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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended October 2, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From to
Commission File Number 01-1097
THE STANDARD REGISTER COMPANY
OHIO CORPORATION 31-0455440
600 ALBANY STREET, DAYTON, OHIO 45401
TELEPHONE NUMBER 513-443-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Secu-
rities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No. .
CLASS OUTSTANDING AS OF OCTOBER 2, 1994
Common Stock - $1.00 Par Value 23,942,891
Class A Stock - $1.00 Par Value 4,725,000
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No Exhibits Filed
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THE STANDARD REGISTER COMPANY
INDEX
Page
No.
PART I - FINANCIAL STATEMENTS
Consolidated Balance Sheet
October 2, 1994, January 2, 1994 3
Consolidated Statement of Income
13 Weeks Ended October 2, 1994 and October 3, 1993
39 Weeks Ended October 2, 1994 and October 3, 1993 4
Consolidated Statement of Cash Flows
39 Weeks Ended October 2, 1994 and October 3, 1993 5
The consolidated financial statements of the Registrant included
herein have been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Although
certain information normally included in financial statements
prepared in accordance with generally accepted accounting
principles has been condensed or omitted, the Registrant believes
that the disclosures are adequate to make the information presented
not misleading. It is suggested that these consolidated financial
statements be read in conjunction with the financial statements and
notes thereto included in the Annual Report on Form 10-K of the
Registrant for the year ended January 2, 1994.
The consolidated financial statements included herein reflect all
adjustments (consisting only of normal recurring accruals) which,
in the opinion of management, are necessary to present a fair
statement of the results for the interim periods.
The results for interim periods are not necessarily indicative of
trends or of results to be expected for a full year.
Management's Discussion and Analysis of the Interim
Financial Statements 6
PART II - OTHER INFORMATION AND SIGNATURE 8
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THE STANDARD REGISTER COMPANY
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Oct 2, January 2,
1994 1994
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 53,226 $ 78,994
Accounts Receivable, less Allowance
for Losses 132,291 135,067
Inventories 105,111 98,248
Deferred Income Tax 10,860 10,860
Prepaid Expense 3,964 4,558
Total Current Assets $305,452 $327,727
PLANT AND EQUIPMENT
Buildings and Improvements $ 58,509 $ 54,688
Machinery and Equipment 208,234 181,645
Office Equipment 38,197 36,041
Total 304,940 272,374
Less Accumulated Depreciation 136,699 118,411
Depreciated Cost 168,241 153,963
Construction in Process 26,827 17,801
Land 2,675 2,488
Total Plant and Equipment $197,743 $174,252
OTHER ASSETS
Patents, Notes, and Other $ 2,501 $ 354
TOTAL ASSETS $505,696 $502,333
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current Maturities of Long-Term Debt $ 6,470 $ 6,471
Accounts Payable 16,294 20,582
Dividends Payable - 4,874
Accrued Compensation 26,267 27,224
Accrued Retirement Expense 6,290 7,805
Accrued Other Expense (994) 1,223
Accrued Taxes, except Income 4,112 4,574
Income Taxes Payable 2,769 4,761
Deferred Service Contract Income 8,551 6,640
Total Current Liabilities $ 69,759 $ 84,154
LONG-TERM LIABILITIES
Long-Term Debt $ 14,306 $ 17,546
Retiree Healthcare 24,482 24,482
Deferred Income Taxes 15,168 15,168
Total Long-Term Liabilities $ 53,956 $ 57,196
SHAREHOLDERS' EQUITY
Common Stock, $1.00 Par Value
24,084,632 Shares Issued in 1994 $ 24,085
24,036,796 Shares Issued in 1993 $ 24,037
Class A Stock, $1.00 Par Value
4,725,000 Shares Outstanding 4,725 4,725
Capital in Excess of Stated Value 26,507 25,562
Retained Earnings 329,527 308,413
Treasury Stock, 141,741 Shares at Cost (2,863) (1,754)
Total Shareholders' Equity $381,981 $360,983
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $505,696 $502,333
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THE STANDARD REGISTER COMPANY
CONSOLIDATED STATEMENT OF INCOME
(In Thousands except Data Per Share)
(Unaudited)
<CAPTION>
Third Quarter Nine Months
13 Weeks Ended 39 Weeks Ended
Oct 2, Oct 3, Oct 2, Oct 3,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
TOTAL REVENUE $ 190,008 $ 179,104 $ 558,189 $ 523,127
COSTS AND EXPENSES
Cost of Products Sold $ 120,379 $ 113,392 $ 351,443 $328,469
Engineering & Research 1,849 2,061 5,613 5,925
Selling and Administrative 43,536 41,460 129,273 122,561
Depreciation and Amortization 6,986 6,165 19,592 18,771
Interest 269 280 806 897
Total Costs and Expenses $ 173,019 $ 163,358 $ 506,727 $ 476,623
INCOME BEFORE INCOME TAXES $ 16,989 $ 15,746 $ 51,462 $ 46,504
Income Taxes 6,682 5,997 20,579 17,843
NET INCOME $ 10,307 $ 9,749 $ 30,883 $ 28,661
Average Number of Shares
Outstanding (000) 28,693 28,746 28,693 28,746
DATA PER SHARE
Net Income Primary and
Fully Diluted $ 0.36 $ 0.34 $ 1.08 $ 1.00
Dividends Paid $ 0.17 $ 0.16 $ 0.51 $ 0.48
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THE STANDARD REGISTER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Nine Months
39 Weeks Ended
Oct 2, Oct 3,
1994 1993
<S>
CASH FLOWS FROM OPERATING ACTIVITIES
<C> <C>
Net Income $ 30,883 $ 28,661
Add (Deduct) Items not Affecting Cash:
Depreciation and Amortization $ 19,592 $ 18,771
Loss on Sale of Facilities 201 20
Net Change to Post-Retirement Healthcare - 450
Increase (Decrease) in Cash Arising from
