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Standard Register Reports Third Quarter 2012 Financial Results

Non-GAAP Measure Presented in This Press Release

The Company reports its results in accordance with Generally Accepted Accounting Principles in the United States (GAAP). However, we believe that certain non-GAAP measures found in this press release, when presented in conjunction with comparable GAAP measures, are useful for investors. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows where amounts are either excluded or included, not in accordance with generally accepted accounting principles. We discuss several measures operating performance including non-GAAP net income and earnings per share and cash flow on a net debt basis, which are not calculated in accordance with GAAP. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.

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 13 Weeks Ended 39 Weeks Ended 39 Weeks Ended
30-Sep-12   2-Oct-11 30-Sep-12   2-Oct-11
 
$ 145,722 $ 157,543 TOTAL REVENUE $ 458,438 $ 486,717
 
  103,690       111,392   COST OF SALES   321,611       336,351  
 
42,032 46,151 GROSS MARGIN 136,827 150,366
 
COSTS AND EXPENSES
43,053 51,140 Selling, general and administrative 138,648 155,473
- (20,239 ) Pension settlement and postretirement plan amendment 983 (19,786 )
  733       112   Restructuring and other exit costs   3,345       (65 )
 
  43,786       31,013   TOTAL COSTS AND EXPENSES   142,976       135,622  
 
(1,754 ) 15,138 (LOSS) INCOME FROM OPERATIONS (6,149 ) 14,744
 
OTHER INCOME (EXPENSE)
(670 ) (630 ) Interest expense (2,059 ) (1,774 )
  10       60   Other income   49       558  
(660 ) (570 ) Total other expense (2,010 ) (1,216 )
 
(2,414 ) 14,568 (LOSS) INCOME BEFORE INCOME TAXES (8,159 ) 13,528
 
  202       6,214   Income tax expense   704       5,742  
 
$ (2,616 )   $ 8,354   NET (LOSS) INCOME $ (8,863 )   $ 7,786  
 
 
 
29,232 29,048 Average Number of Shares Outstanding - Basic 29,182 29,035
29,232 29,204 Average Number of Shares Outstanding - Diluted 29,182 29,199
 
$ (0.09 ) $ 0.29 BASIC AND DILUTED (LOSS) INCOME PER SHARE $ (0.30 ) $ 0.27
 
$ - $ 0.05 Dividends per share declared for the period $ 0.05 $ 0.15
 
MEMO:
$ 4,896 $ 5,264 Depreciation and amortization $ 16,866 $ 15,884
$ 5,773 $ 6,070 Pension loss amortization $ 17,331 $ 18,212
 
 
SEGMENT OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
 
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 39 Weeks Ended
30-Sep-12   2-Oct-11 30-Sep-12   2-Oct-11
REVENUE
$ 51,535 $ 57,717 Healthcare $ 163,348 $ 177,440
  94,187       99,826   Business Solutions   295,090       309,277  
$ 145,722     $ 157,543   Total Revenue $ 458,438     $ 486,717  
 
NET (LOSS) INCOME BEFORE TAXES
$ 2,222 $ 3,858 Healthcare $ 8,564 $ 12,365
2,365 1,993 Business Solutions 5,650 4,808
  (7,001 )     8,717   Unallocated   (22,373 )     (3,645 )
$ (2,414 )   $ 14,568   Total Net (Loss) Income Before Taxes $ (8,159 )   $ 13,528  
 
 
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
30-Sep-12   1-Jan-12
 
ASSETS
Cash and cash equivalents $ 1,175 $ 1,569
Accounts receivable 106,519 113,403
Inventories 46,752 48,822
Other current assets   10,051       9,058  
Total current assets 164,497 172,852
 
Plant and equipment $ 60,277 $ 73,950
Goodwill and intangible assets 13,662 14,479
Deferred taxes 23,991 23,996
Other assets   5,982       8,584  
Total assets $ 268,409     $ 293,861  
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities 79,320 83,443
Deferred compensation 3,567 5,777
Long-term debt 54,158 60,149
Pension benefit obligation 212,530 236,206
Other long-term liabilities 6,992 7,339
Shareholders' deficit   (88,158 )     (99,053 )
Total liabilities and shareholders' deficit $ 268,409     $ 293,861  
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
39 Weeks Ended 39 Weeks Ended
30-Sep-12   2-Oct-11
 
Net income (loss) plus non-cash items $ 30,591 $ 25,472
Working capital 10,541 12,371
Restructuring payments (7,550 ) (1,103 )
Contributions to qualified pension plan (18,703 ) (20,000 )
Other   (4,727 )     (130 )
Net cash provided by operating activities   10,152       16,610  
 
Capital expenditures, net (2,441 ) (12,022 )
Proceeds from sale of equipment 104 40
Acquisition, net of cash received   -       (4,905 )
Net cash used in investing activities   (2,337 )     (16,887 )
 
Net change in borrowings under credit facility (4,364 ) 5,772
Principal payments on long-term debt (1,914 ) (1,091 )
Dividends paid (1,500 ) (4,380 )
Other   (613 )     78  
Net cash (used in) provided by financing activities   (8,391 )     379  
Effect of exchange rate   182       (119 )
Net change in cash $ (394 )   $ (17 )
 
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(Dollars in thousands, except per share amounts)
(Unaudited)
 
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 39 Weeks Ended
30-Sep-12   2-Oct-11 30-Sep-12   2-Oct-11
 
$ (2,616 ) $ 8,354 GAAP Net Income (Loss) $ (8,863 ) $ 7,786
Adjustments:
 
5,773 6,070 Pension loss amortization 17,331 18,212
- (20,239 ) Pension settlement and postretirement plan amendment 983 (19,786 )
733 112 Restructuring charges 3,345 (65 )
(2,567 ) 5,582 Tax effect of adjustments (at statutory tax rates) (8,544 ) 651
  1,194       -   Deferred tax valuation allowance   3,990       -  
$ 2,517     $ (121 ) Non-GAAP Net Income $ 8,242     $ 6,798  
 
 
$ (0.09 ) $ 0.29 GAAP Income (Loss) Per Share $ (0.30 ) $ 0.27
Adjustments, net of tax:
 
0.12 0.13 Pension loss amortization 0.36 0.38
- (0.42 ) Pension settlement and postretirement plan amendment 0.02 (0.41 )
0.02 - Restructuring charges 0.07 -
  0.04       -   Deferred tax valuation allowance   0.14       -  
$ 0.09     $ -   Non-GAAP Income (Loss) Per Share $ 0.29     $ 0.24  
 
 
GAAP Net Cash Flow $ (394 ) $ (17 )
Adjustments:
 
Credit facility paid   4,364       (5,772 )
Non-GAAP Net Cash Flow $ 3,970     $ (5,789 )




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