-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WTxMaHWPvZ02EsO9Vi56IP6dfsMYyg9NF7CpQzGSAVl4+Dh6EqL5UQ142gNTxsCJ 7HRk5pfpaeKKKPy+FEFTGg== 0000950152-94-000354.txt : 19940331 0000950152-94-000354.hdr.sgml : 19940331 ACCESSION NUMBER: 0000950152-94-000354 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940102 FILED AS OF DATE: 19940330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANDARD REGISTER CO CENTRAL INDEX KEY: 0000093456 STANDARD INDUSTRIAL CLASSIFICATION: 2761 IRS NUMBER: 310455440 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-01097 FILM NUMBER: 94519014 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-K 1 FORM 10-K FOR CENTERIOR 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the fiscal year ended January 2, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ________ to ________ Commission file number 1-1097 THE STANDARD REGISTER COMPANY (Exact name of Registrant as specified in its charter) OHIO 31-0455440 (State or other jurisdiction of (I.R.S. Employer incorporation or of organization) Identification No.) 600 ALBANY STREET, DAYTON, OHIO 45401 (Address of principal executive offices) (Zip Code) (513) 434-1000 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT NAME OF EACH EXCHANGE Title of each class ON WHICH REGISTERED Common Over the counter 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 ___ ---- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant' knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] The aggregate market value of the voting stock held by non-affiliates of the Registrant at February 25, 1994 was approximately $235,722,263. At February 25, 1994, the number of shares outstanding of the issuer's classes of common stock are as follows: Common stock, $1.00 par value 23,994,546 shares Class A stock, $1.00 par value 4,725,000 shares Part III incorporates information by reference from the Proxy Statement for Registrant's Annual Meeting of Shareholders to be held on April 20, 1994. Page 1 of 48 2 THE STANDARD REGISTER COMPANY FORM 10-K PART I ITEM 1. - BUSINESS The Standard Register Company began operations in 1912 in Dayton, Ohio. Throughout its history, its primary business has been the design, manufacture, and sale of business forms. However, to meet the needs of today's business environment, the Company provides a wide range of products and services that facilitate the recording, storage and communication of business transactions and information. The Company believes that it is the second largest in the highly competitive U.S. forms industry, which includes approximately 500 companies. Key differentiating factors within the industry include quality, level of service, and price. The variety of forms currently produced and sold is extensive, ranging from commodity type stock continuous forms to complex custom forms designed to meet the specific needs of individual customers. The Company emphasizes high value-added business forms that satisfy the customer's desire to simplify paperwork and thus improve efficiency. Standard Register also manufactures, sells, and services a variety of financial, bar coding and document processing equipment. Other printed products and services include personalized mail promotional materials and pressure sensitive labels. The Company's products including business forms, other printed products and equipment are marketed by direct selling and service organizations operating from offices located in principal cities throughout the United States. Forms are produced at thirty five plants located throughout the United States and are shipped directly to the customer or stored in warehouses for subsequent on- demand delivery. The management of forms inventories to provide timely, cost-effective delivery is a major element of customer service. The Company purchases raw paper in a wide variety of weights, grades, and colors from various paper mills in the United States and Canada. Carbonless paper, inks, carbon, and printing supplies are available nationally and purchased from leading vendors. Continuing efforts are made to assure adequate supplies to meet present and future sales objectives. The Company fills its needs by ordering from suppliers of long-standing relationship. The Company had engineering and research expense during 1993 of $7,754,000 compared to $7,803,000 in 1992 and $7,854,000 for 1991. These costs relate to the development of new products and to the improvement of existing products and services. These efforts are entirely company sponsored and involve approximately eighty-seven professional employees. The Company had no expenditures during the last three years for customer sponsored research relating to the development of new products, services, or techniques or the improvement of existing products, services, or techniques. In 1993, the Company continued its STANFAST manufacturing operations in eighteen print centers located nationwide. These print centers are devoted to the manufacture and sale of business forms for customers requiring relatively small quantities on a quick turnaround basis. -2- 3 Expenditures for property, plant and equipment totaled $31,076,000 in 1993, compared to $22,697,000 and $28,039,000 in 1992 and 1991, respectively. No significant changes occurred in the types of products, manufacture, or method of distribution during the past fiscal year nor does the Company intend to change its method of doing business in the near future. Other items of information which may be pertinent to an understanding of the Company and its business are as follows: 1.) No material patents, trademarks, licenses, franchises, or concessions are held which have a significant effect upon the business. 2.) No material portion of the Company's business could be considered seasonal. 3.) The Company believes its working capital is sufficient for its current operations. The current ratio has been maintained at 3.9 to 1 at the end of the last three fiscal years. Total debt, including long-term and current maturities, was 6.7% of equity at year-end 1993, compared to 9.2% and 12.7% for years-end 1992 and 1991, respectively. At year-end 1992, cash and cash equivalents exceeded current and long-term debt by approximately $54,977,000. These relationships demonstrate the soundness of the Company's financial position. 4.) No material segment of the Company's business is dependent upon a single or a few customers. No single customer accounts for 10% or more of total revenue. 5.) The Company's backlog of custom printing orders at January 2, 1994 was $51,897,000 compared to $42,670,000 and $43,702,000 at January 3, 1993 and December 29, 1991, respectively. All orders were expected to be filled within the ensuing fiscal year. 6.) The Company has no significant exposure with regard to the renegotiation or termination of government contracts. 7.) Expenditures made by the Company in order to comply with federal, state, or local provisions of environmental protection have not had a material effect upon the Company's capital expenditures, earnings, or competitive position. 8.) At January 2, 1994, the Company had 5,769 employees compared to 5,724 and 5,852 at January 3, 1993 and December 29, 1991, respectively. 9.) Substantially all of the Company's products and services facilitate the recording, storage and communication of business transactions and information. 10.) The Company has no foreign operations and no material portion of the Company's sales or net income is derived from sales to foreign customers. The Company does offer technical assistance to foreign business forms manufacturers and receives royalties for these services. Royalties from these foreign associates are approximately .1% of total revenue. -3- 4 ITEM 2 - PROPERTIES The principal production plants of the Company are located in the following cities: Dayton, Ohio, 677,000 sq. ft., printing and equipment products production plants and corporate headquarters Newark, Ohio, 234,000 sq. ft., promotional printing plant Shelbyville, Indiana, 61,000 sq. ft., printing plant Middlebury, Vermont, 113,000 sq. ft., printing plant York, Pennsylvania, 214,000 sq. ft., printing plant and warehouse Fayetteville, Arkansas, 146,000 sq. ft., printing plant Porterville, California, 126,000 sq. ft., printing plant Cincinnati, Ohio, 52,000 sq. ft., pressure sensitive label production plant Murfreesboro, Tennessee, 82,000 sq. ft., printing plant Terre Haute, Indiana, 54,000 sq. ft., pressure sensitive label production plant Salisbury, Maryland, 114,000 sq. ft., printing plant Rocky Mount, Virginia, 105,000 sq. ft., printing plant Kirksville, Missouri, 191,000 sq. ft., printing plant and warehouse Tampa, Florida, 38,000 sq. ft., pressure sensitive label production plant All plants are owned by the Company except for the Tampa location. STANFAST print centers are generally much smaller than the preceding plants and are in eighteen other locations nationwide. STANFAST also operates an imprint center in Tolland, Connecticut, a plastic card embossing plant in Rochester, New York and a printing plant in Phoenix, Arizona. STANFAST generally leases its plants. ITEM 3 - LEGAL PROCEEDINGS (a) No material claims or litigation are pending against the Company. (b) The Company is named as a potentially responsible party by the U.S. Environmental Protection Agency or received a similar designation by state environmental authorities in several situations. None of these matters have reached the stage where liabilities have been assessed against the Company. The Company has evaluated each of these matters and believes that none of them individually, nor all of them in the aggregate, would give rise to a material charge to earnings or a material amount of capital expenditures even if the Company is required to make payments within the range of its current estimates of those potential liabilities. This assessment does not take into account the ability of the Company to recover on existing insurance policies or from other parties which the Company believes would be held as joint and several obligors under any such liabilities. However, since these matters are in various stages of process by the relevant environmental authorities, future developments could alter these conclusions. However, management does not now believe that there is a likelihood of a material adverse effect on the financial condition of the Company in these circumstances. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to shareholders during the fourth quarter of the fiscal year. -4- 5 PART II ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS (a) The common stock $1.00 par value of the Registrant is traded in the over-the counter market and is quoted on the NASDAQ National Market System. The range of quotations as supplied by NASDAQ stock market and dividends paid per share on such securities for each quarterly period during the two most recent fiscal years are presented below. 1 9 9 3 ----------------------------------------------------------------------
Cash Quarter Dividend High Low Last ------- -------- ---- --- ---- 1st $0.16 21 3/4 17 19 1/4 2nd $0.16 20 1/4 16 18 1/2 3rd $0.16 20 1/4 17 1/4 18 1/2 4th $0.16 21 18 20 3/4
1 9 9 2 ----------------------------------------------------------------------
Cash Quarter Dividend High Low Last ------- -------- ---- --- ---- 1st $0.15 18 7/8 13 3/4 18 3/4 2nd $0.15 18 7/8 14 15 3rd $0.15 17 3/4 14 7/8 17 1/4 4th $0.15 19 3/4 16 3/4 18
(b) Approximate number of security holders of the Company's common stock as of February 25, 1994 - 3,408 excluding individual holders whose shares are held by nominees. There are also 17 holders of Class A stock. (c) Dividend policy - The Company expects to continue paying cash dividends in the future, however, the amounts paid will be dependent upon earnings and the future financial condition of the Company. No events have occurred which would indicate a curtailment of the payment of dividends. -5- 6 ITEM 6 - SELECTED FINANCIAL DATA SELECTED INCOME STATEMENT DATA
1993 1992 1991 1990 1989 ---- ---- ---- ---- ---- Thousands except for per share data ------------------------------------------------------------------ Revenue $722,120 $705,215 $693,712 $716,410 $708,876 Net income before cumulative effect of accounting changes 42,185 39,372 32,707 21,794 40,360 Cumulative effect of accounting changes - 13,362 - - - Net income 42,185 26,010 32,707 21,794 40,360 Earnings per share: Net income before cumulative effect of accounting changes 1.47 1.37 1.14 .74 1.35 Cumulative effect of accounting changes - .47 - - - Net income 1.47 .90 1.14 .74 1.35 SELECTED BALANCE SHEET DATA Total assets $502,333 $482,463 $463,560 $453,725 $459,196 Long-term debt 17,546 24,454 35,189 41,940 48,736 OTHER Cash dividends paid per common share .64 .60 .56 .56 .52
