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Standard Register Reports Second Quarter 2012 Financial Results

Management evaluates the Company’s results, excluding pension loss amortization, pension settlements, restructuring charges, and deferred tax valuation allowances. We believe this non-GAAP financial measure is useful to investors because it provides a more complete understanding of our current underlying operating performance, a clearer comparison of current period results with past reports of financial performance, and greater transparency regarding information used by management in its decision-making. Internally, management and our Board of Directors use this non-GAAP measure to evaluate our business performance.

In addition, because our credit facility is borrowed under a revolving credit agreement, which currently permits us to borrow and repay at will up to a balance of $100 million (subject to limitations related to receivables, inventories, and letters of credit), we take the measure of cash flow performance prior to borrowing or repayment of the credit facility. In effect, we evaluate cash flow as the change in net debt (credit facility debt less cash and cash equivalents).

The table below provides a reconciliation of these non-GAAP measures to their most comparable measure calculated in accordance with GAAP.

 
THE STANDARD REGISTER COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share amounts)(Unaudited)
       

13 Weeks Ended 1-Jul-12

  13 Weeks Ended 3-Jul-11 26 Weeks Ended 1-Jul-12   26 Weeks Ended 3-Jul-11
 
$ 155,067 $ 164,285 TOTAL REVENUE $ 312,716 $ 329,174
 
  108,473       113,524   COST OF SALES   217,921     224,959  
 
46,594 50,761 GROSS MARGIN 94,795 104,215
 
COSTS AND EXPENSES
45,380 52,030 Selling, general and administrative 95,595 104,333
- 453 Pension settlements 983 453
  1,490       (251 ) Restructuring and other exit costs   2,612     (177 )
 
  46,870       52,232   TOTAL COSTS AND EXPENSES   99,190     104,609  
 
(276 ) (1,471 ) LOSS FROM OPERATIONS (4,395 ) (394 )
 
OTHER INCOME (EXPENSE)
(685 ) (572 ) Interest expense (1,389 ) (1,144 )
  23       493   Other income   39     498  
(662 ) (79 ) Total other expense (1,350 ) (646 )
 
(938 ) (1,550 ) LOSS BEFORE INCOME TAXES (5,745 ) (1,040 )
 
  197       (554 ) Income tax expense (benefit)   502     (472 )
 
$ (1,135 )   $ (996 ) NET LOSS $ (6,247 ) $ (568 )
 
 
 
29,198 29,048 Average Number of Shares Outstanding - Basic 29,157 29,012
29,198 29,048 Average Number of Shares Outstanding - Diluted 29,157 29,012
 
$ (0.04 ) $ (0.03 ) BASIC AND DILUTED LOSS PER SHARE $ (0.21 ) $ (0.02 )
 
$ - $ 0.05 Dividends per share declared for the period $ 0.05 $ 0.10
 
MEMO:
$ 6,148 $ 5,270 Depreciation and amortization $ 11,970 $ 10,620
$ 5,773 $ 6,069 Pension loss amortization $ 11,558 $ 12,142
 
 
SEGMENT OPERATING RESULTS(Dollars in thousands)(Unaudited)
13 Weeks Ended 1-Jul-12   13 Weeks Ended 3-Jul-11 26 Weeks Ended 1-Jul-12   26 Weeks Ended 3-Jul-11
REVENUE
$ 54,763 $ 59,051 Healthcare $ 111,813 $ 119,723
  100,304       105,234   Business Solutions   200,903       209,451  
$ 155,067     $ 164,285   Total Revenue $ 312,716     $ 329,174  
 
NET LOSS BEFORE TAXES
$ 3,774 $ 3,824 Healthcare $ 6,342 $ 8,507
2,613 628 Business Solutions 3,285 2,815
  (7,325 )     (6,002 ) Unallocated   (15,372 )     (12,362 )
$ (938 )   $ (1,550 ) Total Net Loss Before Taxes $ (5,745 )   $ (1,040 )
 
 
CONSOLIDATED BALANCE SHEETS(Dollars in thousands)(Unaudited)
1-Jul-12   1-Jan-12
 
ASSETS
Cash and cash equivalents $ 756 $ 1,569
Accounts receivable 108,893 113,403
Inventories 49,464 48,822
Other current assets   10,947       9,058  
Total current assets 170,060 172,852
 
Plant and equipment $ 63,573 $ 73,950
Goodwill and intangible assets 13,934 14,479
Deferred taxes 23,991 23,996
Other assets 5,840 8,584
     
Total assets $ 277,398     $ 293,861  
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities 80,986 83,443
Deferred compensation 3,463 5,777
Long-term debt 58,963 60,149
Pension benefit obligation 219,050 236,206
Other long-term liabilities 7,097 7,339
Shareholders' deficit (92,161 ) (99,053 )
     
Total liabilities and shareholders' deficit $ 277,398     $ 293,861  
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS(Dollars in thousands)(Unaudited)
26 Weeks Ended 1-Jul-12   26 Weeks Ended 3-Jul-11
 
Net loss plus non-cash items $ 21,290 $ 20,485
Working capital 4,983 9,113
Restructuring payments (3,646 ) (961 )
Contributions to qualified pension plan (13,500 ) (13,000 )
Other   (5,919 )     (4,126 )
Net cash provided by operating activities   3,208       11,511  
Capital expenditures, net (1,239 ) (6,555 )
Proceeds from sale of equipment   64       19  
Net cash used in investing activities   (1,175 )     (6,536 )
Net change in borrowings under credit facility (55 ) (1,328 )
Principal payments on long-term debt (1,352 ) (721 )
Dividends paid (1,500 ) (2,925 )
Other   (5 )     34  
Net cash used in financing activities   (2,912 )     (4,940 )
Effect of exchange rate   66       (12 )
Net change in cash $ (813 )   $ 23  
 
 
RECONCILIATION OF GAAP TO NON-GAAP MEASURES(Dollars in thousands, except per share amounts)(Unaudited)
13 Weeks Ended 1-Jul-12   13 Weeks Ended 3-Jul-11 26 Weeks Ended 1-Jul-12   26 Weeks Ended 3-Jul-11
 
$ (1,135 ) $ (996 ) GAAP Net Loss $ (6,247 ) $ (568 )
Adjustments:
 
5,773 6,069 Pension loss amortization 11,558 12,142
- 453 Pension settlement 983 453
1,490 (251 ) Restructuring charges 2,612 (177 )
(2,865 ) (2,490 ) Tax effect of adjustments (at statutory tax rates) (5,978 ) (4,931 )
564 - Deferred tax valuation allowance 2,796 -
           
$ 3,827     $ 2,785   Non-GAAP Net Income $ 5,724     $ 6,919  
 
 
$ (0.04 ) $ (0.03 ) GAAP Loss Per Share $ (0.21 ) $ (0.02 )
Adjustments, net of tax:
 
0.12 0.13 Pension loss amortization 0.24 0.25
- 0.01 Pension settlement 0.02 0.01
0.03 (0.01 ) Restructuring charges 0.05 -
0.02 - Deferred tax valuation allowance 0.10 -
           
$ 0.13     $ 0.10   Non-GAAP Income (Loss) Per Share $ 0.20     $ 0.24  
 
 
GAAP Net Cash Flow $ (813 ) $ 23
Adjustments:
 
Credit facility paid 55 1,328
     
Non-GAAP Net Cash Flow $ (758 )   $ 1,351  




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