Standard Register Reports 2002 Results, Maintains Strong Financial Position
Press release from the issuing company
DAYTON, Ohio--Feb. 7, 2003--Standard Register today reported results for the year ended December 29, 2002.
Net income in 2002 was $33.0 million or $1.16 per diluted share compared to a net loss of $49.3 million or ($1.79) per share for 2001. The 2002 net income was affected by two special items that reduced net income in the fourth quarter by a net of approximately $0.09 per share: a $3.7-million write-down in the value of an equity investment and $1.1 million of after-tax income from the adjustment of a past restructuring accrual. Excluding these items, 2002 earnings per diluted share were $1.25. Earnings in the prior year were affected by restructuring, asset impairment and other special charges equivalent to $2.81 per diluted share associated with the company's 2001 restructuring program; excluding these special items, net income in 2001 was $1.02 per share.
Revenue for 2002 was $1.03 billion compared to $1.20 billion in the prior year. The decline resulted primarily from the 2001 restructuring in which low-margin business was discontinued as the year progressed. In addition, 2002 revenue was impacted by a weak economy and some residual effect of the actions taken during the restructuring.
Net income for the 2002 fourth quarter was $4.7 million or $0.16 per share compared to $11.3 million or $0.41 per share in the period last year. Excluding the $0.09 per share impact of the special items described above, earnings per share were $0.25 in the 2002 fourth quarter. The prior year's fourth-quarter result was negatively affected by restructuring expenses that trimmed $0.10 per share from net income. Excluding the restructuring expenses, 2001 fourth quarter earnings per share totaled $0.51.
Revenue in the 2002 fourth quarter was $258 million, compared to $286 million in the 2001 quarter. The fourth quarter 2002 was negatively impacted by weak economic conditions.
The company's financial position continues to be strong. Net cash flow during 2002 was $58 million before the $99 million spent on acquisitions. Dividend payments of $0.92 per share totaled $26 million. At year-end, net debt was $80 million, comprised of $203 million of total debt less $123 million of cash and marketable securities. Net debt represented just 20 percent of total capital.
"In 2002, we further strengthened our position as an information solutions company that will create superior value for shareholders and customers for the long term. We bolstered our technology, talent and solutions through acquisitions as well as internal developments. We are uniquely positioned to be the strategic thought partner to companies in process improvement and the migration from a paper-based to a digital way of operating," said Dennis Rediker, Standard Register president and chief executive officer. "We also were successful in maintaining, and even improving upon, the lower cost structure we established through restructuring.
"Our challenge in the year was revenue. With constrained customer spending and increased pricing pressure as a result of a weak economy, our revenues came up short. And, therefore, we weren't able to display our true earnings power.
"We are focused on reversing this revenue trend over the course of 2003 to leverage our platform for growth and value creation."
The company is aligning its resources to more effectively serve its target markets including healthcare, financial services, insurance, manufacturing and distribution. Its actions include creating an inside sales channel to augment direct sales efforts and establishing a strategic account sales organization to focus on significant new business opportunities. It has also realigned its business units to better leverage capabilities across the company, including those gained through its July 2002 acquisition of InSystems Technologies, Inc., an e-business company, and certain assets of PlanetPrint, a consulting, software services and on-demand printing business. Recent actions included bringing together existing and acquired print-on-demand operations into one unit to better address the fast-growing $26-billion print-on-demand market; bolstering InSystems with additional technical and sales resources to accelerate sales of document automation software and systems in target markets; aligning its other e-business subsidiary, SMARTworks, LLC, with Standard Register's sales channel and Information Management organization to extend the industry-leading print management and e-procurement software further into Standard Register's customer base; and combining Label Solutions and parts of its Document Management strategic business unit into one SBU to leverage synergies and accelerate key initiatives in operations, marketing, research and development, and sales.
"We believe that with the changes we've made, we have the right resources focused on the greatest opportunities for accelerating revenue in the traditional business while investing for long-term growth and value creation in businesses with expanding market opportunities," Rediker said.
"We expect economic weakness will continue to dampen our results in the near term," Rediker said. "And, given typical selling cycles, the actions we're taking to accelerate revenue will likely not have an impact on results until the last half of the year. Therefore, we expect total revenue for the year 2003 will be relatively flat with 2002 revenue.
"We also have some cost pressures, including rising healthcare costs and an approximate $12-million increase in pension expense in 2003 resulting from past years' poor stock market performance. However, we will strive to manage costs through strategic sourcing, Six Sigma and other initiatives. And we will benefit from a significant reduction in interest expense.
"We remain confident in our strategic direction and Standard Register's potential for superior long-term growth and shareholder value. And we will continue to invest in initiatives to help us realize that potential."
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