y Trevor Shackelford March 14, 2006 -- Standard Register, (NYSE: SR) announced their fourth quarter and fiscal 2005 results last week. Standard Register reported fourth quarter revenue of $223.0 million, compared to $236.2 million reported for the same period last year. The prior year reporting period included an extra accounting week, which added approximately $17 million to 2004’s fourth quarter and full year revenues. Net income was breakeven for the quarter, compared to a profit of $13.4 million reported last year. The prior year period also included a $12.8 million after-tax gain on the sale of the company’s former equipment service business. Revenue on continuing operations for the fiscal 2005 was $902 million, compared to $890 million, up $11.7 million or 1.3% from the prior year. Net income on continuing operations increased from a loss last year of $44.7 million to a profit of $0.8 million in 2005. Excluding special charges, earnings per share improved to $0.50 per share, compared to $0.23 per share reported last year. Contents of this Summary * Quarter Highlights * Segment Performance * Guidance * Raine Radar * Q & A Quarter Highlights • Gross margin for the fourth quarter was $77.4 million, down $5.5 million, compared to $82.9 million reported year-ago quarter, the difference coming from the extra week last year. Gross margin for the year was $318.6 million, compared to $324 million reported during the fiscal 2004. • Operating profit improved for the fifth straight quarter, growing to $2.4 million from $1 million last year. Operating profit for the full year was $13.4 million, compared to a loss of $8.5 million reported in 2004. • Wages as a percentage of revenue for the quarter was 34.7%, compared to 35.1% reported last year. • SG&A expenses for the quarter was $65.4 million, compared to $69 million reported for the same period in 2004. After adjusting for the extra week, SG&A expenses for the quarter were in line with last year. SG&A expenses for the year were $266 million, compared to $290 million reported last year. • Depreciation was $9.2 million, compared to $11.2 million reported for the same period in 2004. Depreciation for the year was $39 million, compared to $43 million reported last year, down as a result of lower capital spending. • CAPEX for the year was $20.2 million. • The company ended 2005 with a positive cash flow of approximately $16 million and a debt ratio of 11%, compared to 15.4% at the beginning of the year and 16.2% two years ago. • Net debt outstanding at the end of fourth quarter was $21.4 million • During the year, the company funded $15 million in pension contributions, $5.2 million in restructuring costs and $26.6 million in dividend payments Segment Performance Document and Label Solutions The company reported Q4 revenues for the segment of $154 million, up 2.1% after adjusting for the extra week in the fourth quarter of 2004. For the fiscal year 2005, revenue was $619 million, up 2.7% after adjusting for the extra week in 2004. Print-On-Demand Services (POD) The company reported revenues of $57.1 million for the quarter, down 2.1% after adjusting for the extra week last year, due to some change in the product mix. For the fiscal year 2005, revenue was $238 million, up about 1% after adjusting for the additional week last year. InSystems The segment reported Q4 revenues for the segment for the fourth quarter was $2.8 million, down about 10% after adjusting for the extra week in 2004, compared to fourth quarter of 2004. For 2005, revenue was $11.2 million, down about 6% after adjusting for the extra week in 2004. Digital Solutions The company reported revenues for the segment of $0.5 million for the quarter and $0.7 million for the year. Other Revenue for all other business during the quarter was $8.4 million, up 26% from last year. The majority of these sales come from commercial print offerings, which represent about $7.5 million of $8.4 million. For the fiscal 2005, revenue was $33 million, up 43%, of which approximately $30 million came from commercial print. Guidance The company did not post any specific earnings per share guidance, but expects modest revenue growth for the full fiscal year 2006 on the strength of its enterprise document management and print supply chain services initiatives. However, the company does not anticipate first quarter 2006 performance to exceed the performance posted in the Q1 2005. Raine Radar Standard Register is still having difficulties. The company broke even for the quarter, but POD and its other digital solutions appear to be languishing. The company will need to make some major changes this year in order to jump start its growth. Q & A 1. Total pension expenses for the quarter were $5.9 million, which includes both the qualified and non-qualified plans. 2. Pension expenses for the Q4 were flat compared to the previous quarter. 3. The company intendeds to devote some CAPEX spending on software and other technology items especially in the on-demand segment. 4. Effective tax rate after separating the unusual items should be 42%, which is high. The company expects effective tax rate for the fiscal 2006 would be around 40% range. Effective tax rate was 38.8% last year. 5. The company said that DSO has been in the mid 40s. The company did not expect any change in it for next year. 6. The company said that paper prices went up in January and that seems to be sticking. The company said that International Paper and other companies have announced an additional increase, effective either in March or April.