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1 9 9 3 1993 completed the third year of operations since the Company announced its restructuring plan late in 1990. Many of the characteristics of the forms industry remain little changed since that time, including excess productive capacity, the slowing sales growth of some traditional business forms, and a very price competitive marketplace. Against this backdrop, the Company has produced three consecutive years of improving operating results, culminating in 1993's record profit performance. Net income for 1993 was $42.2 million or $1.47 per share, a 7% increase compared to the $39.4 million and $1.37 operating result reported for 1992. -6- 7 Revenue increased 2.4%, a combination of 1.2% fewer shipment units and 3.6% higher average selling prices, excess industry capacity notwithstanding. Fundamental product mix changes were evident in 1993. Traditional business form products, including custom continuous, unit set, and stock forms declined about 5% and now represent approximately 45% of total revenue. The most significant drop within the traditional forms category was in low value added, low margin stock forms which declined 26% and now represent only 4% of total revenue. Emerging growth products such as cut sheet, Stanfast, Imprint, labels, and distribution services represent about one third of revenue and recorded a 15% increase. Rounding out the remaining major product categories, forms related equipment rose 4% and promotional direct mail increased 15%. The percentage gross margin improved for the third consecutive year, rising to 37.4% compared to 36.6%, 35.5%, and 35.2% for years 1992 through 1990, respectively. This trend reflects the generally improving product mix, actions to reduce excess capacity, and the higher average selling prices mentioned earlier. Paper prices, taken as a whole, averaged about the same in 1993 as in 1992, but have shown some weakness early in 1994. Paper companies are anxious to repair their depressed margins and are expected to increase prices when supply and demand conditions permit. The Company would attempt to recover any paper price increases by raising the price of its business forms. Operating expenses continue to be well controlled. Selling and administrative expenses dropped in relation to revenue for the third consecutive year, reflecting improved productivity. Engineering and research expenses have been maintained at their targeted 1.1% of revenue. Among other expense categories, depreciation and amortization has edged higher in relation to revenue, but this has been offset by reductions in interest expense as a result of lower debt balances and falling interest rates. Overall, operating expenses dropped to 27.7% of revenue compared to last year's 27.9% and 1991's 28.1%. This, coupled with the improved gross margins, pushed the pretax profit margin to 9.7% vs. 8.8% and 7.4% in the preceding two years. Pretax profit dollars were up 14% in 1993 vs. 1992. The effective income tax rate in 1993 was 39.9%, 3.6 percentage points above the 1992 rate. This increase reflects the one percent rise in the Federal rate, higher state and local tax rates, and the absence of favorable investment tax credit amortization. The higher tax rate reduced earnings per share in 1993 by $.09 and halved the 14% pretax growth to 7% after taxes. The AMS Division, a provider of materials management software to hospitals, recorded a loss in 1993 equivalent to $.11 per share as a result of major investments to improve management depth, standardize business practices, improve customer service, and release upgraded application software. The results also reflected nonrecurring charges for bad debt and other adjustments unrelated to 1993 operations. Management expects AMS to return to profitable quarterly performance during the second half of 1994. The financial condition remained strong. Cash and cash equivalents ended 1993 at $79.0 million, $55.0 million higher than the $24.0 million ending balance of total debt. This $55.0 "net cash" balance is identical to that at the end of 1992. Shareholders' equity increased $22.7 million to $361.0 million. Net working capital was $243.6 million with current assets 3.9 times current liabilities. -7- 8 Cash flow from operating activities was $48.1 million compared to $74.5 million in 1992. This $26.4 million unfavorable swing is primarily the result of higher current accounts receivable that accompanied the increased revenue and a rise in inventories to service an expanded third party equipment maintenance program. The average collection period for accounts receivable improved from 50 days in 1992 to 49 days in 1993. Capital expenditures in 1993 totalled $31.1 million, $8.4 million higher than 1992 spending. Excluding any acquisitions, 1994 capital expenditures should increase 10-15% above the 1993 level, primarily related to capacity increases, new product introductions and programs to improve productivity. The Company expects to finance its 1994 operating and financial requirements from present cash reserves and internally generated funds. 1 9 9 2 Net income from operations was $39.4 million, a 20% increase over the $32.7 million recorded for 1991. Per share operating net income was a record $1.37; the comparable 1991 result was $1.14. During 1992, the Company adopted Financial Accounting Standards 106 and 109 which set forth new accounting rules for reporting post-retirement health care costs and deferred income taxes respectively. The net cumulative effect of these two accounting changes was a one-time charge to net income of $13.4 million, or $.47 per share, which has been segregated on the statement of income as a non-operating item. These accounting changes are described in greater detail in Notes 5 and 7. Total revenue was $705.2 million, representing a 1.7% increase over the $693.7 million result for 1991. Revenue from shipments of custom business forms and labels, comprising approximately 73% of revenue, grew 4.2% on the strength of higher net selling prices, excess industry productive capacity notwithstanding; unit volume was down approximately 2%. Non-custom business forms, commonly referred to as stock forms, declined sharply -- continuing a pattern established over the past several years. These low-margin, commodity type forms now represent less than six percent of total revenue. Printed material sold to promotional direct mail users declined 6.2%, reflecting the residual effects of the higher third class postage rates and temporarily lower customer spending on advertising and promotion. Incoming orders for promotional direct mail printing recovered during the year, however, and year-end production backlogs were well above prior year levels. Installations of equipment products and systems were up 19.2%, bolstered in part by customers' expectations of an improving economy; related supplies and maintenance services were up modestly. Finally, revenue from the installation and support of hospital materials management systems, comprising about one percent of total revenue, rose 9.8%. -8- 9 The percentage gross margin improved from 35.5% in 1991 to 36.6% in 1992, primarily as a result of the stronger business forms pricing mentioned earlier. The 1992 cost of products sold included a one-time $3.0 million charge for the first quarter 1993 closing of the Bedford, Pennsylvania stock forms plant. This action is expected to save approximately $2.0 million annually, improving production efficiency at other sites that will continue to produce Paper suppliers have announced an approximate 16% increase in the cost of white bond papers, effective February 15, 1993; other papers are expected to rise by lesser amounts. The Company has announced a forms price increase and expects to recover the higher papers costs. Operating expenses including research, selling, administration, and depreciation increased 1.2%, reflecting the Company's continued emphasis on cost control. Interest expense declined 29.5% as a result of lower outstanding debt and lower interest rates. The financial condition remained exceptionally strong. Cash flow from operations rose 5.8% to $74.5 million, producing a $24.5 million increase in cash and cash equivalents after satisfying $22.7 million in capital expenditures, $17.2 million in dividend payments, and $10.8 million in long-term debt payments. The latter included a $4.0 million prepayment of 8-1/4% debt. At year-end, cash and cash equivalents were $86.2 million compared to $31.2 million in total debt. Shareholders' equity increased $9.0 million to $338.3 million after allowing for the $13.4 million in dividend payments. The Company expects to finance its near term operating and financing needs from internally generated funds and current cash reserves. The recently released Financial Accounting Statement No. 112 requires companies to accrue for expected post-employment costs other than pensions and health care. Adoption of this new statement will not have a material effect on the Company's financial condition or results of operations. 1 9 9 1 Net income for 1991 was $32.7 million or $1.14 per share, compared to $21.8 million and $.74 per share in 1990. The 1990 result included a $14 million charge to pretax earnings for restructuring actions described in the 1990 section below. Excluding this charge, 1990 net income would have been $31.1 million or $1.05 per share. Total revenue declined 3.2% from $716.4 million in 1990 to $693.7 million in 1991. Business forms sales were down 3.3%, reflecting a 4.3% drop in unit shipments offset by very modest gains in pricing. Forms pricing was held down by a combination of recessionary demand, industry-wide overcapacity, and generally declining paper prices. Communicolor's revenue increased 1% as the market for promotional direct mail experienced relatively weak demand brought about by the recession and a 27% increase in third- class postal rates, which temporarily reduced customers' advertising budgets. The Business Equipment and Systems Division reported relatively flat volume in its service and consumables segments, but sold less new equipment as customers deferred their purchase of discretionary capital items; overall. Business Equipment and Systems Division sales were down 8%. Advanced medical Systems' (AMS) sales of materials management software and related systems to hospitals increased 52%. -9- 10 The increase in profits occurred, despite the revenue decline as a result of significant reductions in operating costs. Selling, administrative, engineering, and production costs were down compared to the prior year, both in absolute dollars and in relation to revenue. The restructuring program met its cost saving objective, establishing a lower expense base for 1991 and beyond. Raw material paper costs were also lower during 1991, as the recession reduced demand for paper products, including forms bond. An improving 1992 economy may put upward pressure on paper prices, however. Interest expense declined as a result of debt repayment and lower interest rates. Pretax profit as a percent of revenue improved from 6.6% in 1990, excluding the restructuring charge to 7.4% in 1991. Cash flow from operations, was $70.4 million, a 40.3% increase over 1990, sufficient to finance $28 million in capital expenditures, $16.1 million in dividends, $6.8 million in debt repayment, and provide a $20.3 million increase in cash and short- term investments. At year-end, cash and investments totalled $61.7 million, compared to $42 million in long-term debt including current maturities, and current assets were 3.9 times the level of current liabilities. The Company expects to meet its near-term operating and financing needs from existing cash sources and internally-generated funds. ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements
Page Independent Auditors' Report 14 Consolidated Balance Sheet - January 2, 1994 and January 3, 1993 15-16 Consolidated Statement of Income - Years ended January 2, 1994, January 3, 1993 and December 29, 1991 17 Consolidated Statement of Shareholders' Equity - Years ended January 2, 1994, January 3, 1993 and December 29, 1991 18 Consolidated Statement of Cash Flows - Years ended January 2, 1994, January 3, 1993 and December 29, 1991 19 Notes to Consolidated Financial Statements 20-27 Quarterly Results of Operations 26-27
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None -10- 11 PART III ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Information concerning directors is incorporated by reference from the Company's proxy statement for the 1994 annual meeting of shareholders. EXECUTIVE OFFICERS OF THE REGISTRANT
Officer Name and Position Age Since ----------------- --- ------- Paul H. Granzow, Chairman of the Board of Directors 66 1984 John K. Darragh, President and Chief Executive Officer 64 1974 Craig J. Brown, Vice President - Finance and Treasurer 44 1987 Gerard B. Chadwick, Vice President - Customer Service & Communications 64 1987 A. Paul Cox, Jr., Vice-President and General Manager - Business Equipment & Systems Division 56 1992 Rebecca A. Kagan - Corporate Secretary and In-House Counsel 41 1992 Peter S. Redding, Executive Vice President and General Manager - Forms Division 55 1981 Joseph V. Schwan, Vice President - Forms Sales & Marketing 57 1991 Harry A. Seifert, Vice President - Forms Manufacturing 56 1987 William P. Sherman, Vice-President 73 1957 Michael Spaul, Vice President and General Manager - Communicolor Division 46 1991
There are no family relationships among any of the officers; however, William P. Sherman, Vice-President and retired director is related to James L. Sherman, retired director and Charles F. Sherman, director. Officers are elected at the annual meeting of the Board of Directors, which is held immediately after the annual meeting of shareholders, for a term of office covering one year. William P. Sherman and James L. Sherman retired as directors on February 17, 1994. Roy W. Begley, Jr. and John A. Sherman II were appointed by the Board in February to fill their vacancies. Effective January 1, 1994, Peter S. Redding was appointed Executive Vice-President and Chief Operating Officer. Mr. Redding, who was serving as Executive Vice-President and General Manager of the Forms Division, is now responsible for the operations of all of Standard Register's five divisions - Forms, Business Equipment and Systems, Communicolor, International Operations and Advanced Medical Systems. Also effective on January 1, 1994, Craig J. Brown was appointed to the position of Vice President of Finance, Treasurer and Chief Financial Officer. In addition to his corporate financial responsibilities, Mr. Brown will also direct the operations of the Advanced Medical Systems Division. Mr. Brown joined Standard Register in 1975 and has held a number of financial management positions including his most recent - Vice President of Finance and Treasurer. Items 11, 12 and 13 are incorporated by reference from the Company's Proxy Statement for the 1994 Annual Meeting of shareholders. -11- 12 PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements: See Index to Financial Statements on Page 10. (a)(2) Financial Statement Schedules.
