History of Standard Register
1912: Standard Register is founded by John Q. Sherman and inventor Theodore Schirmer with their paper-feeding invention, the pinfeed autographic register. This revolutionary device simplified business transactions and became the “standard.” This meant that instead of just two or three copies, as many as eight copies could be made at one writing with all copies positively fed through the register. It meant that all copies could be printed with lines, check blocks, imprinted items and other things so that forms could now be designed for many systems in addition to the simple sales slip.
1913: The Dayton flood causes the fledging company to miss many delivery dates, and order cancellations or threatened cancellations pushed the firm toward financial disaster.
1916: A one-story, modern factory was built at the present location of Standard Register’s headquarters in Dayton on Albany Street.
1920: Sales volumes reach $1 million.
1940. Sales volumes reach $5 million. At that time a new plant was built at the Dayton location. Company buys a carbon plant to insure providing the highest quality product possible to its customers.
1940-44: The outbreak of World War II brought government restrictions and business forms were declared nonessential. But General Motors President Charles E. Wilson realized that “no physical activity goes on in our modern age without a piece of paper moving along to guide it.” Paperwork was found to be important to the war effort because it controlled munitions manufacturing, tank building operations, material procurement, troop movement and many other things. Marginally punched forms and other equipment for speedy processing of information were needed by defense plants, shipyards, and the services themselves to keep men and materials moving.
1946-1956: Sales volume grows to more than $43 million and company goes public.
1960s: Business forms industry growth due to automotive industry and development of computers and optical scanners, sales hit $107.9 million.
1980-1990: Sales volume grows to more $700 million, but when recession hits it causes profits to decrease 50 percent at company.
1990: Company closes plants and lays off 5 percent of its employees.
2001: Company lays off 2,400 workers, or 28 percent of its work force of 8,700.
2003: The company closes plants and eliminates 500 jobs.
2008: Joseph Morgan Jr. is named CEO of company.
2013: Company acquires WorkflowOne in a $218 million deal.
March 4: Company de-listed from the New York Stock Exchange.
March 12: Company files for Chapter 11 bankruptcy and agrees to be sold to a private investment firm.
Mounting debt and pension obligations pushed Standard Register to file Thursday for Chapter 11 bankruptcy reorganization, a move company executives said will leave the century-old Dayton business better positioned for growth.
As part of the filing in the U.S. Bankruptcy Court for the District of Deleware, the communication services company signed a $275 million agreement to be acquired by an affiliate of Silver Point Capital L.P.
Standard Register said the sale will help cut its debt and help the company move forward amid declining demand for its traditional printed forms. It has lined up $155 million in financing for the sale process and to fund operations.
The bankruptcy filing listed Standard Register’s total assets at $453 million and total debts at $584 million. Chapter 11 will allow the company to continue to do business under the court’s protection while attempting to reorganize its financial affairs.
In January, Standard Register hired three financial advisory firms that specialize in corporate restructuring and asset sales to explore the company’s options to address its financial situation.
The company’s advisers, board of trustees and management determined Chapter 11 was “the best course to take,” said Joseph P. Morgan, Standard Register president and chief executive, in an interview with the Dayton Daily News.
“We are not liquidating the company. We are going through this process so that we can make the appropriate modifications to the business for ongoing success,” Morgan said.
Morgan said the company is executing its reorganization plan, is in “deep contact” with its customers, and met with its employees on Thursday. “We are stabilizing things here so we can move forward,” he said.
Standard Register has about 3,500 employees, including 850 in Dayton.
Founded in 1912, Standard Register has been “an integral part of the Dayton community for decades,” said Jeff Hoagland, Dayton Development Coalition president and chief executive. “The bankruptcy filing is unfortunate, but I think it’s something we have all been seeing coming,” he said.
Employees at the company’s headquarters at 600 Albany St. in Dayton said they were instructed not to speak with media.
Bankruptcy not unexpected
Thursday’s bankruptcy filing is the latest in a string of troubling news for one of the Dayton region’s last publicly traded companies.
On March 4, Standard Register’s stock was de-listed by the New York Stock Exchange. The company’s shares continue to be traded over-the-counter on the OTC Pink Marketplace, an electronic exchange commonly associated with penny stocks.
Following Thursday’s bankruptcy filing, shares of the company’s stock were 12 cents at the close of trading.
