January 5, 2004 -- Workflow Management, Inc. (NASDAQ: WORK), reported second quarter 2004 earnings. The Company reported a GAAP net income for its second quarter of $1.1 million or $0.08 per diluted share, up from GAAP net income of $517,000 or $0.04 per diluted share in the comparable period a year ago. Compared to the same quarter in the prior year, revenues of $148.2 million decreased 6.9%. Operating income was $7.8 million, or 5.2% of revenues, in the second quarter versus operating income of $8.9 million, or 5.6% of revenues, last year. EBITDA was $10.1 million compared to EBITDA of $11.4 million in the comparable period a year ago.   Editor's Note: This quarter continues to show a decline in revenues; however the EBITDA has shown significant improvement as a result of the restructuring and third-party consultants. For the first time in a long while, the President & CEO, Mr. Gary W. Ampulski, did initiate the call with introductory comments to shareholders that they are ready and available to disclose the information they need. However the company continues to decline in giving guidance for future quarters. The Analyst Q & A session was one of the most poorly attended we have seen to date. After a lot of prompting, a couple of analysts engaged in light discussions with the CEO and CFO. It seems like the investment community is very wary of Workflow; its lack of specificity for financials, targets, bank support, restructuring plans etc. which would explain the lack of attendees and questions on this earnings call.   Topics: * Financial Summary * Q&A   Financial Summary   Mr. Gary Ampulski, CEO, and Mr. Michael L. Schmickle, Executive VP and CFO, reviewed the second quarter 2004 results:  1. Revenue was down 6.9% from last year in the same period because of two reasons. First, a few major customers re-evaluated their approach to the marketplace and reduced inventories. And, secondly, Workflow is evaluating which customers are profitable. Those that are not profitable are exited. Revenue may continue to be less than previous years until Workflow can find the right kind of customers that can meet their profitability goals. 2. Continue to remain compliant with bank covenants and credit facility debt of $153.5 million is now at a three year low. 3. Gross profit decreased 7.4% from $44.8 million (28.1% of revenues in Q2 2003) to $41.5 million (28% of revenues Q2 2004) due to ongoing pricing pressures from competitors, and an overall decrease in manufacturing volumes in commercial printing, direct mail and envelope operations. 4. Workflow achieved almost a $2 million overall reduction in Q2 2004 SGA. As a percentage of sales Q2 2004 were 22.8%, relatively flat from the same period last year. “This was due to cost savings realized from aggressive restructuring and integration efforts.” 5. The company will not be providing any guidance for the next quarter or for the balance of 2004. Q & A Session: 1. One lonely analyst asked about Ampulski's comment about not seeing revenuegrowth in the sequential quarters in lieu of the search for profitable customers. Concerns were raised that earnings can not be sustained in the short and long term without top line growth. No detailed strategies or tactics by Workflow were disclosed how to adapt to the current environment conditions. 2. When asked about the “Do Not Call List”, Ampulski said direct mail sales have not been realized as yet and wouldn't be until later third quarter since customers are in the planning stage. 3. Envelope pricing weakness continues and Workflow is looking for replacement customers as well as maintaining existing relationships and make profit. 4. Workflow is paying little or no taxes in the U.S. given the pledging of their Canadian assets. 5. “How much of a gun is their to Workflow's head to do something quick?” was the phrase asked by the same analyst. May 2004 is when loan repayments are required. The bank is still reviewing their financing plan. 6. When asked about debt and cash levels for the balance of the year, Executives declined to comment. 7. The second analyst made direct comments to express his frustrations: “Shareholders know the least about what is going on in Workflow and that Executives are not disclosing what they should. A great deal of frustration is with the holders of the securities about the slow pace at which the Executives and the Board are not apprising their shareholders of the information they need about their investments.”