-----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, VkIK+OkLpMtZMEoPJI5glcD3RTV5MJFVg4xNkeLEk9yJ0fmziyNZypFnwdD1p2d+ SMbbi55+NN1PhFNA/s/ldw== 0000093456-96-000004.txt : 19960816 0000093456-96-000004.hdr.sgml : 19960816 ACCESSION NUMBER: 0000093456-96-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 1934 Act SEC FILE NUMBER: 001-11699 FILM NUMBER: 96612614 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 June 30, 1996 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 513-443-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Secu- rities 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 June 30, 1996 Common Stock - $1.00 Par Value 23,967,924 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 June 30, 1996, December 31, 1995 3 Statement of Income 13 Weeks Ended June 30, 1996 and July 2, 1995 4 26 Weeks Ended June 30, 1996 and July 2, 1995 Statement of Cash Flows 26 Weeks Ended June 30, 1996 and July 2, 1995 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 31, 1995. 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 the Interim Financial Statements 6-7 PART II - OTHER INFORMATION AND SIGNATURE 8-10 - 2 - 3 THE STANDARD REGISTER COMPANY BALANCE SHEET (Dollars in Thousands) (Unaudited)
June 30, December 31, ASSETS 1996 1995 CURRENT ASSETS Cash and Cash Equivalents $ 66,722 $ 33,646 Investment held to maturity 1,315 1,330 Accounts Receivable, less Allowance for Losses 157,776 181,709 Inventories Finished Products 53,602 57,150 Jobs in Process 24,536 24,953 Materials and Supplies 8,954 15,714 Deferred Income Tax 10,611 10,611 Prepaid Expense 4,946 3,878 Total Current Assets $328,462 $328,991 PLANT AND EQUIPMENT Buildings and Improvements $ 59,221 $ 57,340 Machinery and Equipment 231,279 212,221 Office Equipment 41,884 43,945 Total 332,384 313,506 Less Accumulated Depreciation 144,186 127,871 Depreciated Cost 188,198 185,635 Construction in Process 36,013 27,027 Land 3,312 3,312 Total Plant and Equipment $227,523 $215,974 OTHER ASSETS Goodwill, Patents, and Other 3,239 2,842 Investment in F3 2,370 3,150 Investment in Polyforms Joint Venture 4,703 4,546 Total Other Assets $ 10,312 $ 10,538 TOTAL ASSETS $566,297 $555,503 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current Maturities of Long-Term Debt $ 3,235 $ 6,471 Accounts Payable 15,794 19,025 Dividends Payable - 5,441 Accrued Compensation 28,059 31,973 Accrued Retirement Expense 7,083 2,886 Accrued Other Expense 5,076 6,774 Accrued Taxes, except Income 5,726 5,140 Income Taxes Payable 2,430 2,534 Customer Deposits 5,483 8,334 Deferred Service Contract Income 9,313 8,455 Total Current Liabilities $ 82,199 $ 97,033 LONG-TERM LIABILITIES Long-Term Debt $ 4,600 $ 4,600 Retiree Healthcare 26,475 26,101 Deferred Income Taxes 16,552 16,552 Total Long-Term Liabilities $ 47,627 $ 47,253 SHAREHOLDERS' EQUITY Common Stock, $1.00 Par Value 24,197,313 Shares Issued in 1996 $ 24,197 24,141,758 Shares Issued in 1995 $ 24,142 Class A Stock, $1.00 Par Value 4,725,000 Shares Outstanding 4,725 4,725 Capital in Excess of Stated Value 28,513 27,450 Retained Earnings 383,520 359,334 Treasury Stock, 229,389 Shares at Cost (4,484) 227,446 Shares at Cost (4,434) Total Shareholders' Equity $436,471 $411,217 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $566,297 $555,503 - 3 -
4 THE STANDARD REGISTER COMPANY STATEMENT OF INCOME (In Thousands except Data Per Share) (Unaudited)
Second Quarter Six Months 13 Weeks Ended 26 Weeks Ended June 30, July 2, June 30, July 2, 1996 1995 1996 1995 TOTAL REVENUE $ 239,352 $ 222,523 $ 469,025 $ 427,022 COSTS AND EXPENSES Cost of Products Sold $ 147,708 $ 145,433 $ 292,091 $ 275,423 Engineering & Research 1,995 1,912 4,014 3,924 Selling and Administrative 53,563 47,158 105,731 93,963 Depreciation and Amortization 8,433 7,543 16,688 14,918 Interest 142 263 307 540 Total Costs and Expenses $ 211,841 $ 202,309 $ 418,831 $ 388,768 INCOME BEFORE INCOME TAXES $ 27,511 $ 20,214 $ 50,194 $ 38,254 Income Taxes 11,425 8,173 20,545 15,432 NET INCOME $ 16,086 $ 12,041 $ 29,649 $ 22,822 Average Number of Shares Outstanding (000) 28,686 28,657 28,686 28,657 DATA PER SHARE Net Income Primary and Fully Diluted $ 0.56 $ 0.42 $ 1.03 $ 0.80 Dividends Paid $ 0.19 $ 0.18 $ 0.38 $ 0.36 - 4 -
