By Ann Levine February 16, 2004 – Standard Register, (NYSE: SR) reported fourth quarter 2003 revenues of $225.1 million down 13% from $257.8 million for the same period last year. Standard Register reported a net loss of $24.4 million of $0.86 per share compared to last year's results of $4.5 million in net income or $0.16 per share. Gross margin was $77 million down from $101 million for the prior year due to lower revenue and inventory adjustments. Although SR had the benefit of fixed cost savings during the quarter, these were offset from plant costs, weaker pricing, and high number of retirements. For the full year, revenue was $916.3 million in 2003 and $1,028.1 million in 2002. Also for the full year, the company reported a net loss of $39.1 million or $1.38 per share and net income of $32.6 million or $1.14 per share for 2002. Topics of this summary: 2003 Conditions Impacting Results 2004 Strategies Outlook Q & A 2003 Conditions During todays overall cheerless presentation, Standard Register's President and CEO, Mr. Dennis Rediker, made reference to a "perfect storm" of challenges that have impacted the company's 2003 performance. Rediker went on to state economic conditions, excess capacity, competitive pricing pressures, customer's actions to reduce costs, regulatory issues and stock market decline impacting pension funding were the external factors having impacts on Standard Register's execution of strategy and subsequent performance. Internal factors having impact included those associated with culture change, aligning people with the right roles, hiring the right talent and aligning resources. Revenues associated with 2003 wins have also not been realized due to customers not completing inventory or implementations that are still in progress. Steps the company took to strengthen performance included consolidations to trim excess capacity, advancements in the technology portfolio and a focus on executing strategy to capture emerging growth opportunities. Standard Register reported a $25.2 million pension settlement expense during the quarter. 2004 Strategies Standard Register today spoke of contract wins expected to impact 2004 revenues including a preferred supplier contract with Broadlane with the potential to generate $100 million per year. Additionally, a three year contract was resigned with Primier's 1500 hospitals along with a number of other large order wins. The company has reorganized its sales force to emphasize specialization and improved regional coordination, provided additional training, and implemented enhanced account planning to increase its sales leverage. It has also expanded the concept of client care teams to reach customer needs. Standard Register has expanded the sales teams in the health care industry and in new business development to capture additional market share and emerging growth opportunities. Standard Register is also investing in selected initiatives such as print on demand, digital solutions, ExpeData and the digital pen and paper solution, the Turnkey solution and focusing on overall business profit improvement and automation. The above initiatives are expected to generate a stronger financial position in 2004. Outlook Standard Register announced its intention to forego giving guidance for revenues and earnings in 2004 under the current market conditions. Q & A The gross margins in the fourth quarter were an anomaly as Standard Register faced unusual expenditures such as inventory and training and a large number of retirements. Adjusting for these items, the company's rune rate is at a level that is more normalized. Standard Register's technology inititiative involves alliance partners and channel partners. Channel partners will help the company gain access to customers and in particular areas in which they currently have no access. When questioned by analysts regarding lack of guidance and asked for a general direction, SR stood firm in not providing either until market impact becomes clearer. In the near term, SR will continue to focus on cost reductions and restructuring. Expected expenses include severance as a result. SG & A expenses in the fourth quarter were $70 million showing a clear trend of SG & A reduction over the course of the year. In the first two quarters, SG & A was in the mid 70 million ranges, with a dip to $71 million in the third quarter. Capital spending in 2003 was $18 million and slightly higher in 2002. Going forward capital spending is expected in the plus or minus $20 million range. In the past $12-15 million was in maintenance and replacing equipment. Most recently, spending has been on software. SR has not added heavy iron capacity for printing. SR increased case during the quarter and did not pay down debt.