Standard Register Revenue Flat in Q3, Reports Loss
Press release from the issuing company
DAYTON, Ohio, Oct. 27 -- Standard Register today reported its financial results for the third quarter ended October 1, 2006.
Results of Operations
Total revenue for the third quarter was $215.3 million, compared to $218.6 million for the prior year. Through three quarters, revenue was $666.8 million, versus $670.5 million for the comparable period of 2005. Aggressive bidding activity among a few large accounts has resulted in lower revenue and the Company also experienced a decline in revenue as a consequence of a customer's involvement in an acquisition.
The decline in revenue, coupled with increases in pension-related expenses and income tax adjustments, contributed to reductions in net income for both the quarter and year-to-date periods. The Net Loss on 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.
The table isolates several expense items that had noteworthy effects on reported net income. 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.
The amortization of prior years' pension losses, primarily related to the weak stock market in 2001 - 2002 and declining interest rates, continues to negatively impact current periods' earnings. 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.
The Company also recorded tax valuation allowances and adjustments in the quarter totaling $1.0 million for certain tax assets that are not expected to be realized in the future.
During the 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.
The Company also unveiled to industry analysts its partnership agreement signed recently with Hewlett-Packard that is expected to expand market opportunities for both companies.
"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," said Rediker. "Pricing is expected to continue to be difficult in selected accounts for the fourth quarter, which will likely lower percentage gross margins below our first half 2006 rates," added Rediker.
"Notwithstanding the news on the quarter, we are encouraged by the progress we are making on the opportunities in front of us. We have a solid strategy, a strong financial condition, and continue to invest confidently for the longer-term," said Rediker.
Standard Register's board of directors declared on Oct. 26, 2006 a quarterly dividend of $0.23 per share to be paid on Dec. 8, 2006 to shareholders of record as of Nov. 24, 2006.
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