SR Spire Inc

Standard Register (NYSE: SR) today announced its financial results for the first quarter, which ended April 3, 2011. The Company reported revenue of $164.9 million and a net income of $0.5 million, or $0.02 per share. The results compare to revenue of $167.4 million and a net loss of $0.8 million, or $0.03 per share, last year.

Results of Operations

Revenue was down slightly relative to the prior year. Increases in core growth solutions were offset by expected declines in legacy products in every segment but Industrial. Legacy products represent the majority of the Company’s portfolio and provide a foundation of stability, however the Company expects that future revenue growth will be driven by increases in core solution sales throughout all focus markets.

“Solutions that we call core are where the majority of our investment and innovation will continue to take place,” said Joseph Morgan, president and chief executive officer. “These core solutions have been developed as the result of deep market expertise in assisting our customers to solve problems, operate more efficiently, build brand consistency, reduce risk and ultimately advance their reputations. The ability to provide these high-value solutions is a fundamental advantage that differentiates Standard Register from our competitors.”

Gross margin as a percent of revenue improved to 32.5 for the quarter versus 32.0 in the prior year. LIFO inventory adjustment was negligible for the current quarter versus a favorable LIFO adjustment of $1.7 million for the prior year. Selling, general and administrative expenses, excluding pension loss amortization were down $3.3 million from the prior year. Continuous improvement initiatives allowed the Company to enhance its cost structure which, allowed all three business units to show increases in their operating profit over the prior year.

Adjusting for pension loss amortization and restructuring charges, non-GAAP net income was $4.2 million, or $0.15 per share for the current quarter compared with non-GAAP net income of $2.3 million, or $0.08 per share for the prior year quarter.

During the quarter, capital expenditures were $1.9 million and are expected to be in the range of $18-21 million for the year, the majority of which will support the advancement of our core growth solutions. Pension funding contributions were $8.0 million during the quarter and are expected to be approximately $30 million for the year. Non-GAAP cash on a net debt basis was $5.8 million positive for the quarter, driven by working capital improvements previously predicted.

“Generating profit and positive cash flow during the quarter demonstrates our progress toward a more enduring environment,” noted Morgan. “However, we know that to be a sustainable organization, we need to deliver growth on the top-line as well. Driving revenue growth by advancing our core growth solutions is the primary focus for this year.”

Dividend

On Thursday, April 28, 2011, Standard Register’s board of directors declared a quarterly dividend of $0.05 per share to be paid on June 10, 2011, to shareholders of record as of May 27, 2011. The board will consider future dividend payments on a quarter-by-quarter basis in accordance with its normal practice.

Conference Call

Standard Register’s President and Chief Executive Officer Joe Morgan and Chief Financial Officer Bob Ginnan will host a conference call at 10:00 a.m. EDT on April 29, 2011, to review the first quarter results. The call can be accessed via an audio web cast accessible at: http://www.standardregister.com/investorcenter.

About Standard Register

Standard Register (NYSE:SR) is trusted by the world’s leading companies to advance their reputations by aligning communications with corporate standards and priorities. Providing market-specific insights and a compelling portfolio of solutions to address the changing business landscape in healthcare, commercial and industrial markets, Standard Register is the recognized leader in the management and execution of mission-critical communications. 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 2011 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 including the ability to attract and retain customers, results of continuous improvement and other cost-containment strategies, and the Company’s success in attracting and retaining key personnel. 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.

Non-GAAP Measures Presented in This Press Release

The Company reports its results in accordance with Generally Accepted Accounting Principles in the United States (GAAP). However, we believe that certain non-GAAP measures found in this press release, when presented in conjunction with comparable GAAP measures, are useful for investors. 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. We discuss several measures of operating performance including non-GAAP net income and earnings per share and cash flow on a net debt basis which are not calculated in accordance with GAAP. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.

Management evaluates the Company’s results excluding pension loss amortization, pension settlements, restructuring charges, and asset impairments. We believe that this non-GAAP financial measure is useful to investors because it provides a more complete understanding of our current underlying operating performance, a clearer comparison of current period results with past reports of financial performance, and greater transparency regarding information used by management in its decision making. Internally, management and our Board of Directors use this non-GAAP measure to evaluate our business performance.

In addition, because our credit facility 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 receivables, inventories, and letters of credit), we take the measure of cash flow performance prior to borrowing or repayment of the credit facility. In effect, we evaluate cash flow as the change in net debt (credit facility debt less cash and cash equivalents).

The table below provides a reconciliation of these non-GAAP measures to their most comparable measure calculated in accordance with GAAP.