Standard Register urged “extreme caution” in trading its shares, which “will be highly speculative and will pose substantial risks” during the bankruptcy process. The company said existing shareholders are likely to be left with nothing at the end of the Chapter 11 proceedings.
On March 2, the company announced a shakeup in its executive ranks that included the resignation of long-time Chief Financial Officer Robert M. Ginnan. Kevin M. Carmody of McKinsey Restructuring & Transformation was named as Standard Register’s chief restructuring officer.
Going forward
Standard Register Co. is more than a century old, but it has weathered challenges in recent years. It has gone through at least a couple of corporate restructurings, a 5-for-1 reverse stock split and de-listing warnings from the New York Stock Exchange.
In recent years, Standard Register has made bold, even unexpected moves. It acquired a local competitor, Workflow One — beefing up revenue and its local workforce, initially, to more than 900 people — and it has expanded nationally, leasing and refurbishing a $10 million distribution and print center in Jeffersonville, Ind.
A hearing on Standard Register’s bankruptcy loans and other motions that will allow the company to continue operating during the Chapter 11 process is scheduled for 11 a.m. today at U.S. Bankruptcy Court for the District of Delaware.
“The intense effort to plan for this process and the package that we go into Chapter 11 with will likely allow us to move through the process in an expedited way,” Morgan said.
Standard Register is a print and marketing company that serves the health care, financial services, manufacturing, retail, business services and transportation sectors.
The company’s products and services include customer communications, marketing solutions, print management, product marking and labeling, promotional marketing, health care technology and communications, and patient safety items such as labels and wristbands.
Standard Register reported revenue of $219.4 million and a loss of $5.6 million for the 2014 third quarter.
The company’s business solutions division had revenue of $153.7 million for the third quarter of 2014; health care revenue was $65.7 million.
Standard Register has not yet reported financial results for the fourth quarter of 2014 or for the 12-month fiscal period ending Feb. 27.
Morgan said the company has a fundamentally stable underlying business with a large, diverse customer base. However, its debt structure and legacy liabilities have hurt its ability to invest in growth, he said.
How did company get to this point?
Standard Register’s bottom line has been hurt by pension obligations, the cost of sales, or the investment in labor, rent, freight, and other supply chain expenses necessary to bring goods to market.
In the bankruptcy filing, the company identified its single largest creditor holding an unsecured claim as the Pension Benefit Guaranty Corporation, to which it owes about $195 million.
Over the past two years, the company has incurred additional costs stemming primarily from the integration of WorkflowOne, which the company acquired in August 2013.
Total costs of restructuring tied to the WorkflowOne acquisition, which is expected to continue through the end of this year, will reach about $30.4 million, according to the 2014 third quarter report on the company’s performance.
In addition, Standard Register has incurred asset-based lending and lender debt over the years “that in accumulation have created a debt challenge on our balance sheet,” Morgan said.
The company also has faced a decline in the traditional print market, and expanded into software and electronic documents.
“We stared that right in the eye and made the appropriate changes to the portfolio, although limited in terms of how we could invest in the business because of the constraints,” Morgan said.
Standard Register’s future in Dayton will become clear as the company goes through the sales process, Morgan said.
“But for now we are business as usual. The headquarters is here and our commitment to the community remains, and there is no intent to change that,” he said.
Local officials hopeful
Hoagland said he is hopeful and optimistic that the bankruptcy filing will allow Standard Register to emerge as a “stronger and more nimble company.”
He compared Standard Register’s situation to Eastman Kodak, the Rochester, N.Y-based imaging technology company with a large operation in Kettering.
Kodak filed for Chapter 11 in January 2012. The company emerged from bankruptcy in September 2013, having shed its legacy liabilities and exited from several businesses.
“Kodak has come out of bankruptcy very nicely and the Kettering site is one of the strongest parts of that company. We are hopeful that something like that will happen with Standard Register, as well,” Hoagland said.
Dayton Mayor Nan Whaley said the city has had several meetings with Standard Register executives over the past year, but added the company has not asked for financial incentives.
“The city of Dayton remains committed to providing ongoing support and resources to help ensure Standard Register remains a strong and successful city of Dayton business,” Whaley said.
Community groups praised the longtime Dayton company.
“Standard Register has a long history of being an outstanding community partner, demonstrated by their commitment to families, kids and education. We’re so thankful for their decades of service and leadership and hopeful that they’ll continue to be a partner for the betterment of our community for years to come,” said Michael M. Parks, president of The Dayton Foundation.
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