SR » Topics » OVERVIEW

These excerpts taken from the SR 10-K filed Mar 6, 2009.

COMPANY OVERVIEW

The Standard Register Company (referred to in this report as the “Company,” “we,” “us,” “our,” or “Standard Register”) is a publicly traded company that began operations in 1912 in Dayton, Ohio.  Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol SR.  Our principal executive offices are located at 600 Albany Street, Dayton, Ohio 45408 (telephone number:  937-221-1000).

Standard Register is a leading provider of custom-printed documents and related services in the United States.  For nearly a century, we have helped our customers manage their document costs and improve their business processes in what has been a largely paper-driven world.  Throughout our history, we have successfully adapted to disruptive changes in technology and have continued to deliver value to our customers.  We continue to pursue that course today in response to ongoing advances in digital technologies – principally application software and the Internet.  Our mission today is to make a measurable difference for our customers by helping them achieve their desired business outcomes.  To do this, we must help our customers improve productivity, reduce cost, mitigate risk of fraud, meet compliance standards, and grow their revenue.

In pursuit of our mission, we offer consulting, software, document design, printing, sourcing, distribution, and staffing services.  Our portfolio of products and services finds application across a customer’s entire enterprise – from the desktop, to the internal data center or print shop, to externally-produced print.  Our knowledge of business processes, deep vertical market understanding, past experience in helping customers improve their workflow, and our adoption of new digital technologies, puts us in a strong position to continue to deliver on our mission.  

COMPANY OVERVIEW


The Standard Register Company (referred to in this report as the “Company,” “we,” “us,” “our,” or “Standard Register”) is a publicly traded company that began operations in 1912 in Dayton, Ohio.  Our common stock is traded on the New York Stock Exchange (NYSE) under the symbol SR.  Our principal executive offices are located at 600 Albany Street, Dayton, Ohio 45408 (telephone number:  937-221-1000).


Standard Register is a leading provider of custom-printed documents and related services in the United States.  For nearly a century, we have helped our customers manage their document costs and improve their business processes in what has been a largely paper-driven world.  Throughout our history, we have successfully adapted to disruptive changes in technology and have continued to deliver value to our customers.  We continue to pursue that course today in response to ongoing advances in digital technologies – principally application software and the Internet.  Our mission today is to make a measurable difference for our customers by helping them achieve their desired business outcomes.  To do this, we must help our customers improve productivity, reduce cost, mitigate risk of fraud, meet compliance standards, and grow their revenue.


In pursuit of our mission, we offer consulting, software, document design, printing, sourcing, distribution, and staffing services.  Our portfolio of products and services finds application across a customer’s entire enterprise – from the desktop, to the internal data center or print shop, to externally-produced print.  Our knowledge of business processes, deep vertical market understanding, past experience in helping customers improve their workflow, and our adoption of new digital technologies, puts us in a strong position to continue to deliver on our mission.  


OVERVIEW

The Company – We are a leading document services provider that partners with our customers to manage, control, and source their document and print-related spending.  We primarily serve the healthcare, industrial, and commercial markets.    

We are trusted by our customers to manage business-critical documents.  Managing these documents not only includes providing printed documents but also includes helping companies migrate from paper-based to digital processes by providing innovative tools to manage the entire lifecycle of their documents from concept to delivery.  To accomplish this, we provide products and services including:  printed products, pressure-sensitive labels, print-on-demand services, document automation, document design, outsourcing, warehouse and distribution services, and professional services.

We make a measurable difference for our customers by helping them achieve their desired business outcomes by assisting them with reducing costs, transitioning to more efficient processes, effectively managing their risks and meeting their regulatory and industry requirements, and driving their business growth.

Our operations include five reportable segments:  Document Management, Label Solutions, POD Services, Document Systems, and PathForward.

Our Business ChallengesWe are engaged in an industry undergoing fundamental changes due to advancements in and proliferation of digital technologies.  These changes, in addition to the current economic conditions, create business challenges for us.  We believe our Company is facing the following key challenges:

·

Declines in demand for traditional custom-printed documents

·

Excess production capacity and price competition within our industry

·

Future pension funding requirements and amortization of actuarial gains and losses

·

Current economic conditions and disruption in credit markets.

The following is a discussion of these business challenges and our strategy for managing their effect upon our business.



14



Declines in demand for traditional custom printed documents – Traditional business documents are essential for the conduct of business, but many are being replaced or devalued by software.  However, digital technology also introduces new opportunities with significant growth potential for us, such as print-on-demand services.  Our Company’s history is one of adapting to change, and our goal is to persevere and grow in the digital age.  

We plan to continue to invest in new and existing technologies and services that provide innovative, valuable solutions for our customers’ document needs.  We believe our extensive expertise within our markets combined with increased focus on targeted solutions for those markets will differentiate us from our competitors and produce growth opportunities outside of traditional printed documents.

Excess production capacity and price competition within our industry – Paper mill operating rates for uncoated freesheet have declined somewhat but still remained high at the end of 2008.  Faced with higher energy and transportation costs, paper mills are expected to continue to manage production capacity through downtime and closures in an attempt to maintain or increase paper prices.

Despite a competitive marketplace, we have generally been able to pass through increased paper cost, although it often takes several quarters due to the custom nature of our products and our contractual relationships with many of our customers.  We expect this trend to continue; however, current economic conditions may limit our success at recovering all of our increased costs, resulting in lower margins on products we sell.

To remain competitive, in 2007, we initiated restructuring actions to reduce our annual operating costs by $40 million.  We eliminated approximately 250 positions, primarily in management and overhead, representing $22 million annually in compensation and related costs.  We also consolidated our manufacturing and warehousing operations to save approximately $5 million annually.  Other initiatives that targeted purchasing costs and other non-compensation expenditures lowered costs by approximately $13 million annually.  

