SR Spire Inc

DAYTON, Ohio, Feb. 23 /PRNewswire-FirstCall/ -- Standard Register (NYSE:SR) today reported its financial results for the fourth quarter and total year ended December 31, 2006. Results of Operations Revenue on Continuing Operations for the fourth quarter 2006 was $228.1 million, up 3.6 percent over the comparable quarter of 2005. Total year 2006 Revenue on Continuing Operations was $894.9 million, compared to $890.7 million for the prior year. Revenue growth for both the quarter and total year was driven by strong performances in the Company's Print-On-Demand Services, Commercial Print, and Document Systems business units, as indicated below. Despite modest increases in label sales, the Document & Label Solutions (DLS) business unit reported overall decreases of 4.9 percent and 3.5 percent for the quarter and total year, reflecting a very competitive market for these traditional products. Approximately 40 percent of the DLS decreases were isolated to a single customer account. [$ Millions, rounded] 4th Quarter Total Year Revenue by Business 2006 2005 %Chg 2006 2005 %Chg Unit Document & Label Solutions 141.3 148.7 -4.9% 575.3 596.2 -3.5% Print-On-Demand Services 70.3 57.9 21.4% 260.0 239.8 8.4% Commercial Print 9.9 7.5 31.1% 35.6 29.7 20.1% Document Systems 5.9 4.7 25.4% 21.1 20.9 1.1% Digital Solutions 0.1 0.5 -78.2% 0.6 0.7 -15.9% Other 0.6 0.9 -37.9% 2.3 3.5 -34.3% Total 228.1 220.2 3.6% 894.9 890.7 0.5% Gross margins also improved for both the quarter and total year 2006 periods as a result of the overall revenue increases and continuing improvement in manufacturing productivity. Depreciation and amortization expenses were also lower, continuing the trend of recent years. Increased investment in software development, higher sales and marketing compensation, and increased fringe costs pushed selling, general and administrative expense higher in both the quarter and total year. In addition, higher expense for restructuring, impairment, pension loss amortization, and pension settlement had a substantial unfavorable effect on 2006 reported earnings, as indicated in the table below. Excluding these expense items, Income from Continuing Operations was $8.7 million for the fourth quarter 2006 versus $8.8 million for the comparable quarter of 2005; on the same basis, the total year Income from Continuing Operations was $37.3 million in 2006 compared to $37.7 million for 2005. Including these expense items and after Interest & Other Expenses and Income Taxes, the Company reported a Net Loss on Continuing Operations for the fourth quarter of $0.2 million or $0.01 per share, compared to a Net Profit of $2.4 million or $0.08 per share in the prior year. For the total year 2006, Net Income on Continuing Operations was $0.2 million or $0.01 per share, versus $7.1 million or $0.25 per share in 2005. The Company sold its InSystems subsidiary in June 2006 and classified the former business unit as a discontinued operation. Total Net Income, including the results of InSystems operations and its sale, was $1.1 million or $0.04 per share for the fourth quarter compared to a break-even result in the fourth quarter 2005. For the whole of 2006, the Company reported a loss of $11.7 million or $0.41 per share, versus a profit of $1.4 million or $0.05 per share in the prior year. [$ Millions, rounded] Effect on 4Q Income Effect on Annual Income CONTINUING OPERATIONS 2006 2005 Chg 2006 2005 Chg Income from Continuing Operations Before Restructuring, Impairment, Pension Loss Amortization, & the Pension Settlement Charge 8.7 8.8 -0.1 37.3 37.7 -0.4 Restructuring Expense -0.3 -0.2 -0.1 -2.7 -1.0 -1.7 Impairment Expense -1.1 -0.1 -1.0 -2.7 -0.3 -2.4 Amortization of Past Pension Losses -6.5 -4.7 -1.8 -25.6 -19.0 -6.6 Pension Settlement Charge 0.0 0.0 0.0 -1.6 0.0 -1.6 Income / (Loss) on Continuing Operations 0.8 3.7 -0.1 4.7 17.4 -12.8 Interest & Other Income / (Expense) -0.6 -0.1 -0.6 -2.1 -2.0 -0.1 Pretax Income / (Loss) 0.2 3.6 -3.5 2.6 15.5 -12.8 Income Tax Adjustments -0.1 0.2 -0.4 -1.4 -2.2 0.8 Income Taxes -0.2 -1.5 1.3 -1.0 -6.1 5.1 Net Income / (Loss) on Continuing Operations -0.2 2.4 -2.6 0.2 7.1 0.0 DISCONTINUED OPERATIONS 1.3 -2.4 3.7 -11.9 -5.7 -6.1 CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE 0.1 TOTAL NET INCOME / (LOSS) 1.1 0.0 1.1 -11.7 1.4 -13.1 "Despite challenging industry conditions for traditional printed documents, we believe there is good business and cash flow in this industry segment if we continue our market focus and improvements in productivity. We were pleased to see the increases in revenue and gross margin in our other business units, which underscores our shifting mix and our long-term growth opportunity," said Dennis L. Rediker, Standard Register's president and chief executive officer. Cash flow was a negative $19.5 million, primarily a result of higher year- end accounts receivable and 2006 pension contributions of $25 million that were twice the level of the prior two years' average. The higher receivables related to the timing of payments at a few large accounts and an increase in December's revenue. The balance sheet remained strong with a 25.7 percent ratio of net debt (total debt less cash and short-term investments) to total capital. Outlook "Looking forward to 2007, we expect revenue for the total year to increase in the low-to-mid single digit range overall with a continuation of the strategic mix change we witnessed in 2006. Capital spending is expected to step up in 2007 to the $25 - $28 million range in order to support expected growth in the Print-On-Demand Services business, while contributions to the pension plan are expected to fall back to $20 million," added Rediker. Presentation of Information in This Press Release This press release presents information that excludes restructuring, impairment charges, pension settlement charges and amortization of past pension losses. These financial measures are considered 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 (GAAP). This information is intended to enhance an overall understanding of the financial performance due to the non-operational nature of these items and the significant change from period to period. This presentation is consistent with the manner in which the Board of Directors internally evaluates performance. The presentation of non-GAAP information is not meant to be considered in isolation or as a substitute for results prepared in accordance with principles generally accepted in the United States. Conference Call Standard Register president and chief executive officer Dennis L. Rediker and chief financial officer Craig J. Brown will host a conference call at 10 a.m. EST on February 23, 2007, to review the fourth quarter and full-year results. The call can be accessed via an audio webcast which is accessible at: http://www.standardregister.com/investorcenter. About Standard Register Standard Register is a premier document services provider, trusted by companies to manage the critical documents they need to thrive in today's competitive climate. Relying on nearly 100 years of industry expertise, Lean Six Sigma methodologies and leading technologies, the company helps organizations increase efficiency, reduce costs, mitigate risks, grow revenue and meet the challenges of a changing business landscape. It offers document and label solutions, e-business solutions, consulting and print supply chain services to help clients manage documents across their enterprise. More information is available at http://www.standardregister.com/. Safe Harbor Statement This report includes forward-looking statements covered by the Private Securities Litigation Reform Act of 1995. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results for fiscal year 2007 and beyond could differ materially from the Company's current expectations. Forward-looking statements are identified by words such as "anticipates," "projects," "expects," "plans," "intends," "believes," "estimates," "targets," and other similar expressions that indicate trends and future events. Factors that could cause the Company's results to differ materially from those expressed in forward-looking statements include, without limitation, variation in demand and acceptance of the Company's products and services, the frequency, magnitude and timing of paper and other raw-material-price changes, general business and economic conditions beyond the Company's control, timing of the completion and integration of acquisitions, the consequences of competitive factors in the marketplace, cost-containment strategies, and the Company's success in attracting and retaining key personnel. Additional information concerning factors that could cause actual results to differ materially from those projected is contained in the Company's filing with The Securities and Exchange Commission, including its report on Form 10-K for the year ended December 31, 2006. The Company undertakes no obligation to revise or update forward-looking statements as a result of new information since these statements may no longer be accurate or timely. THE STANDARD REGISTER COMPANY Fourth Quarter STATEMENT OF OPERATIONS Y-T-D 13 Weeks 13 Weeks (In Thousands, except Per Share 52 Weeks 52 Weeks Ended Ended Amounts) Ended Ended 31-Dec-06 01-Jan-06 31-Dec-06 01-Jan-06 $228,122 $220,226 TOTAL REVENUE $894,904 $890,740 151,336 146,814 COST OF SALES 587,712 588,675 76,786 73,412 GROSS MARGIN 307,192 302,065 COSTS AND EXPENSES Selling, General and 68,041 61,438 Administrative 268,311 249,481 6,535 7,921 Depreciation and Amortization 28,786 33,848 1,146 146 Asset Impairment 2,738 303 274 208 Restructuring 2,671 998 75,996 69,713 TOTAL COSTS AND EXPENSES 302,506 284,630 INCOME FROM CONTINUING 790 3,699 OPERATIONS 4,686 17,435 OTHER INCOME (EXPENSE) (693) (590) Interest Expense (2,285) (2,465) Investment and Other Income 54 519 (Expense) 228 499 (639) (71) Total Other Expense (2,057) (1,966) INCOME FROM CONTINUING OPERATIONS BEFORE 151 3,628 INCOME TAXES 2,629 15,469 340 1,255 Income Tax Expense 2,475 8,323 NET (LOSS) INCOME FROM (189) 2,373 CONTINUING OPERATIONS 154 7,146 DISCONTINUED OPERATIONS Income (Loss) from discontinued 556 (2,399) operations, net of taxes (1,849) (6,297) Gain (loss) on sale of discontinued operations, net 711 (3) of taxes (10,044) 550 NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF A 1,078 (29) CHANGE IN ACCOUNTING PRINCIPLE (11,739) 1,399 Cumulative effect of a change in accounting principle, net of - - taxes 78 - $1,078 ($29) NET INCOME (LOSS) (11,661) $1,399 Average Number of Shares 28,616 28,829 Outstanding - Basic 28,543 28,738 Average Number of Shares 28,635 28,829 Outstanding - Diluted 28,579 28,766 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE Income (loss) from continuing ($0.01) $0.08 operations $0.01 $0.25 Income (Loss) from discontinued $0.02 (0.08) operations (0.07) (0.22) Gain (Loss) on sale of 0.03 - discontinued operations (0.35) 0.02 $0.04 ($0.00) Net income (loss) per share (0.41) $0.05 $0.23 $0.23 Dividends Paid Per Share $0.92 $0.92 BALANCE SHEET (In Thousands) 31-Dec-06 01-Jan-06 ASSETS Cash & Short Term Investments $488 $13,609 Accounts Receivable 135,839 120,491 Inventories 49,242 47,033 Assets of Discontinued Operations - 25,706 Other Current Assets 32,201 28,692 Total Current Assets 217,770 235,531 Plant and Equipment 119,339 128,601 Goodwill and Intangible Assets 8,168 8,115 Deferred Taxes 86,710 80,599 Other Assets 20,092 23,066 Total Assets $452,079 $475,912 LIABILITIES AND SHAREHOLDERS' EQUITY Current Portion Long-Term Debt $358 $611 Liabilities of Discontinued Operations $0 $5,756 Current Liabilities 100,956 94,236 Deferred Compensation 17,190 16,357 Long-Term Debt 41,021 34,379 Retiree Healthcare 20,398 43,885 Pension Liability 153,953 107,236 Other Long-Term Liabilities 36 - Shareholders' Equity 118,167 173,452 Total Liabilities and Shareholders' Equity $452,079 $475,912 DATASOURCE: Standard Register CONTACT: Lesley Sprigg +1-937-221-1825, or , or Robert J. Cestelli +1-937-221-1304, or , both of Standard Register Web site: http://www.standardregister.com/ http://www.standardregister.com/investorcenter

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