Page I. Marketable Securities - Other Security Investments 28 V. Property, Plant and Equipment 29 VI. Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment 30 VIII. Valuation and Qualifying Accounts and Reserves 31 X. Supplementary Income Statement Information 32
Schedules other than those listed above are omitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto. Columns omitted from schedules filed have been omitted because the information is not applicable. (a)(3) Exhibits: See Index on Page 33 -12- 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, The Standard Register Company has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on March 18, 1994. THE STANDARD REGISTER COMPANY By: /S/ J. K. DARRAGH --------------------------- J. K. Darragh, President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of The Standard Register Company and in the capacities indicated on March 18, 1994: Signatures Title /S/ P. H. Granzow Chairman of the Board and Director - ------------------ P. H. Granzow /S/ C. J. Brown Vice-President - Finance and - ------------------ Treasurer (Chief Financial Officer) C. J. Brown P. H. Granzow, pursuant to power of attorneys which are being filed with this Annual Report on Form 10-K, has signed below on March 18, 1994 as attorney-in-fact for the following directors of the Registrant: R. R. Burchenal J. J. Schiff, Jr. F. D. Clarke III C. F. Sherman J. K. Darragh J. L. Sherman M. C. Nushawg W. P. Sherman P. S. Redding /S/ P. H. Granzow -------------------------- P. H. Granzow -13- 14 INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholders The Standard Register Company Dayton, Ohio We have audited the accompanying consolidated balance sheet of The Standard Register Company and subsidiary as of January 2, 1994 and January 3, 1993 and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended January 2, 1994. Our audits also included the financial statement schedules listed in Item 14(a)(2). These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based upon our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Standard Register Company and subsidiary as of January 2, 1994 and January 3, 1993, and the results of their operations and their cash flows for each of the three years in the period ended January 2, 1994, in conformity with generally accepted accounting principles. Also in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. As discussed in Notes 5 and 7 to the consolidated financial statements, in 1992 the Company changed its method of accounting for income taxes to conform with Statement of Financial Accounting Standards No. 109, and changed its method of accounting for postretirement benefits other than pensions from the cash to the accrual method to conform with Statement of Financial Accounting Standards No. 106. BATTELLE & BATTELLE Certified Public Accountants 3400 S. Dixie Drive Dayton, Ohio 45439 January 28, 1994 -14- 15 THE STANDARD REGISTER COMPANY CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
January 2 January 3 A S S E T S 1994 1993 --------- --------- CURRENT ASSETS Cash and cash equivalents 78,994 86,203 Accounts receivable, less allowance for losses of $2,534 and $2,983, respectively 135,067 122,444 Inventories 98,248 87,577 Deferred income taxes 10,860 11,006 Prepaid expense 4,558 5,069 ------- ------- Total current assets 327,727 312,299 ------- ------- PLANT AND EQUIPMENT Buildings and improvements 54,688 56,035 Machinery and equipment 181,645 171,837 Office and rental equipment 36,041 34,532 ------- ------- Total 272,374 262,404 Less accumulated depreciation 118,411 109,679 ------- ------- Depreciated cost 153,963 152,725 Plant and equipment under construction 17,801 13,909 Land 2,488 2,488 ------- ------- Total plant and equipment 174,252 169,122 ------- ------- OTHER ASSETS Patents, notes and deferred costs 354 1,042 ------- ------- Total assets 502,333 482,463 ======= =======
-15- 16 THE STANDARD REGISTER COMPANY CONSOLIDATED BALANCE SHEET (DOLLARS IN THOUSANDS)
January 2 January 3 LIABILITIES AND SHAREHOLDERS' EQUITY 1994 1993 --------- --------- CURRENT LIABILITIES Current maturities of long-term debt 6,471 6,724 Accounts payable 20,582 18,204 Dividends payable 4,874 4,594 Accrued compensation 27,224 26,177 Accrued pension expense 7,805 8,037 Accrued other expense 1,223 3,986 Accrued taxes, except income 4,574 4,760 Income taxes payable 4,761 2,866 Deferred service contract income 6,640 5,656 ------- ------- Total current liabilities 84,154 81,004 ------- ------- LONG-TERM LIABILITIES Notes payable to banks and others 17,546 24,454 Retiree health care obligation 24,482 24,510 Deferred federal and state income taxes 15,168 14,178 ------- ------- Total long-term liabilities 57,196 63,142 ------- ------- SHAREHOLDERS' EQUITY Common stock, $1.00 par value: Authorized 30,500,000 shares Issued 1993 - 24,036,796; 1992 - 23,986,317 24,037 23,986 Class A stock, $1.00 par value: Authorized 4,725,000 shares Issued - 4,725,000 4,725 4,725 Capital in excess of par value 25,562 24,705 Retained earnings 308,413 284,901 Cost of 90,086 common shares in treasury ( 1,754) ------- ------- Total shareholders' equity 360,983 338,317 ------- ------- Total liabilities and shareholders' equity 502,333 482,463 ======= =======
See accompanying notes. -16- 17 THE STANDARD REGISTER COMPANY CONSOLIDATED STATEMENT OF INCOME (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
52 Weeks Ended 53 Weeks Ended 52 Weeks Ended January 2 January 3 December 29 1994 1993 1991 -------------- -------------- ------------- REVENUE 722,120 705,215 693,712 ------- ------- ------- COST AND EXPENSE Cost of products sold 452,163 446,772 447,452 Engineering and research 7,754 7,803 7,854 Selling and administrative 166,267 163,711 162,350 Depreciation and amortization 24,553 22,955 22,028 Interest 1,142 2,124 3,012 ------- ------- ------- Total cost and expense 651,879 643,365 642,696 ------- ------- ------- INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGES 70,241 61,850 51,016 ------- ------- ------- INCOME TAXES Current 26,920 22,451 19,639 Deferred (benefit) 1,136 27 (1,330) ------- ------- ------- Total income taxes 28,056 22,478 18,309 ------- ------- ------- NET INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGES 42,185 39,372 32,707 CUMULATIVE EFFECT OF ACCOUNTING CHANGES (13,362) ------- ------- ------- NET INCOME 42,185 26,010 32,707 ======= ======= ======= DATA PER SHARE Net income before cumulative effect of accounting changes $1.47 $1.37 $1.14 Cumulative effect of accounting changes (.47) ----- ----- ----- Net income $1.47 $ .90 $1.14 ===== ===== =====
See accompanying notes. -17- 18 THE STANDARD REGISTER COMPANY CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DOLLARS IN THOUSANDS)
52 Weeks Ended 53 Weeks Ended 52 Weeks Ended January 2 January 3 December 29 1994 1993 1991 -------------- -------------- -------------- COMMON STOCK Beginning balance 23,986 23,948 23,910 Add shares issued under Stock Incentive Plan 51 50 54 Less shares purchased and retired ( 12) ( 16) ------- ------- ------- Ending balance 24,037 23,986 23,948 ------- ------- ------- CLASS A STOCK 4,725 4,725 4,725 ------- ------- ------- CAPITAL IN EXCESS OF PAR VALUE Beginning balance 24,705 24,246 23,926 Add excess of market over par value of shares issued under Stock Incentive Plan 857 650 502 Less excess of cost over par value of shares purchased and retired ( 191) ( 182) ------- ------- ------- Ending balance 25,562 24,705 24,246 ------- ------- ------- RETAINED EARNINGS Beginning balance 284,901 276,414 260,065 Add net income for year 42,185 26,010 32,707 Less cash dividends declared ( 18,673) ( 17,523) ( 16,358) ------- ------- ------- Ending balance 308,413 284,901 276,414 ------- ------- ------- TREASURY SHARES Cost of common shares purchased ( 1,754) ------- Total shareholders' equity 360,983 338,317 329,333 ======= ======= =======
See accompanying notes. -18- 19 THE STANDARD REGISTER COMPANY CONSOLIDATED STATEMENT OF CASH FLOWS (DOLLARS IN THOUSANDS)
52 Weeks Ended 53 Weeks Ended 52 Weeks Ended January 2 January 3 December 29 1994 1993 1991 -------------- -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income 42,185 26,010 32,707 ------- ------- ------- Add (deduct) items not affecting cash: Cumulative effect of accounting changes 13,362 Depreciation and amortization 24,553 22,955 22,028 (Gain) loss on sale of facilities ( 96) 77 ( 872) Provision for deferred income taxes 1,136 27 ( 1,330) Increase (decrease) in cash arising from changes in assets and liabilities: Accounts receivable ( 12,623) 1,754 15,853 Inventories ( 10,671) 5,349 2,138 Other assets 554 ( 714) ( 792) Accounts payable 2,378 1,624 ( 2,371) Accrued expenses ( 2,162) 3,530 ( 557) Income taxes payable 1,895 ( 1,185) 3,388 Deferred service contract income 984 1,729 223 ------- ------- ------- Net adjustments 5,948 48,508 37,708 ------- ------- ------- Net cash provided by operating activities 48,133 74,518 70,415 ------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of equipment 2,134 214 358 Additions to plant and equipment ( 31,076) ( 22,697) ( 28,039) ------- ------- ------- Net cash (used in) investing activities ( 28,942) ( 22,483) ( 27,681) ------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on long-term debt ( 7,161) ( 10,779) ( 6,771) Proceeds from issuance of common stock 908 700 556 Purchase of common stock ( 1,754) ( 203) ( 198) Dividends paid ( 18,393) ( 17,230) ( 16,066) ------- ------- ------- Net cash (used in) financing activities ( 26,400) ( 27,512) ( 22,479) ------- ------- ------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 7,209) 24,523 20,255 Cash and cash equivalents at beginning of year 86,203 61,680 41,425 ------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF YEAR 78,994 86,203 61,680 ======= ======= ======= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest 1,173 2,198 3,103 Income taxes 25,025 23,636 16,251