Future pension funding and loss amortization – During 2001, 2002, and most recently in 2008, our qualified pension plan became underfunded due to weak stock market returns.  The amortization of these asset losses plus other actuarial losses has resulted in significant pension loss amortization in recent years – equivalent to $0.42 per share in 2008, $0.55 per share in 2007, and $0.54 per share in 2006.  Pension loss amortization is expected to be $20.4 million in 2009, equivalent to $0.43 per share.  As a result of the 2008 losses and possible future losses from a continued weak economy in 2009, we expect pension loss amortization to trend higher in future years.  

The Pension Protection Act of 2006 became effective in 2008 and increases the minimum funding requirements for our qualified pension plan.  Although we do not know the exact amount required for our minimum funding at this time, we estimate our funding will be $20 to $25 million in 2009, which is more than the expected required funding.  Based upon the new requirements and the recent decline in the value of our pension assets, it is likely that we will be required to increase our level of contributions in 2010 and beyond.  

In response to these challenges, we modified our qualified and nonqualified defined benefit pension plans for employees still accruing benefits under the plans.  Effective June 30, 2008, these participants ceased accruing pension benefits and the final pension amounts were based upon pay and service through June 29, 2008.  The Company match in the 401(k) savings plan was increased for the affected employees from 10% to 75% on the first six percent of eligible compensation deferred. Excluding pension loss amortization, we expect to realize annualized savings of approximately $4.4 million in service costs as a result of these changes.

Current economic conditions and disruption in credit markets – Recent market and economic conditions have been volatile and challenging resulting in decreased demand and significant price competition in an already price-competitive environment.  These factors had a significant impact upon our revenues during the year.  Although we cannot predict the duration and severity of the current disruption in financial markets and adverse economic conditions going forward, we expect to continue to see similar challenges in 2009.



15



As a result, we implemented the following actions during 2008 to enable the Company to maintain a strong financial condition during this economic downturn and achieve its long-term objectives:

·

We initiated plans to integrate several of our POD Services print centers and Document Management distribution warehouses in order to improve efficiency and reduce cost.  We closed two print centers and one distribution center and integrated two other print centers with warehouses.  We expect to realize approximately $3.0 million in annualized cost savings as a result of these actions.  

·

We also implemented a plan to redesign our sales support infrastructure to more of a centralized model by the end of March 2009.  Customer transactional and administrative functions are being transitioned from our field sales offices to one of three client support centers, one of which is new.  This action is expected to result in approximately $5.6 million in annualized cost savings.

·

In November, we reduced our workforce by 5%, eliminating approximately 175 positions throughout the Company. Annualized savings are expected to total approximately $11.0 million.

·

Late in the year, we renegotiated various contracts to enable us to lower raw material costs, outbound freight charges, and professional service fees.  In addition, we re-evaluated production schedules at our manufacturing facilities to substantially reduce over-time expenses.  We expect to realize approximately $9.0 million in annualized savings as a result of these changes.

Our FocusOur sales focus during 2008 and in previous years was primarily product driven.  Given our substantial experience and expertise within our vertical markets, we are shifting our focus from products to our vertical markets and the challenges and solutions needed in these particular markets.   Additionally, we are creating operational efficiencies to reduce costs, improve customer satisfaction, and generate positive cash flow.  In 2009, we will be focusing on:

·

Increased coverage and improved client satisfaction within our vertical markets

·

Relentless pursuit of cost reduction

·

Generating positive cash flow.

Increased coverage and improved client satisfaction within our vertical markets – We believe focusing our efforts on markets where we are trusted industry leaders and have an extensive understanding of the document-related issues will enable us to provide valuable solutions specific to these markets in a very timely and highly responsive manner.

One of our main objectives is to expand our sales in these vertical markets by focusing our in-depth knowledge on providing a full range of innovative, valuable document and print-related solutions for these customers.  Key to this objective is offering products and services that are driven by anticipated needs and solutions specific to these customers.   We are also investing in alternative sales channels that will further strengthen our position as a leader in these markets and are aligning our sales infrastructure to enable a higher level of customer service and increased opportunities to present our comprehensive solutions to new and existing customers.  

We intend to continue to bring our customers products and services that improve their ability to capture, manage, and move information in their business processes.  We offer a portfolio of Standard Register managed services that help our customers reduce costs and improve their business processes, allowing them to concentrate on their core competencies.  We expect that our ability to provide for digital print-on-demand output, including color and variable print, and services that provide the customer with added convenience, design capability, and control over the process to be a strong differentiator among our competitors.

Relentless pursuit of cost reduction/Generating positive cash flow – We will continue to critically evaluate costs and improve productivity in order to stay cost competitive and most importantly, generate positive cash flow.   We expect these measures to allow us to weather the current downturn in the economy and position us for growth as the economy strengthens.



16



OVERVIEW


The Company – We are a leading document services provider that partners with our customers to manage, control, and source their document and print-related spending.  We primarily serve the healthcare, industrial, and commercial markets.    


We are trusted by our customers to manage business-critical documents.  Managing these documents not only includes providing printed documents but also includes helping companies migrate from paper-based to digital processes by providing innovative tools to manage the entire lifecycle of their documents from concept to delivery.  To accomplish this, we provide products and services including:  printed products, pressure-sensitive labels, print-on-demand services, document automation, document design, outsourcing, warehouse and distribution services, and professional services.


We make a measurable difference for our customers by helping them achieve their desired business outcomes by assisting them with reducing costs, transitioning to more efficient processes, effectively managing their risks and meeting their regulatory and industry requirements, and driving their business growth.


Our operations include five reportable segments:  Document Management, Label Solutions, POD Services, Document Systems, and PathForward.


