Standard Register Renewal Plan on Track, Cut 1000 Jobs, Closed 11 Locations So Far
Press release from the issuing company
(DAYTON, OHIO), April18,2001 Standard Register (NYSE: SR) today reported the Renewal Plan announced on January 25 is well underway. In addition, the Company announced first quarter 2001 net income of $6 million, or $0.22 per share, before restructuring charges.
The Company announced on January 25 that it was implementing a comprehensive four-phase Renewal Plan aimed at producing increased value for shareholders. The Plan anticipates that the Company will emerge from 2001 as a smaller, but leaner and more profitable, company with its focus squarely on developing growth opportunities.
"As expected, we've made significant progress in the Restructuring and Reorganization phases of the Plan," says Standard Register CEO Dennis Rediker. "We are on track to complete the restructuring by year-end. The reorganization has begun as we have taken the initial steps toward shifting to the Strategic Business Unit (SBU) structure."
The restructuring phase called for eliminating business that does not provide an adequate return on assets and overhead employed. First quarter revenue from these unprofitable segments was $25 million below that for the comparable period of 2000. Further declines are expected for the balance of the year and the Company has reiterated its original estimate of eliminating approximately $250 million in low-margin revenue. In concert with these revenue reductions, the Company is reducing production capacity by approximately 30 percent and eliminating 2,400 jobs during 2001. To date, 11 production facilities have been closed and the workforce has been reduced by 1,030 people. In addition, 21 sales offices and eight warehouses have been consolidated into other locations. These actions, in addition to others that will take place throughout the remainder of the year, are expected to result in $125 million in annual cost savings for the Company.
Among the plant closures were the Company's commercial print facilities in Boothwyn, Pennsylvania and Secaucus, New Jersey. "We concluded that our customers would be better served through our alliance with Consolidated Graphics, which provides excellent quality and national coverage through its network of 60+ printers," said COO Peter Dorsman.
Several new accounts were signed during the quarter, including American Home Patient and Freightliner; and, relationships with Delta Airlines and Airborne Express were expanded. The new five-year, $50 million contract with Airborne Express adds document management products and services to the labels the Company provides for the overnight package delivery company. The agreement with Delta Airlines is in addition to the document management contract announced last year and represents a growth area for Standard Register as the Fulfillment Services SBU will supply the airline's Tickets By Mail program.
"Overall, we are where we thought we'd be at this point," says Rediker. "The Plan is being implemented, and our financial results are in line with our expectations during the transition to a leaner, more responsive Company."
The Company recorded a $113 million pretax charge for the restructuring portion of the Renewal Plan announced on January 25, equivalent to $2.44 per share after tax. The Company also incurred a $17 million pretax restructuring charge in the first quarter of the prior year, equivalent to $0.38 per share.
Excluding the above restructuring charges, net profit for the quarter was $6 million, or $0.22 per share, compared to $8 million and $0.31 per share in the first quarter of the prior year. The major factor responsible for this profit decline was a $16 million decrease in revenue from $314 million last year to $298 million for the current period. Business identified as low-margin dropped $25 million from year earlier levels, while all other revenue was up $9 million overall. Cost reductions began late in the first quarter and, as a consequence, the percentage gross margins and dollar operating expense levels changed little from the prior year.
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