See accompanying notes. -19- 20 THE STANDARD REGISTER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company operates in a single industry segment - providing products and services that facilitate the recording, storage and communication of business transactions and information. The accounting policies that affect the more significant elements of the consolidated financial statements are summarized below. CONSOLIDATION - The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated. FISCAL YEAR - The Company's fiscal year ends on the Sunday nearest to December 31. The fiscal year ended January 2, 1994 had 52 weeks; the fiscal year ended January 3, 1993 had 53 weeks; the fiscal year ended December 29, 1991 had 52 weeks. CASH EQUIVALENTS - The Company classifies as cash equivalents all highly liquid investments, primarily composed of repurchase agreements, municipal notes and bond funds, which are convertible to a known amount of cash and carry an insignificant risk of change in value. INVENTORIES - Inventories are valued at the lower of cost or market. All inventory costs are determined by the last-in, first-out method (LIFO). Printed finished products include forms stored for future shipment and invoicing to customers. PLANT AND EQUIPMENT - Land, buildings and equipment, including significant improvements to existing facilities, are valued at cost. Maintenance and repairs are expensed as incurred. DEPRECIATION - For financial statement purposes, depreciation is computed by the straight-line method at rates adequate to recover the costs of the applicable assets over their expected useful lives. For income tax purposes, depreciation is computed by accelerated methods. INCOME TAXES - In 1992, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Prior to 1992, the provision for income taxes was based on income and expense included in the consolidated statement of income. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS - In 1992, the Company adopted Statement of Financial Accounting Standards No. 106 (SFAS 106), "Employers' Accounting for Postretirement Benefits Other Than Pensions". Prior to 1992, the cost of providing these benefits to retired employees was recognized as a charge to income as the health care claims were received, the prevalent practice prior to enactment of SFAS 106. REVENUE RECOGNITION - The Company generally recognizes product and related services revenue at the time of shipment. Under contractual arrangements with some customers, custom forms which are stored for future delivery are recognized as revenue when manufacturing is complete and the order is invoiced. Revenue from equipment service contracts is recognized ratably over the term of the contract. -20- 21 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) NET INCOME PER SHARE - Income per share is calculated using the average number of shares outstanding during the year. NOTE 2 - INVENTORIES Inventories are valued at the lower of cost or market determined by the last-in, first-out (LIFO) method. If the first- in, first-out method had been used, these inventories would have been $22,836,000 higher at January 2, 1994 and $22,380,000 higher at January 3, 1993. During 1992 and 1991, inventory quantities were reduced, which resulted in a liquidation of LIFO layers carried at lower costs. The effect of these liquidations increased net income by $1,763,000 or $.06 per share in 1992 and $2,249,000 or $.08 per share in 1991. Inventories at the respective year-ends are as follows:
(Dollars in thousands) January 2 January 3 1994 1993 --------- --------- Finished products $ 52,571 $ 49,450 Jobs in process 26,671 18,877 Materials and supplies 19,006 19,250 ------- ------- Total $ 98,248 $ 87,577 ======= =======
NOTE 3 - PLANT AND EQUIPMENT Plant and equipment are carried at cost less accumulated depreciation. Depreciation for financial reporting purposes was $23,908,000 in 1993, $22,310,000 in 1992, and $21,383,000 in 1991. Depreciation rates are based on estimates of useful lives:
Classification Years -------------- ----- Buildings and improvements 10-40 Machinery and equipment 5-15 Office equipment 5-15 Rental equipment 3-4 Leasehold improvements Life of leases
When equipment is retired or has been fully depreciated, its cost and the related accumulated depreciation are eliminated from the respective accounts. Gains or losses arising from the dispositions are reported as income or expense. NOTE 4 - PENSION PLANS The Company has qualified defined benefit plans covering substantially all of its employees. The benefits are based on years of service and the employee's compensation at the time of retirement, or years of service and a benefit multiplier. The Company funds its pension plans based on allowable federal income tax deductions. Contributions are intended to provide not only for benefits attributed to service to date but also for benefits expected to be earned in the future. In addition, the Company has non-qualified plans which provide benefits in addition to those provided in the qualified plan. -21- 22 NOTE 4 - PENSION PLANS (CONTINUED) Assumptions used in the respective accounting years to determine pension costs, are as follows:
1993 1992 1991 ---- ---- ---- Discount rate 8.5% 8.5% 9.0% Rate of increase in compensation levels 4.5% 4.5% 5.0% Expected long-term rate of return on assets 10.5% 10.5% 10.5%
Pension costs consist of the following components:
(Dollars in thousands) 1993 1992 1991 ---- ---- ---- Service cost of benefits earned $ 4,948 $ 4,696 $ 3,459 Interest cost on projected benefit obligation 9,780 9,410 7,801 Actual gain on plan assets ( 4,101) ( 12,058) ( 19,025) Asset (loss) gain deferred ( 6,514) 2,481 11,471 Amortization of transition asset ( 722) ( 722) ( 743) Amortization of prior service costs 1,522 1,415 Amortization of loss 13 ------- ------- -------- Net pension cost $ 4,926 $ 5,222 $ 2,963 ======= ======= ========
The following table sets forth the plans' funded status and amounts recognized in the Company's consolidated balance sheet at the respective year ends.
(Dollars in thousands) 1993 1992 1991 ---- ---- ---- Actuarial present value of: Accumulated benefit obligation Vested $ 98,454 $ 91,784 $ 88,828 Non-vested 673 554 426 ------- ------- ------- Total $ 99,127 $ 92,338 $ 89,254 ======= ======= ======= Projected benefit obligation $124,383 $118,439 $114,109 ======= ======= ======= Plan assets at fair market value $101,639 $102,020 $ 91,915 ======= ======= ======= Projected benefit obligation in excess of plan assets ($ 22,744) ($ 16,419) ($ 22,194) Unrecognized net (gain) loss 2,604 ( 2,436) 2,048 Unrecognized prior service cost 15,412 13,828 14,173 Minimum liability adjustment ( 789) Unrecognized transition asset ( 2,288) ( 3,010) ( 3,732) ------- ------- ------- Accrued pension (liability) ($ 7,805) ($ 8,037) ($ 9,705) ======= ======= =======
Pension fund assets are invested in a broadly diversified portfolio consisting primarily of publicly-traded common stocks and fixed income securities. -22- 23 NOTE 5 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS The Company provides health care benefits for eligible employees who retired prior to July 1, 1992. In 1992, the Company adopted Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other than Pensions". This statement requires the accrual method of accounting for postretirement health care benefits over the employees' period of employment based upon actuarially determined costs. Previously, the Company expensed claims as incurred, the prevalent practice prior to enactment of SFAS 106. In fiscal 1992, the Company elected to immediately recognize the $24,510,000 pretax postretirement benefit obligation existing at December 30, 1991, as a cumulative effect of an accounting change. This equates to $14,850,000 or $.52 per share on an after tax basis. The Company continues to pay for retiree benefit costs as claims are incurred. The amount included in expense for 1991 under the previous accounting method was $1,642,000. Under the new accounting method retirees' health claims for 1993 and 1992 amounted to $2,069,000 and $1,892,000, respectively. The accumulated benefit obligation was determined using the unit credit method and an assumed discount rate of 8.5%. The assumed current health care cost trend rate is 11.5% in 1993 and gradually decreases to 6.5% in the year 2014. The components of postretirement benefit costs for 1993 and 1992 are as follows:
(Dollars in thousands) 1993 1992 ---- ---- Service cost -0- -0- Interest cost $ 2,041 $ 1,970 ------- ------- Postretirement benefit cost $ 2,041 $ 1,970 ======= =======
The funded status of the plan at January 2, 1994 and January 3, 1993 is as follows:
January 2 January 3 1994 1993 --------- --------- Accumulated postretirement benefit obligation for retirees $ 28,502 $ 24,510 Plan assets -0- -0- ------- ------- Accumulated postretirement benefit obligation in excess of plan assets 28,502 24,510 Unrecognized net loss ( 4,020) ------- ------- Retiree health care obligation shown in balance sheet $ 24,482 $ 24,510 ======= =======
The effect of a one percent increase or decrease in the health care cost trend rates used would result in a $243,000 increase or decrease in the service and interest components of expense for 1993 ($390,000 for 1992) and a $2,858,000 increase or decrease in the postretirement benefit obligation at January 2, 1994 ($3,090,000 at January 3, 1993). -23- 24 NOTE 6 - LONG-TERM DEBT
(Dollars in thousands) January 2 January 3 1994 1993 --------- --------- Unsecured term notes dated December 9, 1986, bearing interest at 3.6875% and 4.0% at respective year ends, due in seventeen equal semi-annual installments commencing December 9, 1988, payable to: The First National Bank of Boston $ 10,943 $ 14,588 Wachovia Bank and Trust Co. 4,235 5,647 Society Bank, N.A. 4,235 5,647 ------- ------- Total 19,413 25,882 Industrial development revenue bonds issued by Rutherford County, Tenn., bearing interest at 6-1/8%, due 1999 through 2003 4,600 4,600 Other obligations with various interest rates 4 696 ------- ------- Total 24,017 31,178 Less current maturities 6,471 6,724 ------- ------- Long-term debt $ 17,546 $ 24,454 ======= =======
The aggregate principal payments for the five fiscal years subsequent to January 2, 1994, are as follows: 1994 - $6,471; 1995 - $6,475; 1996 - $6,471; 1997 - None; 1998 - None. NOTE 7 - INCOME TAXES The provision (credit) for income taxes consists of the following:
U.S. Federal State Total ------- ----- ----- 1993 Current $ 21,140 $ 5,780 $ 26,920 Deferred 918 218 1,136 ------- ------- ------- Total $ 22,058 $ 5,998 $ 28,056 ======= ======= ======= 1992 Current $ 18,012 $ 4,439 $ 22,451 Deferred ( 220) 247 27 ------- ------- ------- Total $ 17,792 $ 4,686 $ 22,478 ======= ======= ======= 1991 Current $ 15,653 $ 3,986 $ 19,639 Deferred ( 1,330) ( 1,330) ------- ------- ------- Total $ 14,323 $ 3,986 $ 18,309 ======= ======= =======
In 1992, the Company retroactively changed its method of accounting for income taxes as a result of adopting Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". Under this method, deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company recorded a credit of $1,488,000 or $.05 per share which represents the net decrease in the net deferred tax liabilities as of that date. This amount was reported in the consolidated statement of income as a cumulative effect of an accounting change. -24- 25 NOTE 7 - INCOME TAXES (CONTINUED) The significant components of the deferred tax expense (benefit) are as follows:
(Dollars in thousands) 1993 1992 1991 ---- ---- ---- Depreciation $ 1,202 $ 992 $ 52 Pension 5 5 309 Investment tax credit ( 1,128) ( 1,128) Inventories ( 01) 562 214 Compensation and benefits ( 26) ( 151) ( 867) Receivables 154 70 113 Plant reconfiguration 314 ( 307) Retiree health care ( 212) ( 16) Other ( 23) ------- ------- ------- Total $ 1,136 $ 27 ($ 1,330) ======= ======= =======
The components of the net deferred tax asset and liability as of January 2, 1994 and January 3, 1993 are as follows:
(Dollars in thousands) January 2 January 3 1994 1993 --------- --------- Deferred tax asset: Accounts receivable $ 1,024 $ 1,178 Inventories 4,606 4,305 Compensation and benefits 2,871 2,845 Pension 2,288 2,293 Plant reconfiguration 71 385 ------- ------- $ 10,860 $ 11,006 ======= ======= Deferred tax liability: Depreciation $ 25,057 $ 23,855 Retiree health care benefits ( 9,889) ( 9,677) ------- ------- $ 15,168 $ 14,178 ======= ======
The reconciliation of the statutory federal income tax rate and the effective tax rate follows:
