Champion Industries on Jan. 30, announced a net loss of $4 million for the fiscal year that ended Oct. 31, 2011. That was down from net income of $500,000 for fiscal 2010.
The company also reported a net loss of $5.4 million for the fourth quarter, compared to net income of $900,000 for the fourth quarter of fiscal 2010.
According to the quarterly earnings report, the results for 2011 over 2010 reflected a substantial decrease in earnings primarily as a result of non-cash impairment related charges associated with goodwill, trade name and masthead in the amount of $8.7 million or $5.4 million net of tax or 52 cents per share on a basic and diluted basis. The impairments are a result of the acquisition of The Herald-Dispatch daily newspaper in 2007.
Marshall T. Reynolds, Champion chairman and CEO, said, "2011 is the year we believe we stabilized the top line of our revenue components. Our sales only decreased slightly over the prior year and our fourth quarter 2011 sales increased 5 percent over 2010 fourth quarter levels. We believe this was a key hurdle to pave the way to future improvements in core profitability. We have identified certain emphasis areas to improve gross margins and have actively begun to implement these initiatives as we move into 2012. In addition, we are evaluating our overall operations to strive for more improvements and to continue to rationalize our current cost structure in light of the continued impact of the global economic crisis on our business."
The earnings report said Champion's results in 2011 and in 2010 "are reflective of a continuation of the most difficult operating environment the company has ever faced, primarily within the printing segment and secondarily in the newspaper segment. Even in this extremely difficult operating environment, the company was able to generate a profit in 2011 and 2010 on a core net income basis."
At Oct. 31, 2011, Champion had about $48.8 million of interest-bearing debt, of which $47.6 million is syndicated. The syndicated debt has been reduced by approximately $37.9 million since inception of the debt, which resulted primarily from the acquisition of The Herald-Dispatch in September 2007. Champion is subject to certain restrictive financial covenants requiring it to maintain certain financial ratios. Champion was not in compliance with the covenants as of Oct. 31 and thus is currently operating under the provisions of a limited forbearance agreement, which expires April 30, 2012.
Champion 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 with a total daily and Sunday circulation of approximately 24,000 and 30,000, respectively.
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