-----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, Pr10FIMRVwMawC41ZozUPps1x8pQKLu7P0FLVsaz4Z6mBowiuDH82JqMNF37Y9JB NIf9Vg3Mh6P/msOtNAk8XA== 0000093456-96-000005.txt : 19961115 0000093456-96-000005.hdr.sgml : 19961115 ACCESSION NUMBER: 0000093456-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961113 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: 96662020 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 29, 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 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 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 September 29, 1996 Common Stock - $1.00 Par Value 23,970,021 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 29, 1996, December 31, 1995 3 Statement of Income 13 Weeks Ended September 29, 1996 and October 1, 1995 4 39 Weeks Ended September 29, 1996 and October 1, 1995 Statement of Cash Flows 39 Weeks Ended September 29, 1996 and October 1, 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)
September 29, December 31, ASSETS 1996 1995 CURRENT ASSETS Cash and Cash Equivalents $ 87,849 $ 33,646 Investments Held to Maturity 1,215 1,330 Accounts Receivable, less Allowance for Losses 153,990 181,709 Inventories Finished Products 52,490 57,150 Jobs in Process 22,418 24,953 Materials and Supplies 7,054 15,714 Deferred Income Tax 10,611 10,611 Prepaid Expense 4,444 3,878 Total Current Assets $340,071 $328,991 PLANT AND EQUIPMENT Buildings and Improvements $ 61,405 $ 57,340 Machinery and Equipment 246,357 212,221 Office Equipment 43,859 43,945 Total 351,621 313,506 Less Accumulated Depreciation 151,741 127,871 Depreciated Cost 199,880 185,635 Construction in Process 30,780 27,027 Land 3,512 3,312 Total Plant and Equipment $234,172 $215,974 OTHER ASSETS Goodwill, Patents, and Other 3,926 2,842 Investment in F3 Corporation 2,161 3,150 Investment in Polyforms Joint Venture 4,703 4,546 Total Other Assets $ 10,790 $ 10,538 TOTAL ASSETS $585,033 $555,503 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current Maturities of Long-Term Debt $ 3,285 $ 6,471 Accounts Payable 20,404 19,025 Dividends Payable - 5,441 Accrued Compensation 32,109 31,973 Accrued Retirement Expense 4,528 2,886 Accrued Other Expense 5,557 6,774 Accrued Taxes, except Income 5,397 5,140 Income Taxes Payable 3,315 2,534 Customer Deposits 6,069 8,334 Deferred Service Contract Income 8,593 8,455 Total Current Liabilities $ 89,257 $ 97,033 LONG-TERM LIABILITIES Long-Term Debt $ 5,037 $ 4,600 Retiree Healthcare 27,046 26,101 Deferred Income Taxes 16,552 16,552 Total Long-Term Liabilities $ 48,635 $ 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 394,134 359,334 Treasury Stock, 227,292 Shares at Cost (4,428) 227,446 Shares at Cost (4,434) Total Shareholders' Equity $447,141 $411,217 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $585,033 $555,503 - 3 -
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 29, Oct 1, Sept 29, Oct 1, 1996 1995 1996 1995 TOTAL REVENUE $ 230,853 $ 227,922 $ 699,878 $ 654,944 COSTS AND EXPENSES Cost of Products Sold $ 139,418 $ 149,467 $ 431,509 $ 424,890 Engineering and Research 2,023 2,016 6,037 5,940 Selling and Administrative 53,687 48,976 159,418 142,939 Depreciation and Amortization 8,643 7,578 25,331 22,496 Interest 118 225 425 765 Total Costs and Expenses $ 203,889 $ 208,262 $ 622,720 $ 597,030 INCOME BEFORE INCOME TAXES $ 26,964 $ 19,660 $ 77,158 $ 57,914 Income Taxes 10,899 7,942 31,444 23,374 NET INCOME $ 16,065 $ 11,718 $ 45,714 $ 34,540 Average Number of Shares Outstanding (000) 28,687 28,657 28,687 28,657 DATA PER SHARE Net Income Primary and Fully Diluted $ 0.56 $ 0.41 $ 1.59 $ 1.21 Dividends Paid $ 0.19 $ 0.18 $ 0.57 $ 0.54 - 4 -
5 THE STANDARD REGISTER COMPANY STATEMENT OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Nine Months 39 Wks Ended Sept 29, Oct 1, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $45,714 $ 34,540 Add Items not Affecting Cash: Depreciation and Amortization $ 25,330 $ 22,495 (Gain) on Sale of Facilities (30) (897) Net Change to Post-Retirement Healthcare 945 366 Net Change to Investment 989 - Increase (Decrease) in Cash Arising from Changes in Assets and Liabilities: Accounts Receivable 27,719 (11,669) Inventories 15,855 (13,751) Other Assets (544) (1,563) Accounts Payable 1,379 (1,849) Accrued Expenses 817 7 Income Taxes Payable 781 (806) Customer Deposits (2,264) 1,153 Deferred Service Income 138 1,830 Net Adjustments 71,115 (4,684) Net Cash Provided by Operating Activities $116,829 $ 29,856 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from Sale of Facilities $ 951 $ 1,998 Additions to Plant and Equipment (44,317) (34,973) Proceeds from Sale of Short-Term Investments 115 - Loan to F3 Corporation (751) - Investment in F3 Corporation - (3,500) Investment in Polyforms Joint Venture (157) (1,690) Net Cash (Used in) Investing Activities $(44,159) $(38,165) 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 5 - Dividends Paid (16,355) (15,479) Net Cash (Used in) Financing Activities $(18,467) $(17,714) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 54,203 $(26,023) Cash and Cash Equivalents, Beginning $ 33,646 $ 55,235 CASH AND CASH EQUIVALENTS, ENDING $ 87,849 $ 29,212 - 5 -
