By Trevor Shackelford November 16, 2006 -- Standard Register (NYSE: SR) recently announced their third quarter revenue of $215.3 million, down 1.5%, compared to $218.6 million reported for the same period last year. Revenue for the first nine months of the year was $666.8 million, down 0.6%, compared to $670.5 million a year ago. The net loss from continuing operations for the quarter was $3.7 million, versus a net profit last year of $2.1 million. For the nine month period, net profit on continuing operations was $0.3 million, compared to $4.1 million a year ago. Total earnings per share for the third quarter were a net loss of $0.20, compared to a profit of $0.05 per share in the third quarter a year ago. Total earnings for the first nine months were a loss a $0.44 per share, compared to a profit of $0.05 per share in the first nine months of 2005. Contents of this Summary • Quarter Highlights • Segment Performance • Guidance • Raine Radar • Q & A Quarter Highlights • Standard Register opened a label and print services facility in Monterrey, Mexico. • The company reported an operating loss $3.8 million in the quarter compared to a gain $4.2 million in the same quarter a year ago. • A pension settlement charge was also recorded in the quarter related to lump-sum payments made to retirees. These non-cash, pension-related expenses were substantial, totaling $8.0 million and $20.7 million for the quarter and year-to-date respectively. By comparison, pension loss amortization last year was $4.7 million and $14.2 million for the respective periods. • Gross margin for the third quarter was $70.6 million, or 32.8% of revenues, compared to $74.4 million or 34.0% of revenues reported in the year-ago quarter. • Cost of sales for the quarter was $144.7 million, relatively flat, compared to $144.2 million reported in the same quarter a year ago. • Losses from continuing operations was $3.7 million, compared $2.1 million in the same quarter a year ago. • SG&A expenses for the quarter was $66.5 million, compared to $62.4 million reported for the same period in 2005. • The company reported restructuring and impairment charges of $0.6 million in the third quarter, compared to $0.1 million in the same period a year ago. • Net debt for the third quarter was $39.3 million, or 19.9% of total capital, compared to $41.1million, or 16.8% in the third quarter of 2005. Segment Performance Document and Label Solutions Segment The company reported Q3 revenues for the segment of $141.3 million, down 3% compared to same quarter last year. Print-On-Demand Services (POD) Segment The company reported Q3 revenues of $59.0 million for the quarter, down 1.6% compared to the same quarter last year. Digital Solutions Segment The company reported Q3 revenues for the segment of $200,000 for the second quarter. Other Segment Revenue for all other business during the quarter was $14.9 million, up 16.5% from last year. The majority of these sales come from commercial print offerings. Guidance The company did not give any specific guidance for the fourth quarter. President and CEO Dennis Rediker did state, "Although we expect fourth quarter revenue to rebound from the third quarter level, the third quarter's result alters our view for the total year. We now anticipate that full-year 2006 revenue will be relatively close to last year's total figure.” Raine Radar Standard Register is having a tough year. It looks like price erosion and increased competition are to blame. The company is going to have to find a way to increase the value of its services if it wants to grow. Right now, Standard Register is in a backward slide. Hopefully, the company’s new Monterrey, Mexico, facility will generate some forward momentum. Q & A 1. Standard Register was selected by HP to manage their commercial and digital print services as well as provide warehousing, fulfillment, and distribution services. Rediker believes this partnership is a huge win and will contribute to the gain of many new customers. 2. During the third quarter, the Company celebrated the opening of a new production facility in Monterrey, Mexico, to support U.S. based companies with manufacturing operations in Mexico. The plant will provide label, on-demand printing, warehousing and kitting. 3. Excluding restructuring, impairment, amortization of past pension losses, and the pension settlement charge, income on continuing operations before interest and taxes was $4.8 million in the quarter versus $9.0 million last year; the decrease was primarily the result of the lower revenue. On the same measurement basis, the year-to-date result was $28.6 million, down $0.3 million from last year's result. 4. The pricing environment for the company has remained fairly constant. But, they are having some key customers “shop” for pricing and piece-buy from various vendors. The aggressive sourcing is seemingly a trend in the printing industry. 5. Cash and short term investments for the third quarter were $3.1 million, up 121%, compared with $1.4 million in the same quarter a year ago. The company says it will be investing in technology and make acquisitions only when it seems to make sense to Standard Register’s business model. 6. The company’s document and label services segment was down this quarter, but not as much as the entire industry; therefore, to gain revenues the company has to “steal” business from a competitor. 7. The company is still looking for making acquisitions that make sense according to alignment and strategy in the coming quarters as long as cash flow allows them to do so. They are also trying to gain market share in segments that they traditionally not a player, but through acquisitions they believe this can be done.