Our Business ChallengesWe are engaged in an industry undergoing fundamental changes due to advancements in and proliferation of digital technologies.  These changes, in addition to the current economic conditions, create business challenges for us.  We believe our Company is facing the following key challenges:


·


Declines in demand for traditional custom-printed documents


·


Excess production capacity and price competition within our industry


·


Future pension funding requirements and amortization of actuarial gains and losses


·


Current economic conditions and disruption in credit markets.


The following is a discussion of these business challenges and our strategy for managing their effect upon our business.






14






Declines in demand for traditional custom printed documents – Traditional business documents are essential for the conduct of business, but many are being replaced or devalued by software.  However, digital technology also introduces new opportunities with significant growth potential for us, such as print-on-demand services.  Our Company’s history is one of adapting to change, and our goal is to persevere and grow in the digital age.  


We plan to continue to invest in new and existing technologies and services that provide innovative, valuable solutions for our customers’ document needs.  We believe our extensive expertise within our markets combined with increased focus on targeted solutions for those markets will differentiate us from our competitors and produce growth opportunities outside of traditional printed documents.


Excess production capacity and price competition within our industry – Paper mill operating rates for uncoated freesheet have declined somewhat but still remained high at the end of 2008.  Faced with higher energy and transportation costs, paper mills are expected to continue to manage production capacity through downtime and closures in an attempt to maintain or increase paper prices.


Despite a competitive marketplace, we have generally been able to pass through increased paper cost, although it often takes several quarters due to the custom nature of our products and our contractual relationships with many of our customers.  We expect this trend to continue; however, current economic conditions may limit our success at recovering all of our increased costs, resulting in lower margins on products we sell.


To remain competitive, in 2007, we initiated restructuring actions to reduce our annual operating costs by $40 million.  We eliminated approximately 250 positions, primarily in management and overhead, representing $22 million annually in compensation and related costs.  We also consolidated our manufacturing and warehousing operations to save approximately $5 million annually.  Other initiatives that targeted purchasing costs and other non-compensation expenditures lowered costs by approximately $13 million annually.  


Future pension funding and loss amortization – During 2001, 2002, and most recently in 2008, our qualified pension plan became underfunded due to weak stock market returns.  The amortization of these asset losses plus other actuarial losses has resulted in significant pension loss amortization in recent years – equivalent to $0.42 per share in 2008, $0.55 per share in 2007, and $0.54 per share in 2006.  Pension loss amortization is expected to be $20.4 million in 2009, equivalent to $0.43 per share.  As a result of the 2008 losses and possible future losses from a continued weak economy in 2009, we expect pension loss amortization to trend higher in future years.  


The Pension Protection Act of 2006 became effective in 2008 and increases the minimum funding requirements for our qualified pension plan.  Although we do not know the exact amount required for our minimum funding at this time, we estimate our funding will be $20 to $25 million in 2009, which is more than the expected required funding.  Based upon the new requirements and the recent decline in the value of our pension assets, it is likely that we will be required to increase our level of contributions in 2010 and beyond.  


In response to these challenges, we modified our qualified and nonqualified defined benefit pension plans for employees still accruing benefits under the plans.  Effective June 30, 2008, these participants ceased accruing pension benefits and the final pension amounts were based upon pay and service through June 29, 2008.  The Company match in the 401(k) savings plan was increased for the affected employees from 10% to 75% on the first six percent of eligible compensation deferred. Excluding pension loss amortization, we expect to realize annualized savings of approximately $4.4 million in service costs as a result of these changes.


Current economic conditions and disruption in credit markets – Recent market and economic conditions have been volatile and challenging resulting in decreased demand and significant price competition in an already price-competitive environment.  These factors had a significant impact upon our revenues during the year.  Although we cannot predict the duration and severity of the current disruption in financial markets and adverse economic conditions going forward, we expect to continue to see similar challenges in 2009.






15






As a result, we implemented the following actions during 2008 to enable the Company to maintain a strong financial condition during this economic downturn and achieve its long-term objectives:


·


We initiated plans to integrate several of our POD Services print centers and Document Management distribution warehouses in order to improve efficiency and reduce cost.  We closed two print centers and one distribution center and integrated two other print centers with warehouses.  We expect to realize approximately $3.0 million in annualized cost savings as a result of these actions.  


·


We also implemented a plan to redesign our sales support infrastructure to more of a centralized model by the end of March 2009.  Customer transactional and administrative functions are being transitioned from our field sales offices to one of three client support centers, one of which is new.  This action is expected to result in approximately $5.6 million in annualized cost savings.


·


In November, we reduced our workforce by 5%, eliminating approximately 175 positions throughout the Company. Annualized savings are expected to total approximately $11.0 million.


·


Late in the year, we renegotiated various contracts to enable us to lower raw material costs, outbound freight charges, and professional service fees.  In addition, we re-evaluated production schedules at our manufacturing facilities to substantially reduce over-time expenses.  We expect to realize approximately $9.0 million in annualized savings as a result of these changes.


Our FocusOur sales focus during 2008 and in previous years was primarily product driven.  Given our substantial experience and expertise within our vertical markets, we are shifting our focus from products to our vertical markets and the challenges and solutions needed in these particular markets.   Additionally, we are creating operational efficiencies to reduce costs, improve customer satisfaction, and generate positive cash flow.  In 2009, we will be focusing on:


·


Increased coverage and improved client satisfaction within our vertical markets


·


Relentless pursuit of cost reduction


·


Generating positive cash flow.


Increased coverage and improved client satisfaction within our vertical markets – We believe focusing our efforts on markets where we are trusted industry leaders and have an extensive understanding of the document-related issues will enable us to provide valuable solutions specific to these markets in a very timely and highly responsive manner.