1993 1992 1991 ---- ---- ---- Statutory federal income tax rate 35.0% 34.0% 34.0% State and local income taxes 5.4 5.0 5.2 Investment tax credit ( 1.8) ( 2.2) Other ( .5) ( .9) ( 1.1) ----- ----- ----- Effective tax rate 39.9% 36.3% 35.9% ===== ===== =====
NOTE 8 - CAPITALIZATION The Company has two classes of capital stock issued and outstanding, Common and Class A. These are equal in all respects except voting rights and restrictions on ownership of the Class A. Each of the 23,946,710 shares of Common outstanding has one vote, while each of the 4,725,000 shares of Class A is entitled to five votes. Class A stock is convertible into Common stock on a share-for-share basis at which time ownership restrictions are eliminated. -25- 26 NOTE 9 - COMMITMENTS AND CONTINGENCIES Purchase commitments for capital improvements aggregated $2,134,000 at January 2, 1994. Also, the Company has purchase commitments for equipment for resale of $3,593,000 at January 2, 1994. In addition, the Company has entered into several agreements with suppliers to purchase specified minimum quantities of raw materials through 1994. The Company is obligated under several leases expiring at various dates. Annual expense under these leases was $17,747,000 in 1993, $16,746,000 in 1992, and $17,048,000 in 1991. Rental commitments under existing leases at January 2, 1994, were:
(Dollars in thousands) Computer and Real Sales Transportation Other Estate Offices Equipment Equipment Total ------ ------- -------------- --------- ----- 1994 $3,911 $6,975 $1,623 $1,604 $14,113 1995 3,082 5,617 428 1,271 10,398 1996 2,051 3,909 177 1,000 7,137 1997 613 2,134 95 388 3,230 1998 130 777 20 220 1,147 Later years 105 105
In the opinion of management, no litigation or claims, including proceedings under governmental laws and regulations related to environmental matters, are pending against the Company which will have an adverse material effect on its financial condition. NOTE 10 - QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data, in thousands of dollars except for per share amounts, follow:
Quarters Ended ------------------------------------------------------------- April 4 July 4 October 3 January 2 1993 1993 1993 1994 ------- ------ --------- --------- Revenue $169,295 $174,728 $179,104 $198,993 Gross margin* 64,222 64,724 65,712 75,299 Net income 9,366 9,546 9,749 13,524 Net income per share .33 .33 .34 .47
-26- 27 NOTE 10 - QUARTERLY FINANCIAL DATA (UNAUDITED) (CONTINUED)
Quarters Ended -------------------------------------------------------------- March 29 June 28 September 27 January 3 1992 1992 1992 1993 -------- ------- ------------ --------- Revenue $168,541 $173,095 $170,177 $193,402 Gross margin* 62,908 63,623 61,845 70,067 Net income before cumulative effect of accounting changes 8,743 9,447 8,683 12,499 Cumulative effect of accounting changes ( 13,362) Net income (loss) ( 4,619) 9,447 8,683 12,499 Per share Net income (loss) before cumulative effect of accounting changes .30 .33 .31 .43 Cumulative effect of accounting changes ( .47) Net income (loss) per share ( .17) .33 .31 .43
Quarters Ended --------------------------------------------------------------- March 31 June 30 September 29 December 29 1991 1991 1991 1991 -------- ------- ------------ ----------- Revenue $172,306 $173,677 $163,821 $183,908 Gross margin* 58,522 59,678 56,141 71,919 Net income 5,976 6,969 6,758 13,004 Net income per share .21 .24 .24 .45 * Revenue less cost of products sold and services rendered.
NOTE 11 - CONCENTRATION OF CREDIT RISK The Company's concentration of credit risk is limited due to the large number of primarily domestic customers who are geographically dispersed. As disclosed on the balance sheet, the Company maintains an allowance for doubtful accounts to cover estimated credit losses. -27- 28 SCHEDULE I THE STANDARD REGISTER COMPANY MARKETABLE SECURITIES - OTHER SECURITY INVESTMENTS JANUARY 2, 1994 (Shares, Units and Dollars in thousands)
Column A Column B Column C Column D Column E - -------- -------- -------- -------- -------- Number of Amount at shares or which each units - Market security principal value of issue amount of Cost of each issue carried in Name of issuer and title bonds and each at balance the balance of each issue notes issue sheet date sheet - ------------------------ --------- ------- ---------- ----------- Temporary cash investments Municipal Bond Funds (1) 43,879 43,879 43,930 43,930 Municipal Bonds (1) 29,570 29,570 29,709 29,709 Bank Overnight Funds (1) 1,552 1,552 1,552 1,552 ------ ------ ------ ------ Total 75,001 75,001 75,191 75,191 ====== ====== ====== ====== (1) No single investment exceeds 2% of total assets.
-28- 29 SCHEDULE V THE STANDARD REGISTER COMPANY PROPERTY, PLANT AND EQUIPMENT FOR THE THREE YEARS ENDED JANUARY 2, 1994 (Dollars in thousands)
Column A Column B Column C Column D Column E Column F - -------- -------- -------- -------- -------- -------- Balance at Balance at beginning Additions Other changes end of Classification of period at cost Retirements add (deduct) period - -------------- ---------- --------- ----------- ------------- ---------- Year Ended January 2, 1994 - -------------------------- Land 2,488 2,488 Buildings and improvements 56,035 1,070 ( 444) ( 1,973)(a) 54,688 Machinery and equipment 171,837 20,937 (2,173) ( 8,956)(a) 181,645 Office equipment 34,320 5,109 ( 248) ( 3,331)(a) 35,850 Rental equipment 212 67 ( 32) ( 56)(a) 191 Plant and equipment under construction 13,909 3,892 17,801 ------- ------ ----- ------ ------- 278,801 31,075 (2,897) (14,316) 292,663 ======= ====== ===== ====== ======= Year Ended January 3, 1993 - -------------------------- Land 2,488 2,488 Buildings and improvements 56,194 987 ( 23) ( 1,123)(a) 56,035 Machinery and equipment 165,688 10,694 ( 577) ( 3,968)(a) 171,837 Office equipment 29,806 6,949 ( 500) ( 1,935)(a) 34,320 Rental equipment 349 86 ( 179) ( 44)(a) 212 Plant and equipment under construction 9,928 3,981 13,909 ------- ------ ----- ------ ------- 264,453 22,697 (1,279) ( 7,070) 278,801 ======= ====== ===== ===== ======= Year Ended December 29, 1991 - ---------------------------- Land 2,546 ( 58) 2,488 Buildings and improvements 58,248 561 ( 27) ( 2,588)(a) 56,194 Machinery and equipment 145,093 33,099 (1,101) (11,403)(a) 165,688 Office equipment 28,971 5,006 ( 484) ( 3,687)(a) 29,806 Rental equipment 299 97 ( 22) ( 25)(a) 349 Plant and equipment under construction 18,448 ( 8,520)(b) 9,928 ------- ------ ----- ------ ------- 253,605 30,243 (1,692) (17,703) 264,453 ======= ====== ===== ====== ======= (a) Fully depreciated and written off (b) Excess of items capitalized over additions
-29- 30 SCHEDULE VI THE STANDARD REGISTER COMPANY ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF PROPERTY AND EQUIPMENT FOR THE THREE YEARS ENDED JANUARY 2, 1994 (Dollars in thousands)
Column A Column B Column C Column D Column E Column F - -------- -------- -------- -------- -------- -------- Additions Balance at charge to Balance at beginning costs and Other changes end of Classification of period expenses Retirements add (deduct) period - -------------- ---------- --------- ----------- ------------- ---------- YEAR ENDED JANUARY 2, 1994 Buildings and improvements 20,809 2,783 ( 192) ( 1,973)(a) 21,427 Machinery and equipment 74,106 15,494 ( 460) ( 8,956)(a) 80,184 Office equipment 14,648 5,568 ( 186) ( 3,331)(a) 16,699 Rental equipment 116 62 ( 21) ( 56)(a) 101 ------- ------ ----- ------ ------- 109,679 23,907 ( 859) (14,316) 118,411 ======= ====== ===== ====== ======= YEAR ENDED JANUARY 3, 1993 Buildings and improvements 19,095 2,850 ( 13) ( 1,123)(a) 20,809 Machinery and equipment 64,157 14,317 ( 400) ( 3,968)(a) 74,106 Office equipment 11,986 5,050 ( 453) ( 1,935)(a) 14,648 Rental equipment 189 93 ( 122) ( 44)(a) 116 ------- ------ ----- ------ ------- 95,427 22,310 ( 988) ( 7,070) 109,679 ======= ====== ===== ====== ======= YEAR ENDED DECEMBER 29, 1991 Buildings and improvements 18,718 2,977 ( 12) ( 2,588)(a) 19,095 Machinery and equipment 61,721 14,771 ( 932) (11,403)(a) 64,157 Office equipment 11,204 4,589 ( 120) ( 3,687)(a) 11,986 Rental equipment 106 119 ( 11) ( 25)(a) 189 ------- ------ ----- ------ ------- 91,749 22,456 (1,075) (17,703) 95,427 ======= ====== ===== ====== ======= (a) Fully depreciated and written off
-30- 31 CHEDULE VIII HE STANDARD REGISTER COMPANY ALUATION AND QUALIFYING ACCOUNTS AND RESERVES OR THE THREE YEARS ENDED JANUARY 2, 1994 (Dollars in thousands)
Column A Column B Column C Column D Column E - -------- -------- -------- -------- -------- Additions --------- (1) (2) Charged Balance at (Credited) Balance beginning to costs Other at end Description of period and expenses Additions Deductions of period - ----------- ---------- ------------ --------- ---------- --------- YEAR ENDED JANUARY 2, 1994 Allowance for doubtful accounts 2,983 2,085 2,534(a) 2,534 Inventory obsolescence 3,024 1,377 1,451(b) 2,950 YEAR ENDED JANUARY 3, 1993 Allowance for doubtful accounts 3,164 2,312 2,493(a) 2,983 Inventory obsolescence 4,723 822 2,521(b) 3,024 YEAR ENDED DECEMBER 29, 1991 Allowance for doubtful accounts 3,497 2,480 2,813(a) 3,164 Inventory obsolescence 6,487 1,579 3,343(b) 4,723 (a) Net uncollectible accounts written off (b) Obsolete inventory scrapped or written down to realizable value
31- 32 SCHEDULE X THE STANDARD REGISTER COMPANY SUPPLEMENTARY INCOME STATEMENT INFORMATION FOR THE THREE YEARS ENDED JANUARY 2, 1994 (Dollars in thousands)
Column A Column B - -------- -------- Charged to costs and expenses ---------------- Year Ended ------------------------------------------------------------------------ Item January 2, 1994 January 3, 1993 December 29, 1991 ---- --------------- --------------- ----------------- 1. Maintenance and repairs 15,006 14,140 13,490 ====== ====== ====== 2. Depreciation and amortization of intangible assets, preoperating costs and similar deferrals * * * 3. Taxes, other than payroll and income taxes: Real estate and personal property 3,132 3,102 3,106 Franchise and other 979 787 1,090 ----- ------ ------ Total 4,111 3,889 4,196 ===== ===== ===== 4. Royalties * * * 5. Advertising costs * * * * Less than 1% of total revenue
