[TEXT]
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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 July 3, 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 July 3, 1994
Common Stock - $1.00 Par Value 23,994,546
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
July 3, 1994, January 2, 1994 3
Consolidated Statement of Income
26 Weeks Ended July 3, 1994 and July 4, 1993 4
Consolidated Statement of Cash Flows
26 Weeks Ended July 3, 1994 and July 4, 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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<TABLE>
THE STANDARD REGISTER COMPANY
CONSOLIDATED BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
<CAPTION>
July 3, January 2,
1994 1994
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 51,784 $ 78,994
Accounts Receivable, less Allowance
for Losses 125,506 135,067
Inventories 99,965 98,248
Deferred Income Tax 10,860 10,860
Prepaid Expense 4,288 4,558
Total Current Assets $292,403 $327,727
PLANT AND EQUIPMENT
Buildings and Improvements $ 58,452 $ 54,688
Machinery and Equipment 205,095 181,645
Office Equipment 37,461 36,041
Total 301,008 272,374
Less Accumulated Depreciation 130,502 118,411
Depreciated Cost 170,506 153,963
Construction in Process 23,427 17,801
Land 2,675 2,488
Total Plant and Equipment $196,608 $174,252
OTHER ASSETS
Patents, Notes, and Other $ 2,605 $ 354
TOTAL ASSETS $491,616 $502,333
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current Maturities of Long-Term Debt $ 6,471 $ 6,471
Accounts Payable 11,870 20,582
Dividends Payable - 4,874
Accrued Compensation 23,358 27,224
Accrued Retirement Expense 5,761 7,805
Accrued Other Expense (1,801) 1,223
Accrued Taxes, except Income 3,979 4,574
Income Taxes Payable 821 4,761
Deferred Service Contract Income 9,539 6,640
Total Current Liabilities $ 59,998 $ 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 324,099 308,413
Treasury Stock, 90,086 Shares at Cost (1,754) (1,754)
Total Shareholders' Equity $377,662 $360,983
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $491,616 $502,333
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</TABLE>
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<TABLE>
THE STANDARD REGISTER COMPANY
CONSOLIDATED STATEMENT OF INCOME
(In Thousands except Data Per Share)
(Unaudited)
<CAPTION>
Second Quarter Six Months
13 Weeks Ended 26 Weeks Ended
July 3, July 4, July 3, July 4,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
TOTAL REVENUE $ 184,306 $ 174,728 $ 368,181 $ 344,023
COSTS AND EXPENSES
Cost of Products Sold $ 114,806 $ 110,004 $ 231,064 $ 215,077
Engineering & Research 1,868 1,946 3,764 3,864
Selling and Administrative 43,352 40,598 85,737 81,101
Depreciation and Amortization 6,295 6,354 12,606 12,606
Interest 331 294 537 617
Total Costs and Expenses $ 166,652 $ 159,196 $ 333,708 $ 313,265
INCOME BEFORE INCOME TAXES $ 17,654 $ 15,532 $ 34,473 $ 30,758
Income Taxes 7,094 5,986 13,897 11,846
NET INCOME $ 10,560 $ 9,546 $ 20,576 $ 18,912
Average Number of Shares
Outstanding (000) 28,713 28,746 28,713 28,746
DATA PER SHARE
Net Income Primary and
Fully Diluted $ 0.37 $ 0.33 $ 0.72 $ 0.66
Dividends Paid $ 0.17 $ 0.16 $ 0.34 $ 0.32
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</TABLE>
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<TABLE>
THE STANDARD REGISTER COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Six Months
26 Wks Ended
July 3, July 4,
1994 1993
<S>
CASH FLOWS FROM OPERATING ACTIVITIES
<C> <C>
Net Income $ 20,576 $ 18,912
Add (Deduct) Items not Affecting Cash:
Depreciation and Amortization $ 12,606 $ 12,606
Loss on Sale of Facilities 88 12
Net Change to Post-Retirement Healthcare - 300
Increase (Decrease) in Cash Arising from
Changes in Asset and Liabilities:
Accounts Receivable 9,560 11,077
Inventories (1,717) (4,063)
Other Assets 303 1,356
Accounts Payable (8,713) (7,912)
Accrued Expenses (9,528) (11,683)
Income Taxes Payable (3,940) ( 1,627)
Deferred Service Income 2,899 2,839
Net Adjustments 1,558 2,905
Net Cash Provided by Operating Activities $ 22,134 $ 21,817
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Facilities $ 39 $ 74
Additions to Plant and Equipment (37,371) (11,174)
Net Cash (Used in) Investing Activities $(37,332) $(11,100)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Long-Term Debt $ (3,240) $ (3,921)
Proceeds from Issuance of Common Stock 993 909
Dividends Paid (9,765) (9,204)
Repurchase of Common Stock - (262)
Net Cash (Used in) by Financing Activities $(12,012) $(12,478)
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS $(27,210) $ (1,761)
Cash and Cash Equivalents at Beginning
of Year $ 78,994 $ 86,203
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 51,784 $ 84,442
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</TABLE>
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THE STANDARD REGISTER COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS
OF THE INTERIM FINANCIAL STATEMENTS
Net income for the second quarter 1994 was $10.6 million, a 10.6%
increase compared to the second quarter 1993 result of $9.5 million;
earnings per share were $.37 vs. $.33 a year earlier. For the six
months year-to-date period, net income was $20.6 million or $.72 per
share, an 8.8% increase compared to 1993's $18.9 million and $.66 per
share result.
