<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Transition Period From to
Commission File Number 01-1097
THE STANDARD REGISTER COMPANY
OHIO CORPORATION 31-0455440
600 ALBANY STREET, DAYTON, OHIO 45401
TELEPHONE NUMBER 937-443-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
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. .
---- ----
CLASS OUTSTANDING AS OF June 29, 1997
----- -------------------------------
Common Stock - $1.00 Par Value 23,707,532
Class A Stock - $1.00 Par Value 4,725,000
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THE STANDARD REGISTER COMPANY
INDEX
Page
No.
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PART I - FINANCIAL STATEMENTS
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Balance Sheet
June 29, 1997, December 29, 1996 3
Statement of Income
13 Weeks Ended June 29, 1997 and June 30, 1996
26 Weeks Ended June 29, 1997 and June 30, 1996 4
Statement of Cash Flows
26 Weeks Ended June 29, 1997 and June 30, 1996 5
The financial statements of the Registrant included herein have
been prepared, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Although certain
information normally included in financial statements prepared in
accordance with generally accepted accounting principles has been
condensed or omitted, the Registrant believes that the disclosures
are adequate to make the information presented not misleading. It
is suggested that these financial statements be read in conjunction
with the financial statements and notes thereto included in the
Annual Report on Form 10-K of the Registrant for the year ended
December 29, 1996.
The financial statements included herein reflect all adjustments
(consisting only of normal recurring accruals) which, in the
opinion of management, are necessary to present a fair statement
of the results for the interim periods.
The results for interim periods are not necessarily indicative of
trends or of results to be expected for a full year.
Management's Discussion and Analysis of Results of
Operations and Financial Condition 6-7
PART II - OTHER INFORMATION AND SIGNATURE 8-10
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THE STANDARD REGISTER COMPANY
BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS June 29, December 29,
1997 1996
(Unaudited) (Audited)
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and Cash Equivalents $ 79,657 $ 64,550
Investment held to maturity 1,215 1,215
Accounts Receivable, less Allowance
for Losses 159,498 178,711
Inventories
Finished Products 56,929 55,449
Jobs in Process 18,485 18,573
Materials and Supplies 9,568 12,130
Deferred Income Tax 8,206 8,206
Prepaid Expense 5,719 6,153
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Total Current Assets 339,277 344,987
-------- --------
PLANT AND EQUIPMENT
Buildings and Improvements 61,654 61,711
Machinery and Equipment 255,377 224,702
Office Equipment 45,312 60,894
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Total 362,343 347,307
Less Accumulated Depreciation 154,356 141,021
-------- --------
Depreciated Cost 207,987 206,286
Construction in Process 36,162 26,160
Land 3,512 3,512
-------- --------
Total Plant and Equipment 247,661 235,958
-------- --------
OTHER ASSETS
Goodwill, Patents, and Other 3,175 3,278
Investment in F3 5,625 2,890
Investment in Polyforms Joint Venture 500 1,000
-------- --------
Total Other Assets 9,300 7,168
-------- --------
TOTAL ASSETS 596,238 588,113
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable 19,149 20,225
Dividends Payable - 5,738
Accrued Compensation 30,751 34,355
Accrued Other Expense 942 5,536
Accrued Taxes, except Income 6,966 5,902
Income Taxes Payable 2,540 2,624
Customer Deposits 7,218 4,185
Deferred Service Contract Income 8,010 7,274
-------- --------
Total Current Liabilities 75,576 85,839
-------- --------
LONG-TERM LIABILITIES
Long-Term Debt 4,600 4,600
Retiree Healthcare 28,553 27,643
Deferred Income Taxes 16,785 16,785
-------- --------
Total Long-Term Liabilities 49,938 49,028
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SHAREHOLDERS' EQUITY
Common Stock, $1.00 Par Value
24,295,318 Shares Issued in 1997 24,295
24,204,392 Shares Issued in 1996 24,204
Class A Stock, $1.00 Par Value
4,725,000 Shares Outstanding 4,725 4,725
Capital in Excess of Par Value 31,198 28,705
Retained Earnings 426,646 400,387
Treasury Stock, 587,786 Shares at Cost (16,140)
-------- --------
239,486 Shares at Cost (4,775)
--------
Total Shareholders' Equity 470,724 453,246