THE STANDARD REGISTER COMPANY STATEMENT OF OPERATIONS (Dollars in thousands, except per share amounts)     Y-T-D 13 Weeks Ended   13 Weeks Ended 3-Apr-11   4-Apr-10   TOTAL REVENUE $ 164,889 $ 167,423   COST OF SALES   111,257       113,814     GROSS MARGIN 53,632 53,609   COSTS AND EXPENSES Selling, general and administrative 52,303 54,145 Restructuring and other exit costs   74       432     TOTAL COSTS AND EXPENSES   52,377       54,577     INCOME (LOSS) FROM OPERATIONS 1,255 (968 )   OTHER INCOME (EXPENSE) Interest expense (572 ) (390 ) Other income   5       2   Total other expense (567 ) (388 )   INCOME (LOSS) BEFORE INCOME TAXES 688 (1,356 )     Income Tax Expense (Benefit)   153       (543 )   NET INCOME (LOSS) $ 535     $ (813 )       Average Number of Shares Outstanding - Basic 28,976 28,875 Average Number of Shares Outstanding - Diluted 28,997 28,875   BASIC AND DILUTED INCOME (LOSS) PER SHARE $ 0.02 $ (0.03 )   Dividends per share declared for the period $ 0.05 $ 0.05   MEMO: Depreciation and amortization $ 5,350 $ 6,087 Pension loss amortization $ 6,073 $ 4,668     SEGMENT OPERATING RESULTS** (Dollars in thousands) Y-T-D 13 Weeks Ended 13 Weeks Ended 3-Apr-11   4-Apr-10 REVENUE Financial Services $ 43,306 $ 44,714 Commercial Markets   40,331       41,651   Total Commercial 83,637 86,365   Healthcare 60,672 64,261 Industrial   20,580       16,797   Total Revenue $ 164,889     $ 167,423     GROSS MARGIN Financial Services $ 13,143 $ 13,344 Commercial Markets   11,187       10,332   Total Commercial 24,330 23,676   Healthcare 22,572 23,541 Industrial 6,552 4,734 LIFO adjustment   178       1,658   Total Gross Margin $ 53,632     $ 53,609     NET INCOME (LOSS) BEFORE TAXES Financial Services $ 1,691 $ 1,097 Commercial Markets   (293 )     (2,139 ) Total Commercial 1,398 (1,042 )   Healthcare 4,683 3,962 Industrial 789 (874 ) Unallocated   (6,182 )     (3,402 ) Total Net Income (Loss) Before Taxes $ 688     $ (1,356 )   **Prior year data has been revised to reflect the reclassification of certain customers between segments   BALANCE SHEET (Dollars in thousands) 3-Apr-11   2-Jan-11   ASSETS Cash and cash equivalents $ 557 $ 531 Accounts and notes receivable 110,612 122,308 Inventories 29,455 29,253 Other current assets   20,639       20,953   Total current assets 161,263 173,045   Plant and equipment 70,694 74,149 Goodwill and intangible assets 8,779 8,822 Deferred taxes 100,820 102,996 Other assets 11,086 10,819       Total assets $ 352,642     $ 369,831     LIABILITIES AND SHAREHOLDERS' EQUITY Current portion long-term debt $ 1,490 $ 1,467 Other current liabilities 72,570 77,296 Deferred compensation 6,278 6,306 Long-term debt 36,817 42,926 Retiree healthcare obligation 4,921 4,931 Pension benefit obligation 174,935 185,174 Other long-term liabilities 6,877 6,883 Shareholders' equity 48,754 44,848       Total liabilities and shareholders' equity $ 352,642     $ 369,831       CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)   13 Weeks Ended 13 Weeks Ended 3-Apr-11   4-Apr-10   Net income (loss) plus non-cash items $ 11,540 $ 9,389 Working capital 8,662 7,757 Restructuring payments (683 ) (2,407 ) Contributions to qualified pension plan (8,000 ) (7,000 ) Other   (2,068 )     (2,144 ) Net cash provided by operating activities   9,451       5,595   Capital expenditures, net (1,879 ) (2,073 ) Proceeds from sale of equipment   -       19   Net cash used in investing activities   (1,879 )     (2,054 ) Net change in borrowings under credit facility (5,728 ) (4,119 ) Principal payments on long-term debt (357 ) (199 ) Dividends paid (1,459 ) (1,456 ) Other   (15 )     10   Net cash used in financing activities   (7,559 )     (5,764 ) Effect of exchange rate   13       12   Net change in cash $ 26     $ (2,211 )       RECONCILIATION OF GAAP TO NON-GAAP MEASURES (Dollars in thousands, except per share amounts) Y-T-D 13 Weeks Ended 13 Weeks Ended 3-Apr-11   4-Apr-10   GAAP Net Income (Loss) $ 535 $ (813 ) Adjustments:   Pension loss amortization 6,073 4,668 Restructuring charges 74 432 Tax effect of adjustments (at statutory tax rates) (2,441 ) (2,025 )       Non-GAAP Net Income $ 4,241     $ 2,262       GAAP Income (Loss) Per Share $ 0.02 $ (0.03 ) Adjustments, net of tax:   Pension loss amortization 0.13 0.10 Restructuring charges - 0.01       Non-GAAP Income Per Share $ 0.15     $ 0.08       GAAP Net Cash Flow $ 26 $ (2,211 ) Adjustments:   Credit facility paid 5,728 4,119       Non-GAAP Net Cash Flow $ 5,754     $ 1,908