Dec. 27 -- Champion Industries, Inc. today announced record net income of $5,474,000 for the year ended October 31, 2006 compared with net income of $1,117,000 for the year ended October 31, 2005. The Company reported net income of $1,973,000 for the quarter ended October 31, 2006 compared with net income of $569,000 for the quarter ended October 31, 2005. The Company's improved results in 2006 compared with 2005 are reflective of strong sales growth, improved gross margins and improved operating margins.
The year of 2005 was impacted in part from the settlement of various legal related issues and Hurricane Katrina. The Company incurred costs in the second quarter 2005 related to charges and associated expenses for various legal related issues, including the settlement of a Mississippi lawsuit for $440,000 and other legal settlements, accruals and expenses in the amount of $337,000. The aggregate impact of the legal related issues and settlements totaled $777,000 for the second quarter of 2005. During the fourth quarter of 2005, the Company incurred charges related to Hurricane Katrina of approximately $1.0 million. In 2006, the Company recognized recoveries, net of expenses associated with Hurricane Katrina in the amount of $377,000.
Champion's balance sheet, the cornerstone of the Company, continued to reflect a strong position with total interest bearing debt to equity at approximately 13%, book value per outstanding share of $4.51, cash of $5.5 million, working capital of $26.0 million and shareholders' equity of $44.8 million.
Marshall T. Reynolds, Chairman of the Board and Chief Executive Officer of Champion, said, "We have been operating Champion Industries for approximately 14 years since our IPO in January 1993 and 2006 represented our peak earnings. In 2006, we set Company earnings records for the first, second and fourth quarters. We began to see operating improvements in 2005; unfortunately these achievements were masked by certain non-recurring items associated with legal related issues and Hurricane Katrina. In 2006, these initiatives were realized and our profitability benefited from our initiatives over the last several years. Our top line growth was especially critical in improving our operating results. We continue to work with our sales force and implement initiatives to assist in perpetuating top line increases. We are in the process of identifying, reviewing or implementing additional cost reduction programs and feel we will begin to see the impact of such savings in the second quarter of 2007. Champion Industries is one of the better capitalized printers in America and our size enables us to compete effectively in the marketplace. We are committed to building a great printing and office products and office furniture company and eagerly look forward to 2007."
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