LIQUIDITY AND CAPITAL RESOURCES
An important objective of the restructuring was to reduce the level of asset investment to improve productivity and generate cash flow. The exhibit below presents a summary analysis of the composition of the Company's investment and capital structure before and after the restructuring.

 

STANDARD REGISTER COMPANY
NET INVESTMENT & CAPITAL STRUCTURE

   
        Restructuring Period       
     Net Investment    Dec-00           Mar-0l        Jun-01        Sep-01        Dec-01       
  Working Capital (Excl Cash & Debt)   $323     $306   $280   $221   $215    
  Turnover   4.3x                 5.3x    
  Capital Assets @NBV   310     261   253   251   225    
  Restructuring Liability   (9)     (71)   (54)   (32)   (15)    
  All Other Net Assets   16     40   41   35   29    
  Total   $641     $537   $521   $475   $454    
  Turnover   2.2x                 2.5x    
  Annualized Return on Invested Capital   6%                 14%    
                             
  Capital Structure                          
  Total Debt   $204     $203   $203   $203   $203    
  Less Cash   (57)     (89)   (100)   (135)   (164)    
  Net Debt   147     114   103   68   39    
  Equity   494     423   418   407   415    
  Total   $641     $537   $521   $475   $454    
  Net Debt: Total Capital   23%                 9%    
 

    The level of working capital defined above decreased at a faster rate than evenue, generating improved asset turnover and significant cash flow. Capital expenditures were just $26 million, compared to $66 million and $67 million for 2000 and 1999, respectively. Capital spending for 2002 is forecasted in the $45 million to $55 million range, excluding acquisitions.     The low capital spending during the restructuring, plus the closure of facilities and the disposal of equipment, produced a 27% drop in capital assets. Overall asset turnover improved 15% from 2.2x to 2.5x and the annualized return on assets increased from 6% in the fourth quarter 2000 to 14% in the final quarter of 2001.
    Debt remained relatively steady, ending at $203 million. Cash and short-term investments increased by $107 million during the year, producing a year-end net debt position of $39 million, representing just 9% of total capital. This reflects the Company's strong financial condition.
    The Company has a revolving credit facility with 10 banks providing commitments of up to $170 million expiring in May 2005, plus additional commitments with the same banks for up to $85 million expiring in May 2002. At the Company's option in May 2002, amounts outstanding under the latter commitments may be extended up to one year in the form of a term loan.
    The Company is actively seeking acquisitions that will add talent, technology and capabilities that align with the growth strategies of each SBU. The expectation is that the acquisition targets would be moderate in size, having annual revenue of $25 million to $100 million.
    Management believes that the combination of internally generated funds, available cash reserves, and the existing credit facility are sufficient ñî fund the Company's operation over the next year. In management's judgment, the Company's strong balance sheet could support additional debt financing, if necessary, to pursue its acquisition plan.


Standard Register                          
2001 Annual Report