One of our main objectives is to expand our sales in these vertical markets by focusing our in-depth knowledge on providing a full range of innovative, valuable document and print-related solutions for these customers.  Key to this objective is offering products and services that are driven by anticipated needs and solutions specific to these customers.   We are also investing in alternative sales channels that will further strengthen our position as a leader in these markets and are aligning our sales infrastructure to enable a higher level of customer service and increased opportunities to present our comprehensive solutions to new and existing customers.  


We intend to continue to bring our customers products and services that improve their ability to capture, manage, and move information in their business processes.  We offer a portfolio of Standard Register managed services that help our customers reduce costs and improve their business processes, allowing them to concentrate on their core competencies.  We expect that our ability to provide for digital print-on-demand output, including color and variable print, and services that provide the customer with added convenience, design capability, and control over the process to be a strong differentiator among our competitors.


Relentless pursuit of cost reduction/Generating positive cash flow – We will continue to critically evaluate costs and improve productivity in order to stay cost competitive and most importantly, generate positive cash flow.   We expect these measures to allow us to weather the current downturn in the economy and position us for growth as the economy strengthens.






16






These excerpts taken from the SR 10-K filed Mar 11, 2008.

OVERVIEW

The Company – We are a leading document services provider that helps our customers manage, control, and source their document and print-related spending.  We primarily serve the healthcare, financial services, and manufacturing industries.    

We are trusted by our customers to manage business-critical documents.  Our strategy is to help migrate companies from paper-based to digital processes by providing products and services including printed products, pressure-sensitive labels, print-on-demand services, document automation, outsourcing, and professional services.

Our Enterprise Document Management approach includes analysis of where, how, and even if documents should be printed. This document study includes everything from forms, stationery, reports to marketing collateral addressing what is printed internally, as well as externally.

We provide customers the tools to manage the entire lifecycle of their documents from concept to delivery, allowing them to reduce document-related costs.  We make a measurable difference for our customers by helping them achieve their desired business outcomes by assisting them with reducing costs, transitioning to more efficient processes, effectively managing their risks and meeting their regulatory and industry requirements, and driving their business growth.

Our operations include five reportable segments:  Document Management, Label Solutions, Print-on-Demand (POD) Services, Document Systems, and PathForward.

Our Business ChallengesWe are engaged in an industry undergoing fundamental change.  Digital technology is, as is almost always the case with any disruptive change, both friend and foe.  Our traditional business documents are essential for the conduct of business, but many are being replaced or devalued by software.  On the other hand, digital technology introduces new opportunities, such as print-on-demand services, for those willing to invest.  Our Company’s history is one of adapting to change, and our goal is to persevere and grow in the digital age.  The cost reduction program described below was a necessary step for the Company to address these challenges and achieve its long-term objectives.  

In 2007, we initiated restructuring actions as part of an overall plan to reduce our annual operating costs by $40 million.  On July 20, 2007, we eliminated approximately 250 positions, primarily in management and overhead, representing $22 million annually in compensation and related costs.  Earlier in the year, we consolidated our manufacturing and warehousing operations in a move expected to save approximately $5 million annually.  Other new initiatives that target purchasing costs and other non-compensation expenditures are expected to lower costs by an additional $13 million annually.  We targeted approximately $15 million of savings in 2007 with the remaining balance expected in 2008.    

Our pension plan became underfunded in late 2002, primarily as a result of lower interest rates and weak stock market returns in 2001 and 2002.  The amortization of these and other actuarial losses has resulted in significant expense in subsequent years – equivalent to $0.55 per share in 2007, $0.54 per share in 2006, and $0.40 per share in 2005.  We have continued to make voluntary cash contributions to our qualified pension plan, averaging $18.0 million annually over the last six years. We made $20 million of voluntary contributions in 2007.

The market for many of our traditional printed products is very price competitive.  It is likely that the increasing use of reverse auctions and other bidding tools will gain in popularity and may lower the prices of our printed products.  

Paper mill operating rates for uncoated freesheet were in the 95% to 96% range at the end of 2007.  During 2006, operating rates were reported in the 92% to 93% range.  Paper mills are expected to manage supply chain capacity as they are faced with higher energy and transportation costs.  The industry continues to remove capacity through downtime and closures, and mill operating rates for 2008 are projected to be as high as 98%.

At the time of this writing, a price increase on bond roll product and xerographic cut sheet has been announced for the first quarter of 2008 in the six-to-seven percent range.  We plan to increase our selling prices and negotiate with customers to recover these increases as well as any additional increases.  Despite a competitive marketplace, we have generally been able to pass through these paper cost increases, although it often takes several quarters due to the custom nature of our products and our contractual relationships with many of our customers.  



13



Our FocusOur objective is to continue to improve the sales trend in our core document business by obtaining market share in targeted accounts and vertical markets where we have a strong reputation and value proposition.  We will continue to reduce costs and improve productivity in order to stay cost competitive.  

We plan to address the large and growing market to provide for digital print-on-demand output, including color and variable print.  Services that provide the customer with added convenience, design capability and control over the process are expected to be a strong differentiator.  We plan to step up the level of investment in our POD Services business in order to ensure that we catch the building market momentum in this important growth segment.  This will translate into higher capital expenditures and selling, general and administrative expenses in the coming quarters.  

We intend to continue to bring our customers products and services that improve their ability to capture, manage, and move information in their business processes.  We also offer a portfolio of Standard Register managed services that help our customers reduce costs and improve their business processes, allowing them to concentrate on their core competencies.  Over time, services will become an increasing source of our revenue stream.  Our strategy is beginning to resonate with customers, and we have successfully completed implementation of these offerings.

We expect to continue to focus on generating positive cash flow and maintaining our current strong financial condition.

OVERVIEW


The Company – We are a leading document services provider that helps our customers manage, control, and source their document and print-related spending.  We primarily serve the healthcare, financial services, and manufacturing industries.    