5 THE STANDARD REGISTER COMPANY STATEMENT OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Six Months 26 Weeks Ended June 30, July 2, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 29,649 $ 22,822 Add Items not Affecting Cash: Depreciation and Amortization $ 16,688 $ 14,918 (Gain) Loss on Sale of Facilities (171) 52 Net Change to Investment 780 0 Net Change to Post-Retirement Healthcare 374 106 Increase (Decrease) in Cash Arising from Changes in Asset and Liabilities: Accounts Receivable 23,934 (1,408) Inventories 10,725 (17,107) Other Assets (1,046) (2,167) Accounts Payable (3,231) (2,381) Accrued Expenses (829) (3,998) Income Taxes Payable (104) (2,204) Customer Deposits (2,851) 5,231 Deferred Service Income 858 2,537 Net Adjustments 45,127 (6,421) Net Cash Provided by Operating Activities $ 74,776 $ 16,401 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Facilities $ 240 $ 71 Additions to Plant and Equipment (28,226) (25,324) Proceeds from Sale of Short Term Investments 15 0 Loan to F3 Corporation (500) 0 Investment in Polyforms Joint Venture (157) (1,246) Net Cash (Used in) Investing Activities $(28,628) $(26,499) CASH FLOWS FROM FINANCING ACTIVITIES Principal Payments on Long-Term Debt $ (3,235) $ (3,235) Proceeds from Issuance of Common Stock 1,118 1,000 Redemption of Common Stock (51) 0 Dividends Paid (10,904) (10,319) Net Cash (Used in) Financing Activities $(13,072) $(12,554) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 33,076 $(22,652) Cash and Cash Equivalents, Beginning $ 33,646 $ 55,235 CASH AND CASH EQUIVALENTS, ENDING $ 66,722 $ 32,583 - 5 -
6 THE STANDARD REGISTER COMPANY MANAGEMENT DISCUSSION AND ANALYSIS OF THE INTERIM FINANCIAL STATEMENTS Results of Operations Net income for the second quarter 1996 was $16.1 million, a 34% increase compared to the $12.0 million result for the comparable quarter of 1995; earnings per share were $.56 vs. $.42 a year earlier. For the six months year-to-date period, net income was $29.6 million or $1.03 per share, a 30% increase compared to 1995's $22.8 million and $.80 per share result. The Document Management Division reported revenue of $189.6 million and $370.2 million for the quarter and year-to-date periods, representing increases of 13% and 14%, respectively. The second quarter increase reflects unit growth of 6%. Revenues from targeted growth products - Pressure Sensitive, Imaging, Stanfast, Distribution Services, and Electronic Products - continued its double digit growth, up 23%, while revenues from traditional business forms products rose 5%. Communicolor's revenue declined 18% for the second quarter to $25.1 million; the year-to-date result of $50.2 million was down 10%. The promotional mail market has experienced softened demand for the past two quarters related to tightened advertising budgets caused by last year's higher paper costs. Recent incoming order levels and fourth quarter press scheduling indicates that this down trend should begin to reverse itself during the fourth quarter. The Document Systems Division's revenue rose a modest 2% in the second quarter to $23.3 million with supplies revenue up 19%, equipment 2% higher and maintenance down 5%. The division's year-to date revenue was $46.1 million, up 3%. Management expects maintenance revenue to decline slightly in 1996 from 1995 levels due to the elimination of selected unprofitable contracts. Gross margin improved for both the second quarter and first half. Gross margin as a percentage of revenue was 38.3% in the second quarter of 1996, compared to 34.6% in the prior year period. For the first half, gross margin was 37.7%, 2.2 percentage points better than the comparable period of 1995. The improvement is attributed to lower paper price levels and the absence of a LIFO inventory adjustment for both the second quarter and year-to-date periods in 1996. The Company recorded LIFO inventory charges of $5.0 million pre-tax or $.11 per share after tax in the second quarter of 1995 and $7.5 million pre-tax or $.16 per share after tax charge for the first half of 1995. Excluding the prior year LIFO inventory charges, gross margin as a percentage of revenue improved 1.4 percentage points for the second quarter and .4 percentage points for the first half of 1996. Paper prices are expected to remain below year-end 1995 levels for the balance of 1996. Accordingly, the Company expects to record a favorable year-end LIFO inventory adjustment. - 6 - 7 Selling and administrative expenses increased 14% and 13% for the quarter and year-to-date periods, respectively, reflecting higher sales commissions, increased sales support expenses associated with new national accounts, and increased information systems expenses to strengthen the Company's technological infrastructure. Depreciation expense rose 12% for both the quarter and year-to-date periods, reflecting higher capital spending and the effect of