Total revenue increased 5.5% and 7.0% for the quarter and year-to-date
periods, respectively. Business forms shipments rose 4.8% and 7.3% for
the respective reporting periods as the growth of pressure sensitive,
Stanfast, Imprint, cut sheet, and forms management services overcame
the continuing weakness in traditional custom continuous, stock, and
unit set form categories. The 4.8% second quarter increase in business
forms was a result of both higher unit shipment levels and an average
3.0% increase in net selling prices. Promotional direct mail shipments
were off 2.3% in the quarter and were up a modest 1.7% for the six
month period, reflecting an increasingly price competitive marketplace.
Following a flat first quarter performance, equipment, supplies, and
related maintenance services rose a healthy 17.5% for the quarter on
the strength of continued expansion in third party maintenance
services.
1994 pretax profit margins as a percent of revenue have improved vs.
1993 for both the quarter and year-to-date periods--from 8.9% to 9.6%
in the quarter and 8.9% to 9.4% for the first half. For the second
quarter this is attributed to improved gross margins driven by higher
average pricing and improved manufacturing cost ratios. The favorable
year-to-date comparison reflects a favorable spread between the growth
rates of revenue and operating expenses.
Paper costs, which represent approximately half the manufacturing cost
of a typical business form, began to rise in June after eight months of
weakness. By September, weighted average purchase prices for all
material categories are expected to increase 12%. The company has
announced a 5% price increase for the majority of its forms products
effective August 1. The most recent general price increase for
business forms was in July 1993 and the company expects to recover the
August 1 forms price increase over the near term.
The effective income tax rate was 40.2% for the second quarter 1994 vs.
38.6 for the 1993 quarter; the year-to-date comparisons show an almost
identical disparity. The increased rates reflect higher state and
local tax rates and the 1% rise in the federal tax rate that was
adopted with a retroactive adjustment in the fourth quarter 1993. The
total year effective tax rate for 1994 is expected to be similar to
last year's 40.0%.
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The acquisition by the company of the Promotional Graphics Division of
Uarco became effective June 30, 1994. This division, which markets
promotional direct mail produced by its Eudora , Kansas plant, has been
consolidated with Standard's COMMUNICOLOR Division. The acquisition
provides the company with needed promotional printing capacity, a
western manufacturing operation, an expanded product offering,
experienced personnel, and a customer base that is expected initially
to add approximately $20 million to annual revenues.
Net cash flow for the first half 1994 was a negative $27.2 million vs.
an outflow of $1.8 million for the same period of 1993. The $25.4
million greater outflow in 1994 resulted primarily from the acquisition
of Promotional Graphics plus increased capital spending. 1994's
capital spending includes projects to expand production capacity for
growth products and the continuing development of internal systems to
improve customer service and operating effectiveness. 1994 annual
capital expenditures are expected to total approximately $55 million,
including the Promotional Graphics acquisition. Cash flow from
operations and financing activities was little changed from last year's
first half result.
At quarter-end, cash and equivalents stood at $51.8 million. Total
debt, including current maturities, was $20.8 million, producing a net
cash position of $31.0 million. Current assets were 4.9 times the
level of current liabilities. The company believes that a combination
of internally generated funds and current cash reserves will be
adequate to meet operating and financing needs for the near term.
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THE STANDARD REGISTER COMPANY
PART II - OTHER INFORMATION
ITEMS 1 THRU 3
None
ITEM 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on April 20,
1994.
Following is the result of voting by the Shareholders regarding fixing
and determining the number of Directors to be ten.
IN FAVOR OPPOSED ABSTAINED
45,089,752 11,708 63,668
As a result of voting of the Shareholders, the following members were
elected to the Company's Board of Directors to hold office for the
ensuing year:
NOMINEE IN FAVOR WITHHELD
Roy W. Begley, Jr. 45,110,794 54,334
Ralph R. Burchenal 45,131,482 33,646
F. David Clarke, III 45,130,126 35,002
John K. Darragh 45,130,885 34,243
Paul H. Granzow 45,116,931 48,197
Mary C. Nushawg 45,113,517 51,611
Peter S. Redding 45,130,668 34,460
John J. Schiff, Jr. 45,131,843 33,285
Charles F. Sherman 45,114,199 50,929
John Q. Sherman, II 45,115,448 49,680
Following is a result of voting by the Shareholders regarding selection
of Battelle & Battelle as the Corporation's Auditors for the year 1994.
IN FAVOR OPPOSED ABSTAINED
45,092,731 31,547 40,850
No broker non-votes were recorded.
ITEMS 5 THRU 6
NONE
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
August 12, 1994
THE STANDARD REGISTER COMPANY
/s/ C. J. Brown
By C. J. Brown, Vice President-
Finance, Treasurer
& Chief Financial Officer
(principal financial officer)
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