We are trusted by our customers to manage business-critical documents.  Our strategy is to help migrate companies from paper-based to digital processes by providing products and services including printed products, pressure-sensitive labels, print-on-demand services, document automation, outsourcing, and professional services.


Our Enterprise Document Management approach includes analysis of where, how, and even if documents should be printed. This document study includes everything from forms, stationery, reports to marketing collateral addressing what is printed internally, as well as externally.


We provide customers the tools to manage the entire lifecycle of their documents from concept to delivery, allowing them to reduce document-related costs.  We make a measurable difference for our customers by helping them achieve their desired business outcomes by assisting them with reducing costs, transitioning to more efficient processes, effectively managing their risks and meeting their regulatory and industry requirements, and driving their business growth.


Our operations include five reportable segments:  Document Management, Label Solutions, Print-on-Demand (POD) Services, Document Systems, and PathForward.


Our Business ChallengesWe are engaged in an industry undergoing fundamental change.  Digital technology is, as is almost always the case with any disruptive change, both friend and foe.  Our traditional business documents are essential for the conduct of business, but many are being replaced or devalued by software.  On the other hand, digital technology introduces new opportunities, such as print-on-demand services, for those willing to invest.  Our Company’s history is one of adapting to change, and our goal is to persevere and grow in the digital age.  The cost reduction program described below was a necessary step for the Company to address these challenges and achieve its long-term objectives.  


In 2007, we initiated restructuring actions as part of an overall plan to reduce our annual operating costs by $40 million.  On July 20, 2007, we eliminated approximately 250 positions, primarily in management and overhead, representing $22 million annually in compensation and related costs.  Earlier in the year, we consolidated our manufacturing and warehousing operations in a move expected to save approximately $5 million annually.  Other new initiatives that target purchasing costs and other non-compensation expenditures are expected to lower costs by an additional $13 million annually.  We targeted approximately $15 million of savings in 2007 with the remaining balance expected in 2008.    


Our pension plan became underfunded in late 2002, primarily as a result of lower interest rates and weak stock market returns in 2001 and 2002.  The amortization of these and other actuarial losses has resulted in significant expense in subsequent years – equivalent to $0.55 per share in 2007, $0.54 per share in 2006, and $0.40 per share in 2005.  We have continued to make voluntary cash contributions to our qualified pension plan, averaging $18.0 million annually over the last six years. We made $20 million of voluntary contributions in 2007.


The market for many of our traditional printed products is very price competitive.  It is likely that the increasing use of reverse auctions and other bidding tools will gain in popularity and may lower the prices of our printed products.  


Paper mill operating rates for uncoated freesheet were in the 95% to 96% range at the end of 2007.  During 2006, operating rates were reported in the 92% to 93% range.  Paper mills are expected to manage supply chain capacity as they are faced with higher energy and transportation costs.  The industry continues to remove capacity through downtime and closures, and mill operating rates for 2008 are projected to be as high as 98%.


At the time of this writing, a price increase on bond roll product and xerographic cut sheet has been announced for the first quarter of 2008 in the six-to-seven percent range.  We plan to increase our selling prices and negotiate with customers to recover these increases as well as any additional increases.  Despite a competitive marketplace, we have generally been able to pass through these paper cost increases, although it often takes several quarters due to the custom nature of our products and our contractual relationships with many of our customers.  






13






Our FocusOur objective is to continue to improve the sales trend in our core document business by obtaining market share in targeted accounts and vertical markets where we have a strong reputation and value proposition.  We will continue to reduce costs and improve productivity in order to stay cost competitive.  


We plan to address the large and growing market to provide for digital print-on-demand output, including color and variable print.  Services that provide the customer with added convenience, design capability and control over the process are expected to be a strong differentiator.  We plan to step up the level of investment in our POD Services business in order to ensure that we catch the building market momentum in this important growth segment.  This will translate into higher capital expenditures and selling, general and administrative expenses in the coming quarters.  


We intend to continue to bring our customers products and services that improve their ability to capture, manage, and move information in their business processes.  We also offer a portfolio of Standard Register managed services that help our customers reduce costs and improve their business processes, allowing them to concentrate on their core competencies.  Over time, services will become an increasing source of our revenue stream.  Our strategy is beginning to resonate with customers, and we have successfully completed implementation of these offerings.


We expect to continue to focus on generating positive cash flow and maintaining our current strong financial condition.


This excerpt taken from the SR 10-Q filed Nov 6, 2007.

OVERVIEW

Our Company We are a leading document services provider that helps our customers manage, control and source their document and print-related spending.  We primarily serve the healthcare, financial services, and manufacturing industries.  Additional information related to our product and services is contained in our 2006 10-K.  Our operations include three reportable segments:  Document and Label Solutions (DLS), Print On Demand (POD) Services, and Document Systems.

Our Business ChallengesThe market for many of our traditional printed products is very price competitive.  It is likely that the increasing use of reverse auctions and other bidding tools will gain in popularity and may lower the prices of our printed products.  

Our pension plan became underfunded in late 2002, primarily as a result of lower interest rates and weak stock market returns in 2001 and 2002.  The amortization of these and other actuarial losses has resulted in significant expense in subsequent years – equivalent to $0.54 per share in 2006 and $0.41 per share in the first nine months of 2007.  We have continued to make voluntary cash contributions to our qualified pension plan, averaging $18.0 million annually over the last six years.  We made $20 million of voluntary contributions in 2007.

We are engaged in an industry undergoing fundamental change.  Digital technology is, as is almost always the case with any disruptive change, both friend and foe.  Our traditional business documents are essential for the conduct of business, but many are being replaced or devalued by software.  On the other hand, digital technology introduces new opportunities, such as print-on-demand services, for those willing to invest.  Our Company’s history is one of adapting to change and our goal is to persevere and grow in the digital age.  The cost reduction program described below is a necessary step for the Company to achieve its long-term objectives.  

