-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EC2jnQAbnO+WziklhR+TtVn8R2+aLyyuyHwgeQZnMa9sf/JmbYogaCAtkS8mIQTM pT9VX8RJ+LjH8CxX5kHqUw== 0000093456-97-000005.txt : 19971114 0000093456-97-000005.hdr.sgml : 19971114 ACCESSION NUMBER: 0000093456-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970928 FILED AS OF DATE: 19971112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD REGISTER CO CENTRAL INDEX KEY: 0000093456 STANDARD INDUSTRIAL CLASSIFICATION: MANIFOLD BUSINESS FORMS [2761] IRS NUMBER: 310455440 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11699 FILM NUMBER: 97712805 BUSINESS ADDRESS: STREET 1: 600 ALBANY ST CITY: DAYTON STATE: OH ZIP: 45401 BUSINESS PHONE: 5134341000 MAIL ADDRESS: STREET 1: 600 ALBANY STREET STREET 2: P O BOX 1167 CITY: DAYTON STATE: OH ZIP: 45401-1167 10-Q 1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 28, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From to Commission File Number 01-1097 THE STANDARD REGISTER COMPANY OHIO CORPORATION 31-0455440 600 ALBANY STREET, DAYTON, OHIO 45401 TELEPHONE NUMBER 937-443-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No. . --- --- CLASS OUTSTANDING AS OF September 28, 1997 Common Stock - $1.00 Par Value 23,688,385 Class A Stock - $1.00 Par Value 4,725,000 - 1 of 10 2 THE STANDARD REGISTER COMPANY INDEX Page No. --- PART I - FINANCIAL STATEMENTS - ----------------------------- Balance Sheet September 28, 1997, December 29, 1996 3 Statement of Income 13 Weeks Ended September 28, 1997 and September 29, 1996 39 Weeks Ended September 28, 1997 and September 29, 1996 4 Statement of Cash Flows 39 Weeks Ended September 28, 1997 and September 29, 1996 5 The financial statements of the Registrant included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted, the Registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Annual Report on Form 10-K of the Registrant for the year ended December 29, 1996. The financial statements included herein reflect all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods. The results for interim periods are not necessarily indicative of trends or of results to be expected for a full year. Management's Discussion and Analysis of Results of Operations and Financial Condition 6-7 PART II - OTHER INFORMATION AND SIGNATURE 8-10 - ----------------------------------------- - 2 of 10 - 3 THE STANDARD REGISTER COMPANY BALANCE SHEET (Dollars in Thousands)
ASSETS September 28, December 29, 1997 1996 (Unaudited) (Audited) ----------- ------------ CURRENT ASSETS Cash and Cash Equivalents $ 78,567 $ 64,550 Investment held to maturity 16,339 1,215 Accounts Receivable, less Allowance for Losses 168,655 178,711 Inventories Finished Products 58,819 55,449 Jobs in Process 18,331 18,573 Materials and Supplies 10,024 12,130 Deferred Income Tax 8,206 8,206 Prepaid Expense 5,737 6,153 -------- -------- Total Current Assets 364,678 344,987 -------- -------- PLANT AND EQUIPMENT Buildings and Improvements 65,610 61,711 Machinery and Equipment 261,957 224,702 Office Equipment 49,803 60,894 -------- -------- Total 377,370 347,307 -------- -------- Less Accumulated Depreciation 163,623 141,021 Depreciated Cost 213,747 206,286 Construction in Process 33,720 26,160 Land 4,081 3,512 -------- -------- Total Plant and Equipment 251,548 235,958 -------- -------- OTHER ASSETS Goodwill, Patents, and Other 3,159 3,278 Investment in F3 5,277 2,890 Investment in Polyforms Joint Venture 250 1,000 -------- -------- Total Other Assets 8,686 7,168 -------- -------- TOTAL ASSETS 624,912 588,113 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts Payable 20,587 20,225 Dividends Payable - 5,738 Accrued Compensation 33,853 34,355 Accrued Other Expense 947 5,536 Accrued Taxes, except Income 6,941 5,902 Income Taxes Payable 2,253 2,624 Customer Deposits 21,189 4,185 Deferred Service Contract Income 8,352 7,274 -------- -------- Total Current Liabilities 94,122 85,839 -------- -------- LONG-TERM LIABILITIES Long-Term Debt 4,600 4,600 Retiree Healthcare 28,718 27,643 Deferred Income Taxes 16,785 16,785 -------- -------- Total Long-Term Liabilities 50,103 49,028 -------- -------- SHAREHOLDERS' EQUITY Common Stock, $1.00 Par Value 24,302,091 Shares Issued in 1997 24,302 24,204,392 Shares Issued in 1996 24,204 Class A Stock, $1.00 Par Value 4,725,000 Shares Outstanding 4,725 4,725 Capital in Excess of Par Value 31,402 28,705 Retained Earnings 437,214 400,387 Treasury Stock, 613,706 Shares at Cost (16,956) -------- 239,486 Shares at Cost (4,775) -------- Total Shareholders' Equity 480,687 453,246 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $624,912 $588,113 ======== ========
- 3 of 10 - 4 THE STANDARD REGISTER COMPANY STATEMENT OF INCOME (In Thousands except Data Per Share) (Unaudited)