6 THE STANDARD REGISTER COMPANY MANAGEMENT DISCUSSION AND ANALYSIS OF THE INTERIM FINANCIAL STATEMENTS Results of Operations Net income for the third quarter 1996 was $16.1 million, or $.56 per share compared with $11.7 million, or $.41 per share for the comparable quarter of 1995. Excluding LIFO accounting adjustments made in 1995, third quarter net income increased 10.6%. For the first nine months of 1996, net income was $45.7 million, or $1.59 per share compared to 1995's $34.5 million, or $1.21 per share result. Excluding the effect of prior year LIFO adjustments, year-to-date earnings grew 9.2%. The Document Management Division reported revenue of $182.1 million and $552.3 million for the quarter and year-to-date periods, representing increases of 5.4% and 11.0%, respectively. Rising paper prices throughout most of 1995 led to higher forms prices as the Company successfully passed through the higher costs to customers. Paper prices stabilized during the second half of 1995 and have weakened in 1996. In each successive quarter of 1996, the spread between current and prior year average selling prices has narrowed, reducing the division=s nominal revenue growth. Unit growth on a year-to-date basis was 4%. Year-to-date revenues from targeted growth products - Pressure Sensitive, Imaging, Stanfast, Distribution Services, and Electronic Products - continued their double digit growth, up 25.8%. These products now account for 50% of the division=s revenue, up from 44% in the prior year. Revenues from traditional business forms products rose 1.4%. The Communicolor Division=s revenue declined 12.8% for the third quarter to $24.4 million; the year-to-date result of $74.5 million was down 10.9%. The Company=s direct mail division has experienced softened demand in each of the past three quarters. This trend is expected to continue through the fourth quarter. The Document Systems Division's revenue declined 8.2% in the third quarter to $23.3 million as a result of declines in equipment and maintenance revenues of 16.1% and 5.8%, respectively. Excluding the effect of an exceptionally large order for laser printers in the third quarter of 1995, equipment revenue increased 3.4%. Maintenance revenue declined due to the elimination of selected unprofitable contracts. Supplies revenue increased 4.4% and 10.2% on a quarter and year-to-date basis. The division=s year-to- date revenue has declined .8% to $69.3 million. Gross margin continued to improve for both the third quarter and year-to- date periods. Gross margin as a percentage of revenue was 39.6% in the third quarter of 1996, compared to 34.4% in the prior year period. For the year-to-date period, gross margin was 38.3%, 3.2 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 third quarter and year-to-date periods in 1996. The Company recorded LIFO inventory charges of $4.7 million pre-tax or $.09 per share after tax in the third quarter of 1995 and $12.2 million pre-tax or $.25 per share after tax charge during the first nine months of 1995. Excluding the prior year LIFO inventory charges, gross margin as a percentage of revenue improved 3.1 percentage points for the third quarter and 1.3 percentage points on a year-to-date basis. 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. Selling and administrative expenses increased 9.6% and 11.5% for the quarter and year-to-date periods, respectively, as a result of higher sales commissions, increased sales support expenses associated with new national accounts and office automation, and increased information systems expense to - 6 - 7 strengthen the Company=s technological infrastructure. Depreciation expense rose 14.1% and 12.6% for the quarter and year-to-date periods, respectively, reflecting higher capital spending and the effect of the March, 1995 asset acquisition of the FCA division of Capital Graphics, Inc. Interest expense decreased 44% on a year-to-date basis as a result of a $6.0 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 $87.8 million exceeded total debt of $8.3 million by $79.5 million. Net cash flow for the first nine months of 1996 was $54.2 million resulting primarily from continued reductions in accounts receivable, down 15.2%, and inventories, down 16.2%. Current assets were 3.8 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 nine months totaled $44.3 million. 1996 capital expenditures are expected to approach $60 million, including the August, 1996 asset acquisition of the Piedmont Printing Company, Inc., located in Monroe, North Carolina. This facility will enable the Company to expand fulfillment services to the financial marketplace and provide for the addition of another STANFAST short run, high service print center. Subsequent Events On October 21, 1996, the Company completed the sale of its Advanced Medical Systems Division, headquartered in West Trenton, New Jersey, to Montgomery Associates, Inc. The division, with annual revenues of approximately $2.5 million, develops and markets materials management software for hospitals. The sale of the division will not have a material effect on earnings. - 7 - 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 - 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 15, 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 September 29, 1996, and is qualified in its entirety by reference to such financial statements. 1,000 9-MOS DEC-29-1996 SEP-29-1996 87,849 1,215 159,934 5,944 81,962 340,071 385,913 151,741 585,033 89,257 8,322 28,922 0 0 418,219 585,033 697,988 699,878 431,509 622,720 0 1,145 425 77,158 31,444 45,714 0 0 0 45,714 1.59 1.59
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