In 2007, we initiated restructuring actions as part of an overall plan to reduce our annual operating costs by $40 million.  On July 20, 2007, we eliminated approximately 250 positions, primarily in management and overhead, representing $22 million annually in compensation and related costs.  Earlier this year, we consolidated our manufacturing and warehousing operations in a move expected to save approximately $5 million annually.  Other new initiatives that target purchasing costs and other non-compensation expenditures are expected to lower costs by an additional $13 million annually.  All of these actions are expected to reduce second half 2007 costs by approximately $15 million versus the levels incurred in the first six months of the year.  The remaining balance of the $40 million in annual savings is expected next year.

    



16





This excerpt taken from the SR 10-Q filed Aug 2, 2007.

OVERVIEW

Our Company We are a leading document services provider that helps our customers manage, control and source their document and print-related spending.  We primarily serve the healthcare, financial services, and manufacturing industries.  Additional information related to our product and services is contained in our Annual Report on Form 10-K for the year ended December 31, 2006.  Our operations include three reportable segments:  Document and Label Solutions (DLS), Print On Demand (POD) Services, and Document Systems.

Our Business ChallengesThe market for many of our traditional printed products is very price competitive.  It is likely that the increasing use of reverse auctions and other bidding tools will gain in popularity and may lower the prices of our printed products.  

Our pension plan became underfunded in late 2002, primarily as a result of lower interest rates and weak stock market returns in 2001 and 2002.  The amortization of these and other actuarial losses has resulted in significant expense in subsequent years – equivalent to $0.54 per share in 2006 and $0.30 per share in the first half of 2007.  We have continued to make voluntary cash contributions to our qualified pension plan, averaging approximately $17.4 million annually over the last five years; we plan to make voluntary contributions in 2007 of approximately $20 million.

We are engaged in an industry undergoing fundamental change.  Digital technology is, as is almost always the case with any disruptive change, both friend and foe.  Our traditional business documents are essential for the conduct of business, but many are being replaced or devalued by software.  On the other hand, digital technology introduces new opportunities, such as print-on-demand services, for those willing to invest.  Our Company’s history is one of adapting to change and our goal is to persevere and grow in the digital age.  The cost reduction program described below is a necessary step for the Company to achieve its long-term objectives.  

On July 20, 2007, we completed a restructuring action as part of an overall plan to reduce our annual operating costs by $40 million.  This action eliminated approximately 250 positions, primarily in management and overhead, representing $22 million annually in compensation and related costs.  Severance and employer related costs associated with the restructuring action are estimated at $3.5 million, which will be recorded in the third quarter of 2007.  

Earlier this year, we consolidated our manufacturing and warehousing operations in a move expected to save approximately $5 million annually.  Other new initiatives that target purchasing costs and other non-compensation expenditures are expected to lower costs by an additional $13 million annually.  All of these actions are expected to reduce second half 2007 costs by approximately $15 million versus the levels incurred in the first six months of the year.  The remaining balance of the $40 million in annual savings is expected next year.    



16





This excerpt taken from the SR 10-Q filed May 2, 2007.

OVERVIEW

The Company – We are a leading document services provider that helps our customers manage, control and source their document and print-related spending.  We primarily serve the healthcare, financial services, and manufacturing industries.  

We are a document services company entrusted by our customers to manage business-critical documents with a variety of products and professional services.  Our strategy is to provide a full spectrum of solutions including printing solutions, label solutions, print-on-demand services, document automation, outsourcing and managed services, and professional services.  

Our Enterprise Document Management approach includes analysis of where, how - and even if - documents should be printed.  This document study includes everything from forms, stationery and reports to four-color marketing collateral and also addresses what is printed internally as well as externally.  By improving the efficiency of these processes and applying appropriate sourcing strategies, customers are able to save on their entire document-related supply chain costs.

Our solutions give customers the tools to manage the entire lifecycle of their documents from concept to delivery.  We make a measurable difference for our customers by helping them achieve their desired business outcomes by assisting them with reducing costs; transitioning to more efficient processes; effectively managing their risks and meeting their regulatory and industry requirements; and driving their business growth.

Our operations include three reportable segments:  Document and Label Solutions (DLS), Print-on-Demand (POD) Services, and Document Systems.

Our Business ChallengesThe market for many of our traditional printed products is very price competitive.  In order to maintain or improve our margins in these segments, we must execute our plans to gain market share, improve productivity, and increase the sale of related value-added software and services.  

Paper mill operating rates were reported in the 92%-93% range during 2006, which served to support increases in paper prices.  The expectation is that mills will continue to reduce capacity during 2007 in an attempt to offset expected weakness in overall paper demand and pricing.  The paper companies have announced price increases on cut sheet papers, to become effective in the market in May 2007.  If the increases hold up, it is possible that this increase may spread to roll papers, although at this time no increase has been attempted.   

Despite a competitive marketplace, we have traditionally been successful in recovering all or most of the increases in paper costs.  Recovery ordinarily occurs over a period of several quarters.  We would expect to increase our selling prices to our customers to recover paper cost increases that take place in 2007.

It is likely that the increasing use of reverse auctions and other bidding tools will gain in popularity and may lower the prices of our printed products.  

Our pension plan became underfunded in late 2002, primarily as a result of lower interest rates and weak stock market returns in 2001 and 2002.  The amortization of these and other actuarial losses has resulted in significant expense in subsequent years – equivalent to $0.54 per share in 2006 and $0.15 per share in the first quarter of 2007.  We have continued to make voluntary cash contributions to our qualified pension plan, averaging approximately $17.4 million annually over the last five years; we plan to make voluntary contributions in 2007 of approximately $20 million.



14





Our FocusOur objective is to continue to improve the sales trend in our core document business by taking market share in targeted accounts and vertical markets where we have a strong reputation and value proposition.  We will continue to reduce costs and improve productivity in order to stay cost competitive.  