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $596,238 $588,113
======== ========
</TABLE>
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THE STANDARD REGISTER COMPANY
STATEMENT OF INCOME
(In Thousands except Data Per Share)
(Unaudited)
<TABLE>
<CAPTION>
Second Quarter Six Months
13 Weeks Ended 26 Weeks Ended
June 29, June 30, June 29, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
TOTAL REVENUE $236,467 $239,352 $466,581 $469,025
-------- -------- -------- --------
COSTS AND EXPENSES
Cost of Products Sold 139,930 147,708 276,455 292,091
Engineering & Research 2,312 1,995 4,793 4,014
Selling and Administrative 56,587 53,563 112,951 105,731
Depreciation and Amortization 9,471 8,433 18,627 16,688
Interest 70 142 147 307
-------- -------- -------- --------
Total Costs and Expenses 208,370 211,841 412,973 418,831
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 28,097 27,511 53,608 50,194
Income Taxes 11,098 11,425 21,661 20,545
-------- -------- -------- --------
NET INCOME $ 16,999 $ 16,086 $ 31,947 $ 29,649
======== ======== ======== ========
Average Number of Shares
Outstanding (000) 28,507 28,686 28,507 28,686
DATA PER SHARE
Net Income $ 0.60 $ 0.56 $ 1.12 $ 1.03
Dividends Paid 0.20 0.19 0.40 0.38
</TABLE>
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THE STANDARD REGISTER COMPANY
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months
26 Weeks Ended
June 29, June 30,
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 31,947 $ 29,649
-------- --------
Add Items not Affecting Cash:
Depreciation and Amortization 18,627 16,688
Loss (Gain) on Sale of Facilities 183 (171)
Net Change to Investments 793 780
Net Change to Retiree Healthcare 910 374
Increase (Decrease) in Cash Arising from
Changes in Asset and Liabilities:
Accounts Receivable 19,213 23,934
Inventories 1,170 10,725
Other Assets 436 (1,046)
Accounts Payable (1,076) (3,231)
Accrued Expenses (7,134) (829)
Income Taxes Payable (84) (104)
Customer Deposits 3,033 (2,851)
Deferred Service Income 736 858
-------- --------
Net Adjustments 36,807 45,127
-------- --------
Net Cash Provided by Operating Activities 68,754 74,776
======== ========
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Facilities 199 240
Proceeds from Sale of Short-term investments - 15
Additions to Plant and Equipment (30,610) (28,226)
Investment in F3 Corporation (3,028) (500)
Investment in Polyforms Joint Venture - (157)
-------- --------
Net Cash (Used in) Investing Activities (33,439) (28,628)
======== ========
CASH FLOWS FROM FINANCING ACTIVITIES
Principal Payments on Debt - (3,235)
Proceeds from Issuance of Common Stock 2,584 1,118
Redemption of Common Stock (11,365) (51)
Dividends Paid (11,427) (10,904)
-------- --------
Net Cash (Used in) Financing Activities (20,208) (13,072)
======== ========
NET INCREASE IN CASH AND
CASH EQUIVALENTS 15,107 33,076
Cash and Cash Equivalents, Beginning 64,550 33,646
-------- --------
CASH AND CASH EQUIVALENTS, ENDING $ 79,657 $ 66,722
======== ========
</TABLE>
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THE STANDARD REGISTER COMPANY
MANAGEMENT DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
- ---------------------
Net Income for the second quarter 1997 rose 5.7% to $17.0 million or
$.60 per share, compared to $16.1 million or $.56 per share for the
comparable quarter of 1996. Revenue for the quarter was $236.5 million,
compared to $239.4 million in the second quarter 1996. For the six
months year-to-date period, Net Income was $31.9 million or $1.12 per
share, a 7.8% increase compared to 1996's $29.6 million and $1.03 per
share result. Revenue for the first six months was $466.6 million
compared with $469.0 million for 1996. The growth in net income was
primarily attributable to improved gross margins as the result of lower
paper costs for both the quarter and year-to-date periods.
The Document Management Division reported revenue of $171.5 million and
$339.8 million for the quarter and year-to-date periods, representing
increases of .7% and 1.8%, respectively. Within the Document Management
Division, volume continued to shift from traditional rotary products,
down 3.2% year-to-date, to targeted growth areas consisting of
Stanfast's on demand printing, Imaging Services Group's print processing
and fulfillment, and Distribution Service's inventory management. These
three areas, taken as a whole, were up 10.5% year-to-date and accounted
for 37.5% of total division revenue.
