives included customer implementations of SMARTworks® 6.0, a new version of Standard Register's e-procurement and print-management software providing enhanced functionality for one-to-one business communications, digital asset management and business analytics. "We are focused on helping companies increase efficiency, reduce costs, enhance security and strengthen customer loyalty by effectively capturing, managing and using information in their business processes -- whether in paper or digital form," said Rediker. "Our solutions further differentiate Standard Register from the competition and position us for long-term growth. We are funding our initiatives and long-term investments through aggressive cost reductions and asset management, which continue to generate positive operating cash flow and a strong balance sheet." The Company reported a net loss of $1.6 million or $0.05 per share for the 2003 third quarter. These results included restructuring and asset impairment charges equivalent to $0.09 per share, primarily related to ongoing costs from the restructuring that occurred in the second quarter of 2003. Excluding the charges, earnings were $0.04 per share. Also negatively affecting earnings were higher pension costs equivalent to $0.08 per share and the impact of lower revenue. Net income in the 2002 third quarter was $6.3 million or $0.22 per diluted share. For the 2003 nine-month period, the company reported a net loss of $14.7 million or $0.52 per share. This compares to net income last year of $28.1 million or $0.99 per diluted share. The decline in earnings versus the 2002 period is the result of restructuring and impairment charges equivalent to $0.57 per share, higher pension expenses equivalent to $0.23 per share, and the impact of lower revenue partially offset by lower operating expenses and interest expense. The company's financial condition remains strong. Net cash provided by operating activities in the nine-month period totaled $45.8 million after funding $20.0 million in pension plan contributions and $14.6 million in restructuring payments. In addition, the company paid down debt by $77.6 million. As of Sept. 28, 2003, net debt was approximately $62.0 million (debt of $125.0 million less cash and short-term investments of $63.0 million), representing 17.6 percent of total capital. "Due to weak third-quarter revenue and long implementation cycles for new sales, we anticipate that the revenue for the second half of 2003 will fall below revenue in the 2003 first half. However, with our backlogs up and seeing solid incoming orders thus far in October, we expect fourth-quarter revenue to exceed third-quarter revenue," Rediker said. "We will also benefit from cost savings as a result of restructuring actions we took earlier this year."