We plan to address the large and growing market to provide digital print-on-demand output, including color and variable print.  Services that provide the customer with added convenience, design capability and control over the process are expected to be a strong differentiator.  We plan to step up the level of investment in our POD Services business in order to ensure that we catch the building market momentum in this important growth segment.  This will translate into higher capital expenditures and selling, general and administrative expenses in the coming quarters.  

We intend to continue to bring our customers products and services that improve their ability to cost-effectively capture, manage and move information.  Over time, services will become an increasing share of our revenue stream.  

On January 25, 2007, the Company adopted a restructuring to organize and consolidate its manufacturing and distribution capabilities to become more efficient in meeting customer needs.  The actions associated with the plan are expected to be completed in 2007.

We expect to continue to focus on maintaining our current strong financial condition.

This excerpt taken from the SR 10-K filed Mar 7, 2007.

Overview

Consolidated revenue from continuing operations has grown modestly in each of the last two years, up 0.5% and 1.4% in 2006 and 2005.  Adjusting for the extra accounting week in 2004, which added an estimated $17 million to 2004’s revenue, the 2004 increase would have been 3.4%.   

More noteworthy perhaps is evidence of a gradual but accelerating shift in the composition of the Company’s revenue.  Traditional, business forms are less in demand, yielding to competing technologies or shorter-run digitally printed documents.  Labels have continued to play a larger role and our focus on offering tailored total document solutions to our customers has added an increased focus on commercial print, application software, and services.   

Consolidated gross margin improved $5.1 million in 2006 on an incremental revenue gain of $4.2 million, rebounding from the $7.1 million gross margin decline in 2005.  As a percent of revenue, the overall gross margin was 35.2% in 2004, 33.9% in 2005, and 34.3% in 2006.    

We evaluate our financial performance primarily on operating income before restructuring, impairment, pension loss amortization, and pension settlement losses.  On this basis, consolidated operating income was $37.3 million in 2006, compared to $37.7 million in 2005, and $17.9 million in 2004.  The following table reconciles our consolidated financial statements to these amounts.



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2006

 

2005

 

2004

       

Income (Loss) from Continuing Operations

 

 $         4.7

 

 $       17.4

 

 $     (11.4)

Asset impairments

 

             2.7

 

             0.3

 

             0.9 

Restructuring charges

 

             2.7

 

             1.0

 

           11.0 

Amortization of prior period pension losses

 

           25.6

 

           19.0

 

           17.4 

Pension settlement loss

 

             1.6

 

                -  

 

                - 

Total Pre-tax Operating Income, exluding the above

 

 $       37.3

 

 $       37.7

 

 $       17.9 


This excerpt taken from the SR 10-K filed Mar 9, 2006.

OVERVIEW

The Company – We are a leading document services provider that helps our customers manage, control and source their document and print-related spending.  We primarily serve the healthcare, financial services, insurance, pharmaceutical, manufacturing, and transportation industries.  

We are a document services company entrusted by our customers to manage business-critical documents with a variety of products and professional services.  As a strategic partner in migrating companies from paper-based to digital processes, our strategy is to provide a full spectrum of solutions including printing solutions, label and tag solutions, print-on-demand services, document and marketing automation, outsourcing and managed services, and professional services.  Standard Register’s solutions give customers the tools to manage the entire lifecycle of their documents from concept to delivery to archiving.

Our Enterprise Document Management approach includes analysis of where, how - and even if - documents are printed.  This document study includes everything from forms, stationery and reports to four-color marketing collateral and also addresses what is printed internally as well as externally.  By improving the efficiency of these processes and applying appropriate sourcing strategies, customers are able to save on their entire document-related supply chain.

Our operations include four reportable segments:  Document and Label Solutions, Print-on-Demand (POD) Services, InSystems, and Digital Solutions.

Our Business ChallengesThe market for many of our traditional printed products is very price competitive.  In order to maintain or improve our margins in these segments, we must execute our plans to gain market share, improve productivity, and increase the sale of related value-added software and services.  

Paper prices have risen in recent months, reflecting higher energy costs, lower pipeline inventories, and high paper mill operating rates achieved in part as a result of lowered capacity.  These industry conditions are expected to continue through 2006, which may support additional paper price increases.  We have raised our target selling prices to recover the most recent round of paper cost increases and will likely do so again in 2006 should paper prices increase further.  Given our price-competitive marketplace and the custom nature of our product, the recovery of paper cost increases requires individual customer negotiation and is challenging, often taking several quarters to achieve and reducing margins in the interim.  

We fully expect the increasing use of reverse auctions and other bidding tools will gain in popularity and will most likely lower our prices for our printed products.  

Our pension plan became underfunded in late 2002, primarily as a result of weak stock market returns in 2001 and 2002.  The amortization of these and other actuarial losses has resulted in significant expense in subsequent years – equivalent to $0.40 per share in 2005 and $0.50 per share expected for 2006.  We have continued to make voluntary cash contributions to our qualified pension plan, averaging approximately $15 million annually over the last four years; we plan to make a $20 million voluntary contribution in 2006.

Our Digital Solutions segment has produced operating losses in recent periods, reflecting software development and other investments made to bring our digital pen and paper technology and services solution to market.  We have been encouraged by the results of our pilot tests and by our initial customer installations late in 2005.  Our challenge will be to translate existing pilots and prospects into a meaningful level of revenue in 2006 that demonstrates the viability of this newly emerging application.



19



Our FocusOur objective is to continue to improve the sales trend in our core document business by taking market share in targeted accounts and vertical markets where we have a strong reputation and value proposition.  We will continue to reduce costs and improve productivity in order to stay cost competitive.  