The Communicolor Division's revenue continued to decline for both the
quarter, down 9.4% to $22.7 million, and the first half, down 9.7% to
$45.3 million. Fifty percent of the decline was attributable to lower
prices on a year-to-date basis. The benefits of recent changes in sales
management and staffing levels, the announcement of two new product
offerings, and continued cost control are not expected to have a
noteworthy effect until late fourth quarter.
The Document Systems Division reported revenue of $41.6 million for the
second quarter, down 2.1%, and $80.2 million year-to-date, down 2.6%.
During the second quarter, equipment and maintenance revenues declined
19.2% and .8%, respectively, while the Pressure Sensitive Group and
supplies revenues increased 5.2% and .4%, respectively. On a year-to-
date basis, equipment and maintenance revenues declined 16.9% and 6.9%,
respectively, while the Pressure Sensitive Group and supplies revenues
increased 4.4% and 5.8%, respectively. Maintenance revenue declined as
expected as a result of last year's pruning of unprofitable accounts.
Document Systems Division's dollar gross margin increased 15.0% and
14.1% on a quarter and year-to-date basis, respectively, due to improved
gross margins in both the maintenance and Pressure Sensitive groups, up
90.7% and 24.2%, respectively, on a year-to-date basis.
The Company's gross margin for all products and services continued to
improve for both the second quarter and first half, increasing 5.3% and
7.5%, respectively. Gross margin as a percentage of revenue in the
current quarter was 40.8%, consistent with the first quarter's 40.7%.
Gross margin as a percentage of revenue improved 2.5 percentage points
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over the prior year's 38.3% for the current quarter and 3.0 percentage
points over the prior year-to-date's 37.7%.
The improvements in gross margin were attributable to lower paper price
levels in both the Document Management Division and the Document Systems
Division's Pressure Sensitive Group, along with improved cost controls
in the Document Systems Division's maintenance group. Paper prices are
expected to increase in the near term to levels experienced at the end
of last year. No LIFO inventory adjustments were recorded on a year-to-
date basis in either year.
Selling, administrative, and engineering expenses increased 6.0% and
7.3% for the quarter and year-to-date periods, respectively, as a result
of increased sales support personnel related to the rollout of the STAR
sales office automation project and increased information systems
expense to support the development of new client server applications.
Depreciation and amortization increased approximately 12% for both the
quarter and year-to-date periods in line with current higher capital
spending levels. Interest expense decreased fifty percent as a result
of a $3.2 million decrease in debt level compared to the prior year.
Liquidity and Capital Resources
- -------------------------------
The Company's financial condition remains strong. Cash and cash
equivalents of $79.7 million exceeded total long term debt of $4.6
million by $75.1 million. Net cash flow from operating activities for
the first half of 1997 was $68.8 million resulting primarily from
increased net income and reductions in accounts receivable, down 10.8%.
Current assets were 4.5 times the level of current liabilities.
Capital expenditures for the first half of 1997 totaled $30.6 million,
in line with the Company's anticipated $60 million annual capital
expenditure level. In addition, the Company continued its stock
repurchase program, purchasing $6.1 million in the current quarter and
$11.4 million in the first half.
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 5
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None
ITEM 6 (a) Exhibits
- ------
Exhibit No. Description
27 Financial Data Schedule
(b) There have been no reports on Form 8-K filed during the
quarter for which this report on Form 10-Q is being filed.
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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, 1997
THE STANDARD REGISTER COMPANY
/s/ C. J. Brown
-----------------------------------------
By C. J. Brown, Sr. Vice President, Administration,
Treasurer & Chief Financial Officer
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EXHIBIT INDEX
Number Description
27 Financial Data Schedule
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
The Standard Register Company Financial Statements for the six months
ended June 29, 1997, and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> JUN-29-1997
<CASH> 79,657
<SECURITIES> 1,215
<RECEIVABLES> 164,921
<ALLOWANCES> 5,423
<INVENTORY> 84,982
<CURRENT-ASSETS> 339,277
<PP&E> 402,017
<DEPRECIATION> 154,356
<TOTAL-ASSETS> 596,238
<CURRENT-LIABILITIES> 75,576
<BONDS> 4,600
<COMMON> 29,020
0
0
<OTHER-SE> 441,704
<TOTAL-LIABILITY-AND-EQUITY> 596,238
<SALES> 465,322
<TOTAL-REVENUES> 466,581
<CGS> 276,455
<TOTAL-COSTS> 412,973
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 225
<INTEREST-EXPENSE> 147
<INCOME-PRETAX> 53,608
<INCOME-TAX> 21,661
<INCOME-CONTINUING> 31,947
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,947
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
</TABLE>
