Champion Industries Posts a Net Loss for Its Third Quarter

HUNTINGTON, WV—Sept. 14, 2012—Champion Industries announced a third quarter 2012 net loss from continuing operations of $1.1 million. This compares to net income from continuing operations of $0.8 million for the three months ended July 31, 2011.

Its net loss from continuing operations for the nine months ended July 31, 2012, was $22.2 million. This compares with net income from continuing operations of $1.2 million for the nine months ended July 31, 2011.

The losses for the nine months ended July 31, 2012 were primarily reflective of pre-tax, non-cash charges of $9.5 million, associated with impairment of goodwill at the newspaper segment and an increase in the deferred tax asset valuation allowance of approximately $15.4 million primarily related to taxes associated with continuing operations.

The reduction in net income from the third quarter of 2012 to the third quarter of 2011 was primarily reflective of a pre-tax gain on early extinguishment of debt to a related party recorded in the third quarter of 2011 of $1.3 million and higher SG&A expenses primarily associated with professional fees related to the company's secured syndicated debt.

Marshall T. Reynolds, chairman of the board and CEO of Champion, said, “Our first nine months of 2012 were negatively impacted by two charges associated with certain non-cash events. When we step back and look at the fundamental operations of the company, we have grown sales for the year to date period to $80.2 million from $76.6 million in the previous year, or 4.6 percent, and when we look at the third quarter of 2012 compared to the prior year, we have grown sales 2.9 percent. We believe this is indicative of our ability to successfully operate our businesses while devoting substantial efforts, funds and resources to identify an appropriate deleveraging path with our secured lenders.

“As a result of these actions, we incurred approximately $1.4 million in increased non-legal professional fees primarily associated with actions associated with our credit facilities. The company continues to work diligently to implement a restructuring plan submitted to our secured lenders and we believe certain facets of this plan will improve overall productivity and efficiency of the company while assisting in addressing credit challenges to assist in a refinancing.

“The company continues to remain focused on our customer base and is cognizant of the need to allocate resources to assure we are serving the needs of our customers. We also must address our secured lenders concerns and identify a path to refinancing our credit which will be beneficial for all stakeholders,” Reynolds added.

Revenues for the three months ended July 31, 2012 totaled $26.3 million, compared to $25.6 million in the same period in 2011. This change represented an increase in revenues of $0.7 million or 2.9 percent.

• The printing segment revenues were flat while the office products and office furniture segment experienced an increase of $0.9 million or 10.4 percent.

• The newspaper revenues for the quarter decreased $0.2 million or 5.2 percent when compared to the prior period.

On a year to date basis for the nine months ended July 31, 2012, revenues increased to $80.2 million from $76.6 million in the prior year or 4.6 percent.

• The printing segment experienced an increase of 4.6 percent from $40.6 million to $42.5 million.

• The office products and office furniture segment experienced an increase of 7.7 percent from $25.2 million to $27.1 million.

• The newspaper segment revenues decreased by 2.3 percent during this period to $10.6 million in 2012 from $10.8 million in 2011.

Reynolds concluded, “I believe the company is taking the interim steps necessary to achieve long-term sustainability and ultimately growth. We are aware that we must address our debt situation and our pending line of credit maturity, but we ultimately believe striving to improve our core business is a fundamental component of a solution for all parties. I look forward to completing 2012 and making every reasonable effort to report a stronger 2013.”

About Champion
Champion Industries is a commercial printer, business forms manufacturer and office products and office furniture supplier in regional markets east of the Mississippi. Champion also publishes The Herald-Dispatch daily newspaper in Huntington, WV with a total daily and Sunday circulation of approximately 24,000 and 29,000, respectively.

Source: Champion.