Changes in Assets and Liabilities:
Accounts Receivable 2,776 5,040
Inventories (6,864) (12,502)
Other Assets 636 1,222
Accounts Payable (4,288) (2,935)
Accrued Expenses (5,151) (6,523)
Income Taxes Payable (1,992) (337)
Deferred Service Income 1,911 1,730
Net Adjustments 6,821 4,936
Net Cash Provided by Operating Activities $ 37,704 $ 33,597
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Facilities $ 50 $ 81
Additions to Plant and Equipment (45,522) (18,406)
Net Cash Used in Investing Activities $(45,472) $(18,325)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Long-Term Debt $ (3,240) $ (3,924)
Proceeds from Issuance of Common Stock 993 909
Dividends Paid (14,644) (13,803)
Repurchase of Common Stock (1,109) (262)
Net Cash Used in Financing Activities $(18,000) $(17,080)
NET DECREASE IN CASH AND
CASH EQUIVALENTS $(25,768) $ (1,808)
Cash and Cash Equivalents at Beginning
of Year $ 78,994 $ 86,203
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 53,226 $ 84,395
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THE STANDARD REGISTER COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS
OF THE INTERIM FINANCIAL STATEMENTS
Net income for the third quarter 1994 was $10.3 million or $.36 per
share, compared to $9.7 million and $.34 per share for the third
quarter of 1993. Pretax profit margins edged higher from 8.8% of
revenue in the 1993 quarter to 8.9% in the most recent period.
Total revenue increased 6.1% for the quarter, which compared favorably
to the 5.5% growth recorded for the preceding twelve month period.
Business forms products, representing 77% of total revenue, continued
to demonstrate growth with unit sales up approximately 6.0% and net
pricing 1.0% higher. Production utilization at forms plants continued
to rise, necessitating the purchase of new equipment for certain forms
configurations. Shipments of promotional printing, accounting for
about 12% of total revenue, was little changed from last year's third
quarter, reflecting some temporary weakness in incoming order volume
and prices, offset by the inclusion of business associated with the
acquisition of Promotional Graphics on June 30, 1994. Promotional mail
production backlogs were strong at quarter-end, however, and the
outlook is for a resumption of growth for the fourth quarter. A third-
class postal increase is anticipated for early 1995. Postal rate hikes
have typically had a depressing effect on promotional mail volume as a
lesser share of the user's advertising budget is devoted to printed
material. Based on past experience and the relatively modest increase
expected, management believes the effect will be minimal and that the
market will adjust to the higher postal rates within three to six
months. Equipment, software, and related services comprising the
balance of revenue, rose approximately 6.0%.
Cost of products sold was 63.4% of revenue, compared to an almost
identical 63.3% for the same quarter of 1993. Paper is a significant
factor, accounting for approximately 50% of the cost of production for
a typical business form. As a commodity, paper prices vary with demand
and paper mill utilization. Increasing demand for all paper products,
due in part to higher exports, combined with high utilization and
depressed paper company earnings have fueled a rapid rise in paper
prices since June of this year. The weighted average cost of material,
including bond and carbonless papers, will have increased approximately
30% from June 1994 to January 1995. The company has announced
increases in the pricing of its forms and expects to be successful in
recovering the higher paper costs as the year progresses; discounts are
expected to rise for one or two quarters, however, given the unusually
steep climb in prices.
Selling, administration, and R&D expenses increased 5.4% overall, below
the 6.1% rate of revenue growth and in line with management
expectations. Depreciation rose 13.3%, reflecting higher capital
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spending and the effect of the Promotional Graphics acquisition.
Interest expense was lower as a result of lower debt balances.
The effective income tax rate was 39.3%, compared to 38% for the third
quarter 1993; this increase is largely attributed to the 1.0% increase
in the 1993 statutory federal rate, not included in reported results
until the fourth quarter 1993.
The balance of cash and cash equivalents declined $25.8 million from
the outset of the year, reflecting the acquisition of Promotional
Graphics and scheduled debt payments. Cash flow from operations for
the first nine months of the year rose 12% due in large part to a
slower rate of inventory growth. Capital spending, including the cost
of the Promotional Graphics acquisition is expected to be in the $52-55
million range.
The financial condition remains strong. At quarter-end, cash and cash
equivalents stood at $53.2 million compared to $20.8 million in total
debt including current maturities. Current liabilities were 4.4 times
the level of current assets and long-term debt was only 3.7% of
shareholders' equity. The company expects to continue to finance its
operations, including debt payments, capital expenditures, and dividend
payments from internally generated funds and existing cash reserves.
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THE STANDARD REGISTER COMPANY
PART II - OTHER INFORMATION
ITEMS 1 THRU 6
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
October , 1994
THE STANDARD REGISTER COMPANY
/s/ C. J. Brown
By C. J. Brown, Vice President-
Finance and
Treasurer
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