Third Quarter Nine Months 13 Weeks Ended 39 Weeks Ended Sept 28, Sept 29, Sept 28, Sept 29, 1997 1996 1997 1996 -------- -------- -------- -------- TOTAL REVENUE $237,243 $230,853 $703,824 $699,878 -------- -------- -------- -------- COSTS AND EXPENSES Cost of Products Sold 139,789 139,418 416,244 431,509 Engineering & Research 2,227 2,023 7,020 6,037 Selling and Administrative 58,059 53,687 171,010 159,418 Depreciation and Amortization 9,712 8,643 28,339 25,331 Interest 71 118 218 425 -------- -------- -------- -------- Total Costs and Expenses 209,858 203,889 622,831 622,720 -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 27,385 26,964 80,993 77,158 Income Taxes 11,135 10,899 32,796 31,444 -------- -------- -------- -------- NET INCOME $16,250 $16,065 $48,197 $45,714 ======== ======== ======== ======== Average Number of Shares Outstanding (000) 28,498 28,687 28,498 28,687 DATA PER SHARE Net Income $ 0.57 $ 0.56 $ 1.69 $ 1.59 Dividends Paid 0.20 0.19 0.60 0.57
- 4 of 10 - 5 THE STANDARD REGISTER COMPANY STATEMENT OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Nine Months 39 Weeks Ended Sept 28, Sept 29, 1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 48,197 $ 45,714 -------- -------- Add Items not Affecting Cash: Depreciation and Amortization 28,339 25,330 Loss (Gain) on Sale of Facilities 245 (30) Net Change to Investments 1,267 989 Net Change to Retiree Healthcare 1,075 945 Increase (Decrease) in Cash Arising from Changes in Asset and Liabilities: Accounts Receivable 10,056 27,719 Inventories (1,022) 15,855 Other Assets 417 (544) Accounts Payable 362 1,379 Accrued Expenses (4,052) 817 Income Taxes Payable (371) 781 Customer Deposits 17,004 (2,264) Deferred Service Income 1,078 138 -------- -------- Net Adjustments 54,398 71,115 -------- -------- Net Cash Provided by Operating Activities 102,595 116,829 ======== ======== CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Facilities 401 951 Proceeds from Sale of Short-term investments - 115 Purchase of Short Term Investments 15,000) - Additions to Plant and Equipment (44,456) (44,317) Investment in F3 Corporation (3,028) (751) Investment in Polyforms Joint Venture - (157) -------- -------- Net Cash (Used in) Investing Activities (62,083) (44,159) ======== ======== CASH FLOWS FROM FINANCING ACTIVITIES Principal Payments on Debt - (3,235) Proceeds from Issuance of Common Stock 2,794 1,118 Redemption of Common Stock (12,181) 5 Dividends Paid (17,108) (16,355) -------- -------- Net Cash (Used in) Financing Activities (26,495) (18,467) ======== ======== NET INCREASE IN CASH AND CASH EQUIVALENTS 14,017 54,203 Cash and Cash Equivalents, Beginning 64,550 33,646 -------- -------- CASH AND CASH EQUIVALENTS, ENDING $ 78,567 $ 87,849 ======== ========
- 5 of 10 - 6 THE STANDARD REGISTER COMPANY MANAGEMENT DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations - --------------------- Net Income for the third quarter 1997 rose 1.2% to $16.3 million or $.57 per share, compared to $16.1 million or $.56 per share for the comparable quarter of 1996. Revenue for the quarter was $237.2 million, a 2.8% increase compared to the $230.9 million reported in the third quarter 1996. For the nine months year-to-date period, Net Income was $48.2 million or $1.69 per share, a 5.4% increase compared to 1996's $45.7 million and $1.59 per share result. Revenue for the first nine months was $703.8 million compared with $699.9 million for the comparable period in 1996. The 2.8% increase in revenue for the quarter showed a slight improving trend compared to the .5% decline reported in the first half of 1997. Overall, the growth in net income was primarily attributable to improved gross margins, up 6.6% and 7.2% for the quarter and year-to-date periods, respectively, offset by increases in operating expenses and depreciation. The Document Management Division reported revenue of $174.9 million and $514.7 million for the quarter and year-to-date periods, representing increases of 6.1% and 3.2%, respectively. The current quarter's strong revenue growth was driven by the division's Stanfast on demand printing group, up 26.1%, and the Imaging Services print processing and fulfillment group, up 12.4%. The Stanfast Group's 26.1% growth includes the transfer of envelope products previously subcontracted by the Company; restating the prior year's revenue for the inclusion of envelopes, the Stanfast Group's revenue increased 14.2%. The Document Management Division experienced improved unit growth of 4% for the quarter. The Communicolor Division reported revenue of $23.6 million for the third quarter, 1997. While this was a 3.0% decline from the comparable period in 1996, it compared favorably to the average decline in the preceding four quarters of 11.5%. On a year-to-date basis, the Communicolor Division reported revenue of $68.9 million, down 7.5%. The