-32- 33 INDEX TO EXHIBITS 3. Amended Articles of Incorporation of the Company, Filed as Exhibit 4 to the Company's Registration Statement No. 33-8687. 10. Material contracts. 10.1 The Standard Register Company Key Employees Incentive Plan. Incorporated by reference to the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 26, 1976. 10.2 The Standard Register Company Stock Incentive Plan. Incorporated by reference to the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 19, 1978. 10.3 The Standard Register Company Non-Qualified Retirement Plan filed herewith. 10.4 The Standard Register Company Officers' Supplemental Non-Qualified Retirement Plan filed herewith. 10.5 The Standard Register Company Amended and Restated Stock Incentive Plan filed herewith. 11. Computation of Earnings Per Share. 17.1 Letter of James L. Sherman resigning from Board of Directors. 17.2 Letter of William P. Sherman resigning from Board of Directors. 24. Power of Attorney of R. R. Burchenal, F. D. Clark III, J. K. Darragh, M. C. Nushawg, P. S. Redding, J. J. Schiff, Jr., C. F. Sherman, J. L. Sherman and W. P. Sherman. -33- EX-10.3 2 EXHIBIT 10.3 1 EX-10.3 THE STANDARD REGISTER COMPANY NON-QUALIFIED RETIREMENT PLAN EFFECTIVE JANUARY 1, 1987 INTRODUCTION Effective January 1, 1987, the Standard Register Company (hereinafter referred to as the "Employer"), hereby adopts the Standard Register Company Non-qualified Retirement Plan (hereinafter referred to as the "Plan") as set forth herein. The Plan is completely separate from The Stanreco Retirement Plan (hereinafter referred to as the "Qualified Plan") and is not qualified for special tax treatment under the Internal Revenue Code. The purpose of this Plan is to restore retirement benefit payments to those eligible employees who retire under the Qualified Plan and whose retirement benefits under said Qualified Plan will be reduced by the limitations imposed by the Internal Revenue Code of 1986. The Employer, by action of its Board of Directors, reserves the right at any time and from time to time, to terminate, modify or amend, in whole or in part, any or all provisions of the Plan, including specifically the right to make any such amendments effective retroactively. No amendment or termination of the Plan shall reduce a Participant's benefit under this Plan earned prior to the date of amendment or termination. Nothing contained in this Plan shall be deemed to give any Member or Employee the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any Member or Employee at any time regardless of the effect which such discharge shall have upon him as a Member of the Plan. ARTICLE I DEFINITIONS Stanreco 2.4 1.01 Board of Directors means the Board of Directors of the Employer. 2.5 1.02 Code means the Internal Revenue Code of 1986, as amended. 2.6 1.03 Committee means the retirement committee appointed by the Board of Directors to supervise and direct the general administration of the Plan. 1.04 Effective Date means January 1, 1987. 2.10 1.05 Employer means The Standard Register Company, an Ohio corporation. 2.11 1.06 ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. 1.08 Excess Benefit means the benefit provided for under this plan to Participants in the Plan. 1.08 Participant means any employee who becomes a participant as provided in Section 2.01 of this Plan. 1.09 Qualified Plan means The Stanreco Retirement Plan, as it may hereafter be amended. -34- 2 ARTICLE II PARTICIPATION AND EXCESS BENEFITS 2.01 Eligibility Each employee of the Employer who is a Participant in the Qualified Plan, whose benefits thereunder are limited by the Code shall be a Participant in this Plan. Upon termination of employment, death or retirement on or after the Effective Date, Participants will be eligible for benefits in accordance with Section 2.02 of this Plan. Each Participant shall make the required contributions to the Qualified Plan and this Plan. To the extent that the Participant's contributions to the Qualified Plan are restricted by the limitations imposed by the Code and/or ERISA, such excess contributions which may not be made to the Qualified Plan shall be made to this plan and shall be used to provide benefits under this plan. In the event a Participant who retires, dies or terminates employment is ineligible for benefits under this Plan, his contributions to this Plan shall be refunded to him, with interest, in accordance with the terms of the Qualified Plan. 2.02 Excess Benefits Upon a Participant's retirement, death or termination of employment with the Employer on or after the Effective Date, any benefit which otherwise would have been provided to him under the Qualified Plan, but which may not be provided to him because of the limitations imposed by the Code and/or ERISA, shall be calculated and, if appropriate, commuted to its actuarially equivalent monthly benefit or ump sum value using the actuarial assumptions stated in the Qualified Plan. Such Excess Benefit shall be the full amount of any benefit produced for the Participant by the Qualified Plan's formula, less the maximum amount of said benefit that can be provided under the Qualified Plan in accordance with the limitations imposed by the Code and/or ERISA. 2.03 Payment of Benefits A Participant's Excess Benefit shall be payable to the Participant or the Participant's beneficiary at the same time and under the same terms and conditions as would have applied if such benefit were payable under the Qualified Plan. All elections made, beneficiaries designated and payment options selected under the Qualified Plan by the Participant, his spouse or his beneficiary shall be deemed to have been so made, designated or selected for purposes of this Section 2.03. 2.04 Benefits Provided by Employer Benefits payable under this Plan to a Participant or his spouse or other beneficiary shall be paid directly by the Employer. The Employee shall not be required to sequester any assets to be applied for the payment of benefits under this Plan. -35- 3 ARTICLE III GENERAL Stanreco 13.1 3.01 Appointment of Committee The Plan shall be administered by a Retirement Committee (the "Committee") which will be appointed by and will serve at the pleasure of the Board of Directors. 12 3.02 Non-Alienation of Benefits The Plan shall not, in any manner, be liable for or subject to the debts or liabilities of any person entitled to benefits hereunder. No benefits at any time payable under the Plan shall be subject to any manner of alienation, sale, transfer, assignment, pledge or encumbrance of any kind. If any person entitled to benefits under the Plan attempts to or does alienate, sell, transfer, assign, pledge or otherwise encumber such benefit, or any part thereof, or if, by reason of bankruptcy or other event happening at any time, such benefits would be received by anyone else or would not be enjoyed by him, his interest in such benefits shall thereupon terminate and the Committee may hold or apply his interest to or for the benefit of such person, his spouse, children or other dependents, or any of them as the Committee may determine. If the terms of this Section are contrary to the law governing in a particular circumstance, any such payment shall be so exempt to the maximum extent permitted by such law. 11.3 3.03 Facility of Payment If the Committee shall determine that any payee under the Plan to whom retirement income is payable is unable to care for his affairs because of illness, accident, or other incapacity, any payment due (unless prior claim theretofore shall have been made by a duly qualified guardian, conservator, or other legal representative) may be paid to his spouse, parent, brother, or sister, son or daughter, or any other person as the Committee may determine. Any such payment shall be a payment for the account of such payee and shall, to the extent hereof, be a complete discharge of any liability under the Plan to such payee. 3.04 Gender and Number Where the context permits, words in the masculine gender shall include the feminine gender, the plural shall include the singular and the singular shall include the plural. 16.4 3.05 Law Governing The Plan shall be construed, regulated and administered under the laws of the State of Ohio to the extent not preempted by the laws of the United States of America. -36- 4 16.1 3.06 No Enlargement of Employee Rights This Plan is strictly a voluntary undertaking on the part of the Employer and shall not be deemed to constitute a contract between the Employer and any Employee, or to be a consideration for, any inducement to, or a condition of, the employment of any Employee. Nothing contained in this Plan shall be deemed to give any Employee the right to be retained in the service of the Employer or to interfere with the right of the Employer to discharge any employee at any time. No Employee, prior to his retirement under conditions of eligibility for Excess Benefits or prior to his satisfying any other requirements as provided for in the Qualified Plan, shall have any right to or interest in the Plan, other than as herein specifically provided. No person shall have any right to Excess Benefits except to the extent provided herein. 16.5 3.07 Severability If any provisions(s) of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of this Plan, but this Plan shall be construed and enforced as if said illegal and invalid provisions had never been included herein. 3.08 Reference to Qualified Plan To the extent not specifically addressed in this Plan, the Plan Administrator may rely on the provisions of the Qualified Plan and procedures and policies thereunder in making any determinations under the Plan. ARTICLE IV AMENDMENT AND TERMINATION Stanreco 19.1 4.01 Right to Amend or Terminate The Employer reserves the right by action of its Board of Directors, to alter, amend, modify, revoke or terminate the Plan at any time. Notwithstanding the above, no amendment or termination of the Plan shall reduce a Participant's benefit under this Plan earned prior to the date of amendment or termination. ARTICLE V EVIDENCE OF ADOPTION IN WITNESS WHEREOF, the Employer has caused the Plan to be executed by its President and its corporate seal to be affixed by the Secretary, both duly authorized, effective the 1st day of January, 1987, but executed this 15th day of December, 1988. ATTEST: (Seal) THE STANDARD REGISTER COMPANY - -------------------------------- -------------------------------- Secretary O. F. Stock President J. K. Darragh -37- EX-10.4 3 EXHIBIT 10.4 1 EX-10.4 THE STANDARD REGISTER COMPANY OFFICERS' SUPPLEMENTAL NON-QUALIFIED RETIREMENT PLAN EFFECTIVE JANUARY 1, 1994 THE STANDARD REGISTER COMPANY OFFICERS' SUPPLEMENTAL NON-QUALIFIED RETIREMENT PLAN Effective January 1, 1994, The Standard Register Company, an Ohio corporation (the "Company"), adopts this Officers' Supplemental Non-Qualified Retirement Plan to enable Participants to earn additional retirement income. This Plan is intended to be an unfunded, non-qualified retirement program exempt from the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), except as specifically provided in that statute. ARTICLE I DEFINITIONS When used in this Plan, the following terms have the meaning given in this Article, unless a different meaning is clearly required by the context. 1.1 Average Monthly Earnings. Average Monthly Earnings has the same meaning given to it under the Qualified Plan. 1.2 Beneficiary. Beneficiary means the Participant or the Participant's surviving spouse, if any. 1.3 Committee. Committee means the Compensation Committee of the Company's Board of Directors. 1.4 Disability. Disability means a condition that qualifies a Participant to receive benefits under the Company's group long term disability program. 1.5 Disabled Participant. Disabled Participant means a Participant who has a Disability. 1.6 Early Retirement. Early Retirement means the date that a Participant retires before his Normal Retirement Date, but after reaching age 55 and completing at least ten (10) years of Credited Service (as defined under the Qualified Plan). 1.7 Officer. Officer means a person who has been duly elected by the Company's Board of Directors to serve as an officer of the Company. 