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Standard Register Reports Increased Profits, Stabilized Revenue

October 29, 2010
DAYTON, OH—Oct. 29, 2010—Standard Register announced its financial results for the third quarter, which ended Oct. 3, 2010. For the quarter, it had revenue of $163.6 million and a net profit of $1.4 million. That compares to last year's quarterly revenue of $163.5 million and a net loss of $5.5 million, which included $10.6 million of restructuring expense primarily related to the MyC3 strategic earnings improvement initiative announced during the quarter.

Through the first nine months, Standard Register reported revenue of $495.7 million and a net profit of $0.5 million. Those results compare to last year's revenue for the period of $509.2 million and a net loss of $13.3 million, which in addition to the MyC3 restructuring incurred during the quarter, included pension settlement charges of $20.4 million.

Results from Operations

The company posted its sixth consecutive quarter of stabilizing revenue trends resulting in growth for the quarter of $0.1 million, net income of $1.4 million, and positive cash flow of $7.7 million when measured from a non-GAAP net debt basis.

"Returning the company to growth has been a principal objective of our turnaround," stated Joseph Morgan, president and CEO. "Revenue, profits and cash flow are the key metrics that we use internally to measure our progress. To see all three metrics move in a positive direction during the quarter provides validation that our strategy is working."

Healthcare rebounded from the prior quarter, posting one percent revenue growth over the prior year third quarter with solid growth in patient communications, wristbands and labels, and workflow solutions. The Industrial market segment continues to show steady growth of twelve percent over the prior year, primarily due to continued but moderating economic recovery within its manufacturing customer base, growth from new customers in both our Mexico and domestic operations and new revenues from in-mold labeling solutions.

Within our Commercial business unit, Financial Services continued to reduce their revenue declines by bringing on new customers, although not overcoming continued challenges in technology automation and other printed product unit declines. Only the Emerging market segment showed signs of weakening revenue trends as the company intentionally began balancing the pursuit of unit growth in a highly commoditized and aggressively priced product categories against improving overall profitability within the segment. Across all business units, we experienced double-digit growth within our marketing solutions.

Gross margin as a percent of revenue was 31.7 for the quarter versus 32.5 in the prior year. LIFO inventory adjustments continue to be the major difference between the two periods as a favorable $0.7 million was recorded for the current period versus a favorable $2.3 million for the same period last year. Through nine months, gross margin was identical between the two years at 31.7 percent of revenue with LIFO at $2.6 million favorable for the current year, versus $3.0 million favorable for the prior year. The cost containment portions of the MyC3 initiative, announced last year, allowed the Company to maintain the gross margin from operations despite lower revenue units.

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