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Standard Register Reports Fourth Quarter 2012 Financial Results

Management evaluates the Company’s results, excluding pension loss amortization, pension settlements, restructuring charges, postretirement plan terminations 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
(In thousands, except per share amounts)
(Unaudited)
Fourth Quarter     Y-T-D
13 Weeks Ended   13 Weeks Ended 52 Weeks Ended   52 Weeks Ended
Dec 30, 2012   Jan 1, 2012 Dec 30, 2012   Jan 1, 2012
 
$ 143,550 $ 161,392 TOTAL REVENUE $ 601,988 $ 648,109
 
99,975     113,589   COST OF SALES 421,586     449,940  
 
43,575 47,803 GROSS MARGIN 180,402 198,169
 
OPERATING EXPENSES
42,026 51,386 Selling, general and administrative 180,674 206,859
355 67 Pension settlement and postretirement plan amendment 1,338 (19,719 )
933     5,263   Restructuring and other exit costs 4,278     5,198  
 
43,314     56,716   TOTAL OPERATING EXPENSES 186,290     192,338  
 
261 (8,913 ) INCOME (LOSS) FROM OPERATIONS (5,888 ) 5,831
 
OTHER INCOME (EXPENSE)
(630 ) (692 ) Interest expense (2,689 ) (2,466 )
(10 )   74   Other income (expense) 39     632  
(640 ) (618 ) Total other expense (2,650 ) (1,834 )
 
(379 ) (9,531 ) (LOSS) INCOME BEFORE INCOME TAXES (8,538 ) 3,997
 
(170 )   85,953   Income tax (benefit) expense 534     91,695  
 
$

(209

)   $

(95,484

)

NET LOSS $ (9,072 )   $ (87,698 )
 
29,232 29,094 Average Number of Shares Outstanding - Basic 29,194 29,049
29,232 29,094 Average Number of Shares Outstanding - Diluted 29,194 29,049
 
$ (0.01 ) $ (3.28 ) BASIC AND DILUTED LOSS PER SHARE $ (0.31 ) $ (3.02 )
 
$ $ 0.05 Dividends per share declared for the period $ 0.05 $ 0.20
 
MEMO:
$ 5,141 $ 5,925 Depreciation and amortization $ 22,007 $ 21,809
$ 5,773 $ 6,070 Pension loss amortization $ 23,104 $ 24,281
 
 
SEGMENT OPERATING RESULTS
(In thousands)
(Unaudited)
13 Weeks Ended   13 Weeks Ended     52 Weeks Ended   52 Weeks Ended
Dec 30, 2012   Jan 1, 2012 Dec 30, 2012   Jan 1, 2012
REVENUE
$ 52,535 $ 59,332 Healthcare $ 215,883 $ 236,772
91,015     102,060   Business Solutions 386,105     411,337  
$ 143,550     $ 161,392   Total Revenue $ 601,988     $ 648,109  
 
NET (LOSS) INCOME BEFORE TAXES
$ 4,140 $ 2,110 Healthcare $ 12,704 $ 14,475
2,427 (1,326 ) Business Solutions 8,077 3,483
(6,946 )   (10,315 ) Unallocated (29,319 )   (13,961 )
$ (379 )   $ (9,531 ) Total Net (Loss) Income Before Taxes $ (8,538 )   $ 3,997  
 
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
    Dec 30, 2012   Jan 1, 2012
ASSETS  
Cash and cash equivalents $ 1,012 $ 1,569
Accounts receivable 104,513 113,403
Inventories 44,281 48,822
Other current assets 9,248     9,058  
Total current assets 159,054 172,852
 
Plant and equipment 58,923 73,950
Goodwill and intangible assets 13,389 14,479
Deferred taxes 22,765 23,996
Other assets 5,773     8,584  
Total assets $ 259,904     $ 293,861  
 
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities $ 74,832 $ 83,443
Deferred compensation 3,498 5,777
Long-term debt 49,159 60,149
Pension benefit obligation 252,665 236,206
Other long-term liabilities 6,610 7,339
Shareholders' deficit (126,860 ) (99,053 )
     
Total liabilities and shareholders' deficit $ 259,904     $ 293,861  
 
CONSOLIDATED STATEMENT OF CASHFLOWS
(In thousands)
(Unaudited)
    Dec 30, 2012   Jan 1, 2012
 
Net loss plus non-cash items $ 42,694 $ 32,477
Working Capital 12,452 7,176
Restructuring Payments (8,567 ) (1,227 )
Contributions to qualified pension plan (22,729 ) (25,000 )
Other (5,334 )   (171 )
Net cash provided by operating activities 18,516 13,255
 
Capital expenditures, net (5,972 ) (14,186 )
Proceeds from sale of equipment 134 1,845
Acquisition, net of cash received     (4,905 )
Net cash used in investing activities (5,838 ) (17,246 )
 
Net change in borrowings under credit facility (8,760 ) 12,661
Principal payments on long-term debt (2,483 ) (1,721 )
Dividends paid (1,502 ) (5,836 )
Other (613 )   105  
Net cash (used in) provided by financing activities (13,358 )   5,209  
 
Effect of exchange rate 123     (180 )
 
Net change in cash $ (557 )   $ 1,038  
 
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands, except per share amounts)
(Unaudited)
13 Weeks Ended   13 Weeks Ended     52 Weeks Ended   52 Weeks Ended
Dec 30, 2012   Jan 1, 2012 Dec 30, 2012   Jan 1, 2012
$ (209 ) $ (95,484 ) GAAP Net Loss $ (9,072 ) (87,698 )
Adjustments:
5,773 6,070 Pension loss amortization 23,104 24,281
355 67 Pension settlement and postretirement plan amendment 1,338 (19,719 )
933 5,263 Restructuring charges 4,278 5,198
(2,783 ) (4,501 ) Tax effect of adjustments (at statutory tax rates) (11,319 ) (3,850 )
(75 )   89,478   Deferred tax valuation allowance 3,910     89,478  
$ 3,994     $ 893   Non-GAAP Net Income $ 12,239     $ 7,690  
 
$ (0.01 ) $ (3.28 ) GAAP Loss Per Share $ (0.31 ) $ (3.02 )
Adjustments, net of tax:
0.12 0.12 Pension loss amortization 0.48 0.50
0.01 Pension settlement and postretirement plan amendment 0.03 (0.41 )
0.02 0.11 Restructuring charges 0.09 0.11
    3.08   Deferred tax valuation allowance 0.13     3.08  
$ 0.14     $ 0.03   Non-GAAP Income Per Share $ 0.42     $ 0.26  
 
GAAP Net Cash Flow $ (557 ) $ 1,038
Adjustments:
Credit facility paid (borrowed) 8,760     (12,661 )
Non-GAAP Net Cash Flow $ 8,203     $ (11,623 )




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