Standard Register Announces Strategic Restructuring, Workforce Reduction
DAYTON, OH—Jan. 23, 2012—Standard Register announced a strategic restructuring program to better align the company’s resources in support of its growing core solutions business and to reduce costs to offset the impact of declining revenue in its legacy operations. The restructuring is expected to result in an estimated $45 million in annual savings and the elimination of 12-15 percent of its workforce over the next 6 to 9 months.
“The actions we’ve announced today will more appropriately align our resources with our revenue expectations and in support of our core solutions business,” said Joseph P. Morgan, Jr., president and CEO. “Importantly, they will also assist us in achieving positive cash flow and in making investments in talent, technology and operational infrastructure, as well as sales and marketing optimization, to drive growth.
“We are accelerating our strategy of providing solutions to enable our customers to align their brand communications with their corporate priorities and standards. We have a solid base of customers as well as significant opportunities to grow market share in each of our market-facing business units.”
Morgan continued, “Despite today’s news, we generated modest revenue gains in the fourth quarter supported in particular by strong results in our financial services segment and healthcare technology. We will continue to aggressively execute our strategic plan. Today’s announcement is another important step forward in stabilizing our position and will result in sufficient liquidity and capital resources to fund our near-term operations and growth objectives.”
Standard Register has realigned its business to focus on four markets where it has deep industry knowledge and strong relationships—healthcare, financial services, commercial markets and industrial. Its customer base includes approximately half of the Fortune 100 as well as a variety of mid-sized organizations and small businesses.
The company’s core solutions help customers operate more efficiently, build brand consistency, and reduce risk through the use of the company’s secure distributed digital network with digital color production and distribution. In addition to its core solutions, the company delivers market-specific solutions in the areas of software and consulting as well as more traditional products and services such as forms printing, transactional labels, commercial print and digital black and white printing.
Costs associated with the restructuring program are expected to reduce fourth quarter 2011 earnings by approximately $5.5 million net of tax. The balance of the costs will reduce 2012 earnings by approximately $1.5 million net of tax.
Standard Register will also record a non-cash charge to tax expense of $70-$90 million to establish a valuation allowance against certain deferred tax assets. The action is necessary under accounting standards that require recording a valuation allowance when it is more likely than not that a portion of the asset will not be realized. The valuation allowance will be maintained until sufficient evidence exists to support its reversal.
Additionally, the company will record a non-cash actuarial loss of approximately $80 million to other comprehensive income within equity as a result of actual pension asset performance as compared to actuarial assumptions and liability increases caused by continued declines in the discount rate. The recording of this loss has no impact on 2011 earnings.
On a preliminary basis, the company expects its fourth quarter 2011 revenue to be $160-$162 million and to post a pretax loss o -$9.6 million to -$10.1 million. On a non-GAAP basis, pretax income (excluding the impact of pension amortization and settlement and restructuring costs) is expected to be $1.3-$1.8 million representing growth as compared to the third quarter 2011 (which also excludes the impact of the postretirement plan amendment).
Standard Register also announced the suspension of its quarterly dividend in keeping with Ohio law, which requires that cash dividends be paid only out of a corporation’s statutory surplus. Because of the decline in book equity related to additional fourth quarter actuarial losses in the company’s pension plan and the valuation allowance established against deferred tax assets, there is not currently a statutory surplus.
About Standard Register
Standard Register 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, financial services, commercial and industrial markets, Standard Register is the recognized leader in the management and execution of mission-critical communications.
Source: Standard Register