Document Systems Division reported revenue of $37.9 million for the third quarter, down 6.7%, and $118.1 million on a year-to-date basis, down 3.9%. Contributing to the third quarter decline was a 20.0% decline in equipment revenue reflecting the on-going transition to new intelligent printing application products, a 4.5% decline in maintenance revenue as a result of last year's pruning of unprofitable accounts, and a 4.0% decline in the Pressure Sensitive Group due to increased discounting of labels. Partially offsetting these declines was an increase in supplies revenue, up 3.7% for the quarter. The Company's gross margin for all products and services continued to improve for both the third quarter and nine months year-to-date, increasing 6.6% and 7.2%, respectively. Gross margin as a percentage of revenue was 41.1% for the third quarter, slightly higher than the first half's 40.7%. Gross margin as a percentage of revenue improved 1.5 percentage points over the prior year's 39.6% for the quarter and 2.6 percentage points over the prior year- to-date's 38.3%. - 6 of 10 - 7 The improvements in gross margin on a year-to-date basis continue to be attributable to lower paper price levels in both the Document Management Division and the Document Systems Division's Pressure Sensitive Group, along with improved cost controls in the Document Systems Division's maintenance group. No LIFO inventory adjustments were recorded on a year-to-date basis in either year. During the third quarter, the price of white bond paper, which accounts for approximately 50% of the total paper used by the Company, increased approximately 6% and another 6% increase is expected in the fourth quarter. The anticipated year-end price levels should be reflective of the prices experienced at the end of 1996. Accordingly, the year end LIFO inventory adjustment is not expected to have a material effect on earnings. Selling, administrative, and engineering expenses increased 8.2% and 7.6% for the quarter and year-to-date periods, respectively, reflecting increased sales support expense related to the roll out of the STAR sales office automation system and heavier investment in information services related to the development and support of new internal client server applications. Depreciation and amortization expense continued to increase approximately 12% for both the quarter and year-to-date periods in line with higher capital spending levels. Liquidity and Capital Resources - ------------------------------- The Company's financial condition remains strong. Cash and cash equivalents of $78.6 million exceeded total long term debt of $4.6 million by $74.0 million. Net cash flow from operating activities on a year-to-date basis was $102.6 million resulting from higher net income, a 5.6% reduction in accounts receivable, and a $17 million increase in customer deposits. Current assets were 3.9 times the level of current liabilities. Capital expenditures on a year-to-date basis totaled $44.5 million including the purchase of a $2.7 million Memphis, Tennessee manufacturing facility to house a new Stanfast demand print center utilizing color digital technology. The Company's anticipated annual capital expenditure level remains at $60 million. During the quarter, the Company also invested $15 million in short term investments and repurchased an additional $.8 million of the Company's stock, bringing the total year-to-date stock repurchases to $12.2 million. The Company believes that a combination of internally generated funds and current cash reserves will be adequate to meet operating and financing needs in the near term. - 7 of 10 - 8 THE STANDARD REGISTER COMPANY PART II - OTHER INFORMATION ITEMS 1 THRU 5 - -------------- None ITEM 6 (a) Exhibits - ------ Exhibit No. Description 27 Financial Data Schedule (b) There have been no reports on Form 8-K filed during the quarter for which this report on Form 10-Q is being filed. - 8 of 10 - 9 SIGNATURE --------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. November 11, 1997 THE STANDARD REGISTER COMPANY /s/ C. J. Brown ----------------------------------------- By C. J. Brown, Sr. Vice President, Administration, Treasurer & Chief Financial Officer - 9 of 10 - 10 EXHIBIT INDEX Number Description 27 Financial Data Schedule - 10 of 10 - EX-27 2 EXHIBIT 27
5 This schedule contains summary financial information extracted from The Standard Register Company financial statements for nine months ended September 28, 1997, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-28-1997 SEP-28-1997 78,567 16,339 173,527 4,872 87,174 364,678 415,171 163,623 624,912 94,122 4,600 29,027 0 0 451,660 624,912 701,688 703,824 416,244 622,813 0 126 218 80,993 32,796 48,197 0 0 0 48,197 1.69 1.69
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