1.8 Officer Service. Officer Service means all the years and whole months that a Participant has served as an Officer of the Company, including, without limitation, all such service prior to the effective date of this Plan. However, no Participant will earn Officer Service for his first five (5) years of service as an Officer. 1.9 Participant. Participant means an Officer of the Company who the Committee, on the recommendation of the Company's Chief Executive Officer, decides may participate in this Plan. 1.10 Normal Retirement Date. Normal Retirement Date has the same meaning given it to under the Qualified Plan. 1.11 Qualified Plan. Qualified Plan means The Stanreco Retirement Plan. -38- 2 ARTICLE II PARTICIPATION Participation in this Plan is limited to those Officers of the Company who are designated by the Committee on the recommendation of the Company's Chief Executive Officer and who have enrolled in the Plan. ARTICLE III BENEFITS 3.1 Normal Retirement Benefit. Each Participant will earn a benefit, payable at his Normal Retirement Date in the form described in Section 4.1, equal to the lesser of (a) or (b), reduced by the sum of (c) and (d): (a) Consists of the sum of (i), (ii) and (iii) as follows: (i) the benefit payable at Normal Retirement Date to the Participant under the Qualified Plan, based on the normal form of benefit provided under the plan; PLUS (ii) the benefit payable at Normal Retirement Date to the Participant under The Standard Register Company Non- Qualified Retirement Plan; PLUS (iii) 3.05% of the Participant's Average Monthly Earnings, multiplied by the number of years of the Participant's Officer Service prior to the date on which the Participant attains age 65; (b) 50% of the Participant's Average Monthly Earnings; (c) the benefit payable at Normal Retirement Date to the Participant under the Qualified Plan, based on the normal form of benefit provided under that plan; (d) the benefit payable at Normal Retirement Date to the Participant under The Standard Register Company Non-Qualified Retirement Plan. For purposes of this Section, the benefit payable under the Qualified Plan will be calculated as if the Participant made all contributions required to earn a benefit under the Qualified Plan and did not reject the pre-retirement survivor annuity available under the Qualified Plan. 3.2 Early Retirement Benefit. A Participant who terminates employment because of Early Retirement may elect to have his benefit begin on the first day of any month after that date. If benefits begin before the Participant's Normal Retirement Date, the amount of each monthly benefit will be adjusted (using the factors described in the Qualified Plan) to reflect the early commencement of benefits. 3.3 Disability Retirement Benefit. If a Participant is determined to have a Disability prior to his Normal Retirement Date, no benefits will be payable from this Plan until the earlier or: -39- 3 (a) the Participant's Normal Retirement Date; or (b) the date the Committee determines that the Participant is no longer receiving Disability benefits and qualifies for benefits hereunder. The Disabled Participant will continue to accrue Officer Service under this Plan as if he continued to be employed by the employer and is earning Credited Service under the Qualified Plan. The benefits payable from this Plan on the earliest of (a) or (b) above, will be calculated in accordance with the provisions of this Article III, including the period of Officer Service which is credited under this Section 3.3. 3.4 Death Benefit. If a married Participant dies before his Normal Retirement Date, but after reaching age 55 and after completing at least ten (10) years of Credited Service (as defined in the Qualified Plan), his spouse will receive a monthly benefit, beginning on the first day of the month after the Participant dies and ending on the first day of the month after the spouse dies, equal to 50% of the monthly benefit the Participant would have received if he had retired on the date before his death. 3.5 Vested Benefit (a) Subject to Section 3.6, a Participant will be fully vested in benefits earned under this Plan if he terminates: (i) at or after his Normal Retirement Date; (ii) after qualifying for Early Retirement; (iii) after becoming Disabled; or (iv) because of death; (b) Subject to Section 3.6, a Participant will be fully vested in benefits earned under this Plan upon amendment, suspension or termination of this Plan for any reason. All benefits accrued under this Plan will be forfeited if the Participant terminates employment for any other reason. 3.6 Forfeitures. Notwithstanding the provisions of Section 3.5, the unpaid portion of any benefit accrued under this Plan shall be forfeited if the Participant: (a) is convicted of a felony committed during and arising out of the Participant's employment with the Company; (b) engages, directly or indirectly, in competition with the Company after termination of employment with the Company; (c) discloses any of the Company's confidential or proprietary information to any person not entitled to receive it. As used herein, the phrase "engages, directly or indirectly, in competition with the Company" shall include, without limitation, owning, managing, operating, controlling, being employed by, acting as an agent, officer, director of, or consultant to, or being involved in any manner with the ownership, management, operation, control or financing of any business which is in competition with the Company, provided, however, that nothing herein shall prohibit a Participant or Beneficiary from owning less than 5% of the outstanding stock of any publicly held corporation which engages in competition with the Company. -40- 4 ARTICLE IV DISTRIBUTIONS 4.1 Normal Form of Benefit. Benefits under this Plan will be paid monthly, beginning at the same time that benefits begin under the Qualified Plan (except as otherwise provided in Section 3.2) and ending on the first day of the month after the Participant dies. If the Participant dies before receiving 120 monthly payments and leaves a surviving spouse, benefits will continue to be paid in the same amount to the Participant's surviving spouse until the sum of the monthly payments made to the Participant and his surviving spouse equals 120 payments or until the death of the surviving spouse, whichever occurs sooner. 4.2 Withholding; Payroll Taxes. The Company will deduct from each benefit payment any amount required under applicable law to be withheld in advance payment of the recipient's income or other taxes. If the Company is required to withhold any current taxes on any amount accrued under this Plan, the deduction will be taken against compensation paid by the Company to the Participant. Determination by the Company of the amount to be withheld is binding on the Participant and any Beneficiary. ARTICLE V ADMINISTRATION AND FINANCING 5.1 Committee. Any successor Committee will have all of the rights, powers, privileges and immunities given to the original members of the Committee. Except as required by law, no Committee member will be required to give any bond or other security for the faithful performance of their duties as a Committee member. The Committee will adopt any procedures and rules needed to administer the Plan. 5.2 Appointment of Plan Administrator. The Committee shall appoint a Plan Administrator to administer the Plan. The Plan Administrator will serve at the Committee's pleasure and may be removed or may resign at any time. The Plan Administrator will have only such rights, powers, privileges and immunities as may be given to the Plan Administrator by the Committee. Except as required by law, the Plan Administrator will not be required to give any bond or other security for the faithful performance of his duties as Plan Administrator. 5.3 Funding. The Plan will be funded in any respect. Benefits will be paid solely from the Company's general assets. 5.4 Legal Competency. Any Plan benefits payable to any person who is determined by a court of competent jurisdiction to be legally incompetent to receive them will be paid to the guardian of the incompetent person or to the person having custody of the incompetent person without any further liability by the Company, the Committee or the Plan Administrator. 5.5 Nonalienation of Benefits. Except as otherwise provided by law, no benefit, payment or distribution under this Plan is subject to the claim of any creditor of a Participant or of a Beneficiary. Further, no creditor of the Participant or Beneficiary may attach, garnishee, subject to a levy, or subject to execution or other legal or equitable process, any benefits payable from this Plan. No Participant or Beneficiary may alienate, commute, anticipate or assign (either at law or in equity) all or any portion of any benefit, payment or distribution under this Plan. The Plan will not in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts or any person entitled to receive benefit under this Plan. -41- 5 ARTICLE VI MISCELLANEOUS PROVISIONS 6.1 Employment and Other Rights. Nothing in the Plan requires the Company to employ any Participant or requires any Participant to remain employed with the Company. Nor does the Plan create any rights or obligations other than those specifically set forth in the Plan. The benefits payable under the Plan are independent of, and in addition to, any other compensation or benefits payable by the Company. 6.2 Offset to Benefits. Regardless of any Plan provision to the contrary, the Company may, if the Committee in its sole and absolute discretion agrees, offset any amounts to be paid to a Participant or a Beneficiary under the Plan against any amounts that the Participant owes to the Company. 6.3 Amendment and Termination. Although the Company intends to continue this Plan indefinitely, the Company reserves the right to amend, suspend or terminate the Plan at any time for any reason or for no reason at all. The procedure for amending, suspending or terminating the Plan shall be by resolution duly adopted by the Company's Board of Directors, which shall possess sole authority to amend, suspend or terminate the Plan. Further, if it is determined at any time for any reason by any agency of the United States Government or any court of competent jurisdiction, that the Plan does not qualify for the exclusions under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, the Plan shall be deemed to have terminated as of the date of such determination, unless other action is taken by the Board of Directors of the Company. In the event of any such amendment, suspension or termination of the Plan, those benefits which are fully vested at the time of such amendment, suspension or termination or which become fully vested as a result thereof shall be paid by the Company as provided in the Plan as if the Plan had not terminated. 6.4 Interpretation. The Committee will interpret the Plan according to the laws of the State of Ohio and, when applicable, the laws of the United States in a manner that ensures that this Plan will be treated as a non-qualified retirement plan for executives and highly compensated employees, within the meaning of ERISA. The Committee may adopt any additional rules or interpretative guidelines not specifically mentioned in this Plan if they are needed to administer the Plan and are not inconsistent with its purpose. 