the March, 1995 acquisition of the FCA division of Capital Graphics, Inc. Interest expense decreased 43% on a year-to- date basis as a result of a $6.5 million decrease in debt level compared to the prior year. Liquidity and Capital Resources The Company's financial condition remains exceptionally strong. Cash and cash equivalents of $66.7 million exceeded total debt of $7.8 million, including current maturities, by $58.9 million. Net cash flow for the first half 1996 was $33 million resulting primarily from improved working capital management. Despite higher revenue, accounts receivable were down 13% and inventories dropped 11%. Current assets were 4.0 times the level of current liabilities. The company believes that a combination of internally generated funds and current cash reserves will be adequate to meet operating and financing needs for the near term. Capital expenditures for the first six months totaled $28.2 million. 1996 capital expenditures are expected to approach $60 million, including the August, 1996 acquisition of the Piedmont Printing Company, Inc., described below. Subsequent Events On August 8, 1996, the Company announced it is pursuing the sale of its Advanced Medical Systems Division, headquartered in West Trenton, New Jersey. The division, with annual revenues of approximately $2.5 million, develops and markets materials management software for hospitals. The Company will focus its software development efforts on its electronic forms, intelligent printing and related application products which have wider strategic implications to the Company's core businesses in the Document Management and Document Systems Divisions. The potential sale of the division is not expected to have a material effect on 1996 financial results. During August, 1996, the Company purchased the assets of the Piedmont Printing Company, Inc., located in Monroe, North Carolina. The Company will make additional investments in the facility to expand fulfillment services offered by the Imaging Services Group to the financial marketplace and will also install a STANFAST Print Center. This center will be the 24th STANFAST location, part of an overall plan to place these short run, high service print centers in all major metropolitan areas. The Southeast is an area of rapid growth for the Company and this acquisition will help to ensure that we continue our high level of customer service. - 7 - 8 THE STANDARD REGISTER COMPANY PART II - OTHER INFORMATION ITEMS 1 THRU 3 None ITEM 4 Submission of Matters to a Vote of Security Holders The Company's Annual Meeting of Shareholders was held April 17, 1996. Following is the result of voting by the Shareholders regarding fixing and determining the number of Directors to be ten. IN FAVOR OPPOSED ABSTAINED 45,641,933 34,235 70,753 As a result of voting of the Shareholders, the following were elected to the Company's Board of Directors to hold office for the ensuing year. NOMINEE IN FAVOR WITHHELD Roy W. Begley, Jr. 45,560,356 186,565 F. David Clarke, III 45,569,801 177,120 Paul H. Granzow 45,566,438 190,483 Graeme G. Keeping 45,567,685 179,236 Peter S. Redding 45,570,955 175,966 Dennis L. Rediker 45,568,679 178,242 Ann Scavullo 45,560,179 186,742 John J. Schiff, Jr. 45,022,479 724,442 Charles F. Sherman 45,565,362 181,559 John Q. Sherman, II 45,560,511 186,410 The 1995 Standard Register Company Stock Option Plan was adopted as a result of the following vote. IN FAVOR OPPOSED ABSTAINED 41,868,674 1,777,495 1,423,097 Following is the result of voting by the Shareholders regarding selection of Battelle & Battelle PLL as the Corporation's Auditors for the year 1996. IN FAVOR OPPOSED ABSTAINED 45,674,954 15,246 56,721 No broker non-votes were recorded. ITEM 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 - 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. August 13, 1996 THE STANDARD REGISTER COMPANY /s/ C. J. Brown By C. J. Brown, Senior Vice President, Administration, Treasurer & Chief Financial Officer - 9 - 10 EXHIBIT INDEX Number Description 27 Financial Data Schedule - 10 - EX-27 2
5 The Standard Register Company Financial Data Schedule This schedule contains summary financial information from The Standard Register Company for the six months ended June 30, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-29-1996 JUN-30-1996 66,722 1,315 163,819 6,043 87,092 328,462 371,709 144,186 566,297 82,199 7,835 28,922 0 0 407,549 566,297 467,780 469,025 292,091 418,831 0 662 307 50,194 20,545 29,649 0 0 0 29,649 1.03 1.03
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