DAYTON, Ohio -- Standard Register today reported its financial results for the first quarter ended March 29, 2009.
Results of Operations
Revenue for the first quarter was $174.6 million, down 15.7 percent compared with $207.2 million recorded for the comparable quarter of 2008. Gross margin as a percent of revenue was 31.1 percent compared with 31.3 percent in the prior year. "Despite the revenue shortfall, our gross margin as a percent of revenue remained even with last year due to the successful execution of cost reduction initiatives implemented in 2007 and 2008," said Joe Morgan, president and chief executive officer. "We have added to our customer base in the quarter and have not experienced any significant customer losses. Our top line has mainly been impacted by the reduction in corporate spending by many of our customers combined with a continued technology trend that impacts many legacy products."
Net income from continuing operations was a loss of $11.0 million or $0.38 per share compared with income of $2.5 million or $0.09 per share last year. The loss was primarily due to considerable pension settlement charges representing $19.7 million on a pre-tax basis or $0.41 per share. SG&A expenses were $51.8 million compared with $59.5 million in the comparable quarter of 2008. These expenses included non-cash pension loss amortization of $4.7 million vs. $5.2 million in the prior year and are a result of prior years' pension losses as well as declining interest rates. Non-cash pension settlement charges were significant and were related to lump sum payments made to retirees. No pension settlement charges were recorded in the prior year. SG&A expenses, excluding pension loss amortization, decreased in the quarter by $7.3 million. This represented the seventh consecutive quarter of year over year lower SG&A expenses excluding pension amortization. In late 2008, the Company announced plans to reduce annualized costs by $33 million. This was in addition to successfully achieving $40 million from cost-savings measures introduced in mid 2007. "One of our key areas of focus is the relentless pursuit of cost reduction," added Morgan. "This will continue to receive our full attention throughout 2009."
Cash flow on a net debt basis was negative due primarily to unusually large payments in the Company's non-qualified plans and the $0.23 per share dividend paid to shareholders in the quarter.
The Company completed its organizational transformation initiatives by aligning sales, marketing, client satisfaction and in some cases, manufacturing by the major vertical markets of healthcare, industrial products and commercial, a business unit comprised of specific market sectors including financial, government and retail. This targeted approach resulted in the signing of 43 multi-year contracts during the quarter. These contracts represent over $11.0 million in new business on an annualized basis and support the Company's strategy that focusing on a concentrated number of vertical markets will lead to growth in revenue and earnings over the long term.
Standard Register's board of directors today declared a quarterly dividend of $0.05 per share to be paid on June 5, 2009, to shareholders of record as of May 22, 2009. The board will consider future dividend payments on a quarter-by-quarter basis in accordance with its normal practice.
Standard Register's president and chief executive officer Joe Morgan and chief financial officer Bob Ginnan will host a conference call at 10 a.m. EDT on April 24, 2009, to review the first quarter results. The call can be accessed via an audio web cast which is accessible at: http://www.standardregister.com/investorcenter.
Presentation of Information in This Press Release
This press release may contain information that is non-GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows where amounts are either excluded or included not in accordance with generally accepted accounting principles. The presentation of non-GAAP information is not meant to be considered in isolation or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. In particular, we will segregate and highlight cash flows related to restructuring and contributions to our qualified pension plan, both of which are carefully monitored by management and have a significant and variable impact on cash flow. In addition, because our outstanding debt is borrowed under a revolving credit agreement which currently permits us to borrow and repay at will up to a balance of $100 million (subject to limitations related to receivable balances and letters of credit), we measure cash flow performance prior to debt borrowing or repayment. In effect, we evaluate cash flow as the change in net debt (total debt less cash and cash equivalents).
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