6.5 Illegality of Any Provision. Any determination by a court of competent jurisdiction that any part of this Plan is illegal or ineffective will not affect any other provision of the Plan not specifically included in the court's determination. 6.6 Headings. Section headings are for convenience only and do not create any additional rights, privileges or duties. 6.7 Gender and Number. Where the context permits, words in the masculine gender will include the feminine gender, the plural will include the singular, and the singular will include the plural. As evidence of its adoption of this Plan, The Standard Register Company has caused this instrument to be signed by its duly authorized officers this _____day of ___________, 1993. ATTEST: THE STANDARD REGISTER COMPANY By - ----------------------------- ----------------------------- Secretary President and Chief Executive Officer -42- EX-10.5 4 EXHIBIT 10.5 1 EX-10.5 THE STANDARD REGISTER COMPANY AMENDED AND RESTATED STOCK INCENTIVE PLAN ARTICLE I PURPOSE 1.1 The purpose of The Standard Register Company Amended and Restated Stock Incentive Plan (the "Plan") is to provide additional incentive to Officers and other employees of the Company through making it possible for them to obtain a stock ownership in the Company by virtue of this Plan. ARTICLE II PLAN PROVISIONS 2.1 The Company shall compute an amount annually (the "Stock Incentive Base") equal to thirty-one and one-half percent (31.5%) of its annual pre-federal income tax profit for the immediate preceding fiscal year, which amount shall be considered the "Stock Incentive Base." 2.2 The Company shall compute an amount annually (the "Stock Incentive Reserve") equal to four percent (4%) of the excess of the Company's pre-federal income tax profit over the Stock Incentive Base. "Pre-federal income tax profit" as used herein shall mean the net income reported to shareholders plus federal income tax expense, the Key Employees' "Maximum Incentive Reserve" and the "Stock Incentive Reserve" and exclusive of extraordinary items, if any, all as verified by the Company's independent Certified Public Accountants. 2.3 The amount of the "Stock Incentive Reserve" computed under this Plan shall not diminish the amount of the "Maximum Incentive Reserve" (as defined in The Standard Register Company's Key Employees' Incentive Plan) and the annual computation of the "Maximum Incentive Reserve" for key employees shall be computed as if there were no "Stock Incentive Reserve". 2.4 The employees eligible to participate in the Plan shall be the elected Officers of the Company and those employees of the Company who have been selected each fiscal year of the Company by the Board of Directors of the Company to participate in the Plan (the "Selected Employees"). The elected Officers of the Company and the Selected Employees shall hereinafter be referred to collectively as the "Participants." 2.5 The relative annual participation of the Officers, other than Assistant Officers, in the Stock Incentive Reserve shall be in proportion to their annual base salaries in effect at the beginning of the fiscal year for which the computation of the Stock Incentive Reserve is made. 2.6 The relative annual participation of the Selected Employees and Assistant Officers in the Stock Incentive Reserve shall be determined each fiscal year of the Company by the Board of Directors of the Company; provided, however, in no event shall their participation exceed fifty percent (50%) of their annual base salaries in effect at the beginning of the fiscal year for which the computation of the Stock Incentive Reserve is made. 2.7 Annually, within a reasonable time after the end of the fiscal year for which the "stock Incentive Reserve" is computed, the Company shall pay to the Participants, according to their relative participation, one-half (1/2) of the amount in the Stock Incentive Reserve in cash and one-half (1/2) in Common -43- 2 Stock of the Company. The number of shares to be delivered to the Participants shall be computed by using the "bid" value of the Common Stock of the Company as published in the Wall Street Journal for the last market trading day of the fiscal year for which the computation is made. Fractional shares will not be issued, but in lieu thereof, cash will be paid. 2.8 The Officers of the Company who are to participate in any Plan year shall be those persons who are elected officers of the Company as of the beginning of the fiscal year for which the computation of the Stock Incentive Reserve will be made. Any Officer who ceases to be an Officer during any year for which he is a participant shall be entitled to participate in the Stock Incentive Reserve in proportion to the whole months during the year in which he was an Officer. 2.9 The employees of the Company who are to participate in any Plan year shall be those employees who are selected to be participants in the Plan by the Company's Board of Directors as of the beginning of the fiscal year for which the computation of the Stock Incentive Reserve will be made (the "Selected Employees"). If any Selected Employee ceases to be an employee of the Company during any year for which he is a Participant, the Selected Employee shall be entitled to participate in the Stock Incentive Reserve in proportion to the whole months during the year in which he was an employee of the Company. 2.10 As and when a Participant becomes entitled to Common Stock certificates as a result of such Participant's participation in this Plan, the Company shall deliver registered Common Stock of the Company from authorized and unissued shares or Treasury shares of Common Stock of the Company to such Participant or the duly authorized representative of such Participant. 2.11 The provisions of this Plan shall be effective January 1, 1987 and this Plan shall be used to compute the Stock Incentive Reserve for the fiscal year 1987 and ensuing fiscal years; provided, however, that in no event shall the maximum total annual payout (including both Common Stock of the Company and cash) to all Participants computed under the provisions of this Plan exceed the maximum annual payout (including both Common Stock of the Company and cash) to all Participants as computed under the provisions of The Standard Register Company Stock Incentive Plan which was adopted by the shareholders on April 19, 1978. ARTICLE III ADMINISTRATION, INTERPRETATION AND AMENDMENT 3.1 The Board of Directors of the Company shall have the full power and authority to interpret, construe and administer the Plan and to make amendments to the Plan to such extent as may be required from time to time by any applicable federal or state law or regulations and shall have the authority to make any other amendments to the Plan provided that any such amendments do not increase the cost of the Plan to the Company or its shareholders. ARTICLE IV TERMINATION 4.1 The Board of Directors of the Company shall have full power and authority to terminate this Plan at any time; provided that such termination shall not become effective earlier than the beginning of the next ensuing fiscal year. -44- EX-11 5 EXHIBIT 11 1 EX-11 THE STANDARD REGISTER COMPANY COMPUTATION OF EARNINGS PER SHARE (Dollars in thousands except for per share amounts)
1993 1992 1991 ---- ---- ---- Average shares outstanding 28,734,394 (1) 28,709,291 (2) 28,679,138 (3) ========== ========== ========== Net income before cumulative effect of accounting changes 42,185 39,372 32,707 Cumulative effect of accounting changes - 13,362 - ------- ------- ------- Net income 42,185 26,010 32,707 ======= ======= ======= Primary income per share: Net income before cumulative effect of accounting changes $1.47 $1.37 $1.14 Cumulative effect of accounting changes - .47 - ---- ---- ---- Net income $1.47 $ .90 $1.14 ==== ==== ==== (1) Includes 50,749 shares of common stock issued in 1993 under the Company's Stock Incentive Plan and repurchase of 90,086 shares during the year. (2) Includes 50,490 shares of common stock issued in 1992 under the Company's Stock Incentive Plan and repurchase of 12,570 shares during the year. (3) Includes 53,857 shares of common stock issued in 1991 under the Company's Stock Incentive Plan and repurchase of 15,279 shares during the year.
-45- EX-17.1 6 EXHIBIT 17.1 1 EX-17.1 February 17, 1994 Ms. Rebecca A. Kagan, Corporate Secretary The Board of Directors The Standard Register Company 600 Albany Street Dayton, OH 45408 Gentlemen: For personal reasons, I hereby tender my resignation as Chairman of the Compensation Committee of the Board of Directors as well as Director of The Standard Register Company, to take effect no later than February 17, 1994. Sincerely yours, James L. Sherman cc: J. K. Darragh P. H. Granzow -46- EX-17.2 7 EXHIBIT 17.2 1 EX-17.2 February 17, 1994 Ms. Rebecca A. Kagan, Corporate Secretary The Board of Directors The Standard Register Company 600 Albany Street Dayton, OH 45408 Gentlemen: For personal reasons, I hereby tender my resignation as Director of The Standard Register Company, to take effect no later than February 17, 1994. Sincerely yours, William P. Sherman cc: J. K. Darragh P. H. Granzow -47- EX-24 8 EXHIBIT 24 1 EX-24 P O W E R O F A T T O R N E Y We, the undersigned Directors of The Standard Register Company (hereinafter called "Company"), an Ohio corporation, do hereby appoint Paul H. Granzow, Chairman of the Board of Directors of the Company, as our attorney-in-fact to sign on behalf of each of us as Directors of the Company the Annual Report on Form 10-K filed by the Company annually with the Securities and Exchange Commission. We, the undersigned Directors of the Company, have signed this Power of Attorney on December 16, 1993. /S/ R. R. Burchenal /S/ J. J. Schiff, Jr. - ----------------------------- --------------------------- R. R. Burchenal J. J. Schiff, Jr. /S/ F. D. Clark, III /S/ C. F. Sherman - ----------------------------- --------------------------- F. D. Clark, III C. F. Sherman /S/ J. K. Darragh /S/ J. L. Sherman - ----------------------------- --------------------------- J. K. Darragh J. L. Sherman /S/ M. C. Nushawg /S/ W. P. Sherman - ----------------------------- --------------------------- M. C. Nushawg W. P. Sherman /S/ P. S. Redding - ----------------------------- P. S. Redding Signed and acknowledged in the presence of: /S/ P. H. Granzow /S/ R. A. Kagan P. - ----------------------------- --------------------------- P. H. Granzow, Chairman of R. A. Kagan, Corporate Secretary the Board of Directors of & In-House Counsel of The Standard Register Company The Standard Register Company [Corporate Seal] STATE OF OHIO, MONTGOMERY COUNTY: The foregoing Directors of The Standard Register Company personally appeared before me, a Notary Public for the State of Ohio, and each of them acknowledged that they did sign this Power of Attorney, and that it is the free act and deed of each said Director. I have signed and sealed this Power of Attorney at Dayton, Ohio on October 16, 1993. /S/ Brynne A. Dailey --------------------------- Brynne A. Dailey Notary Public [ Notary Seal ] -48- -----END PRIVACY-ENHANCED MESSAGE-----