We plan to address the large and growing market to provide for digital print-on-demand output, including color and variable print.  Services that provide the customer with added convenience, design capability and control over the process are expected to be a strong differentiator.  We plan to step up the level of investment in our POD Services business in order to ensure that we catch the building market momentum in this important growth segment.  This will translate into higher capital expenditures and selling, general and administrative expenses in the coming quarters.  

We intend to continue to bring our customers products and services that improve their ability to capture, manage and move information in their business processes.  We also offer a portfolio of Standard Register managed services that help our customers reduce costs and improve their business processes allowing them to concentrate on their core competencies.  Over time, services will become an increasing source of our revenue stream.  Our strategy is beginning to resonate with customers and we have successfully completed implementation of these offerings.

We previously announced an objective to improve our pretax operating profit before restructuring and impairment charges by five percentage points as a percent of revenue, from the first half of 2004 to the second half of 2005.  Late in 2005, we stated that our outlook indicated we might fall short of our five-percentage point goal as a result of investments in our Digital Pen and Paper and POD Services initiatives.  We did achieve a 3.6 percentage point improvement in 2005 and will continue to focus on improving the performance of operations that currently do not make a sufficient contribution to profit and on improving our overall productivity and return on invested capital.   

Digital Pen and Paper is an emerging market that shows promise.  Although the initial adoption rate is proving slower than originally expected, we are encouraged by the results of our initial installations, customer pilots, and the growing interest among prospects in the technology and its application.  There are seven pilots currently running and we reported revenue in this segment for the first time in the fourth quarter of 2005.  We will continue to invest in product and market development in 2006 in this segment.  

We expect to continue to focus on generating positive cash flow and maintaining our current strong financial condition.

This excerpt taken from the SR 10-K filed Mar 15, 2005.

OVERVIEW

The Company - We are a leading provider of information solutions for the healthcare, financial services, insurance, pharmaceutical, manufacturing, and transportation industries.  Our products and services include the design, production, management, and distribution of printed and electronic documents; label solutions; data-capture systems; document security; fulfillment and other outsourcing services; e-business solutions; and consulting services.  

As a strategic partner in migrating companies from paper-based to digital processes, our strategy is to provide a full spectrum of solutions – from printed documents to consulting to digital solutions - and continue to expand capabilities that help organizations effectively capture, manage, and use information to improve their business results.  Organizations leverage Standard Register’s deep industry expertise and innovative solutions to increase efficiency, reduce cost, enhance security, and strengthen customer loyalty.  Our operations include four reportable segments: Document and Label Solutions, POD Services (formerly called Fulfillment Services), InSystems, and Digital Solutions.

Industry challenges – The overall market for most traditional long-run printed business documents will increasingly be marked by unfavorable economic forces.   The industry is currently oversupplied and competing software and Internet technologies will continue to make inroads, eliminating or devaluing the role of many traditional paper forms.  These conditions will contribute to lower unit demand and weaker pricing for many products.  The pace of change is expected to be gradual, but is difficult to predict.

Advances in digital printing will increasingly intrude on the quality and cost advantages historically claimed by conventional long-run offset printing.  For many print applications, this will require the industry to add capital investment and will accelerate the “commoditization” of custom printed documents.  The traditional long-run web print business is evolving toward a digital print on demand business and we will invest and participate in this market.  It is a natural extension of the long-run, web-print business.

Business Challenges The above industry conditions, combined with some post 2001 restructuring sales productivity issues, resulted in substantial revenue and operating profit decreases in 2002 and 2003.   A realignment of our sales force and other sales initiatives, together with an improving economy, contributed to a more stable revenue picture in 2004.   Future revenue growth in our traditional product segment will require a gain in market share.  

Our strategy of expanding our portfolio of products and services to provide for long-term growth requires that we redirect some investment away from traditional capital spending and toward people, technology, and other capabilities, most of which are expensed.  This places additional stress on our near-term profitability, but is aimed at growing digital print-on-demand and other service and technology-based businesses.

By September 2002, the weak stock market and historically low interest rates drove our pension plan from an overfunded to an underfunded position.  The amortization of these past asset and liability losses, although non-cash in nature, has had a significant impact on 2003 and 2004 profits.  Pensions produced earnings in 2002 equal to $0.04 per share, but resulted in annual expense in 2004 equivalent to $0.49 per share.  Pension expense for 2005 is currently estimated at $0.56 per share.  

Paper costs have changed little in recent years; however, paper companies instituted three price increases during 2004, reflecting high operating rates at paper mills and escalating energy costs.  It appears that conditions may support additional increases in 2005 for selective materials.  In response, we have increased our target selling prices and have made progress in an attempt to recover the paper cost increases.  With each paper cost increase, we expect margins to worsen initially and to then recover over a period of several quarters as selling price increases are negotiated; however, there is no guarantee that we will be successful.  

Our Focus – Our objective is to improve the sales trend in our core document business by taking market share in targeted accounts and vertical markets where we have a strong reputation and value proposition.  We will continue to reduce costs and improve productivity in order to stay cost competitive.  

We plan to address the large and growing market to provide for digital print-on-demand output, including color and variable print.  Services that provide the customer with added convenience, design capability, and control over the process are expected to be a strong differentiator.  

We intend to continue to bring our customers products and services  that improve their ability to capture, manage, and move information in their business processes.  We also offer a portfolio of Standard Register managed services that help



13






our customers reduce costs and improve their business processes, allowing them to concentrate on their core competencies.  

In addition, we will focus on improving the performance of operations that currently do not make a sufficient contribution to profit, and on improving our overall productivity.  At the end of the first half of 2004, we announced an objective to improve our cost and expense ratios over the next several quarters by a total of five percentage points in relation to revenue.  We have made good progress toward this goal, and if we are successful in recovering paper costs, we expect to achieve this objective by the second half of 2005.

We expect to continue to focus on cash flow and maintain our current strong financial condition.

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