NOTE 1 - Summary of Significant Accounting Policies

The Standard Register Company is a leading domestic supplier of printed documents, document-management services, outsourcing services, pressure-sensitive labels, and e-procurement services. The Company markets its produces and services primarily through direct sales organizations operating throughout the United States.
    The accounting policies that affect the more significant elements of the financial statements are summarized below.

USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

FISCAL YEAR
The Company's fiscal year is the 52 or 53-week period ending the Sunday nearest to December 31. Fiscal years 2001,
2000, and 1999 ended on December 30, 2001, December 31, 2000, and January 2, 2000, respectively. Fiscal years
2001, 2000 and 1999 each included 52 weeks.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of The Standard Register Company and its wholly owned
subsidiaries (collectively, the Company) after elimination of intercompany transactions, profits and balances.

CASH EQUIVALENTS
The Company classifies as cash equivalents all highly liquid investments with original maturities of three months or less. The carrying value of cash equivalents approximates fair value due to the short-term maturity of these instruments.

TRADING SECURITIES
Securities are classified as trading when held for short-term periods in anticipation of market gains and are reported at fair market value, with unrealized gains and losses included in income.

INVENTORIES
Inventories are valued at the lower of cost or market. Substantially all inventory costs are determined by the last-in,
first-out (LIFO) method. Finished products include printed forms scored for future shipment and invoicing to
customers.

PLANT AND EQUIPMENT
Plant and equipment are stated at cost less accumulated depreciation. Costs of normal maintenance and repairs are charged to expense when incurred. Upon the disposition of assets, their cost and related depreciation are removed from the respective accounts and the resulting gain or loss is included in current income. Impairment of asset value is recog-nized whenever events or circumstances indicate that carrying amounts are not recoverable.

DEPRECIATION
For financial reporting purposes, depreciation is computed by the straight-line method over the estimated useful lives of the depreciable assets. Depreciation expense from continuing operations was $45,419 in 2001, $50,683 in 2000, and $46,847 in 1999. Estimated asset lives are:

Classification Years     Buildings and improvements 10-40     Machinery and equipment 5-15     Office furniture and equipment 5-15

REVENUE RECOGNITION
The Company generally recognizes product and related services revenue upon shipment to the customer, legal title passing to the customer, and satisfaction of all significant obligations of the contract. Under contractual arrangements with some customers, custom forms, which are stored for future delivery, are recognized as revenue when manufacturing is complete and the order is invoiced under normal credit terms. Revenue from equipment service contracts is recognized ratably over the term of the contract.

INCOME TAXES
The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the financial and tax bases, using enacted rates.

DERIVATIVE INSTRUMENTS
The Company utilizes derivative financial instruments to reduce interest rate risks. The Company does not hold or issue derivative financial instruments for trading purposes. The Company accounts for derivative instruments in accordance with Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for Derivative Instruments and Hedging Activities" (see Note 13).

EARNINGS PER SHARE
Basic earnings per share is the per share allocation of net income available to shareholders based on the weighted average number of shares outstanding during the period. Diluted earnings per share represents the per share allocation of net income based on the weighted average number of shares outstanding plus all common shares that potentially could have been issued under the Company's stock option program.

STOCK-BASED COMPENSATION
The Company accounts for stock-based employee compensation arrangements in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Pro forma information regarding net income and earnings per share, as calculated under the provisions of SFAS No. 123 , "Accounting for Stock-Based Compensation," are disclosed for stock options in Note 10.

COMPREHENSIVE INCOME (LOSS)
Comprehensive income (loss) represents net income (loss) and any revenues, expenses, gains and losses that, under accounting principles generally accepted in the United States of America, are excluded from net income and recognized directly as a component of shareholders' equity. Components of comprehensive income (loss) for the Company include net income (loss), the minimum pension liability adjustment, and the fair value of derivatives adjustment.

ENGINEERING AND RESEARCH
Engineering and research costs are charged to expense as incurred. These costs relate to the development of new
products and to the improvement of existing products and services. These efforts are entirely company sponsored.

COSTS OF COMPUTER SOFTWARE
The Company accounts for the costs of software developed for internal use and web-site development costs according to Accounting Standards Executive Committee Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed for or Obtained for Internal Use." Such costs have generally been expensed in accordance with the application provisions of this SOP.

ADVERTISING
The Company expenses costs of advertising as incurred.

RECLASSIFICATIONS
Certain prior-year amounts have been reclassified to conform to the current-year presentation.

SHIPPING AND HANDLING FEES
In 2001, the Company adopted Emerging Issues Task Force (EITF) 00-10, "Accounting for Shipping and Handling Fees and Costs." EITF 00-10 requires companies to classify shipping and handling fees billed to customers as revenues and classify shipping and handling costs paid to vendors as cost of sales. Previously, such revenues and related expenses were netted in revenues. The adoption of this standard increased both net sales and cost of sales by approximately $82,818, $90,672, and $69,183 for 2001, 2000, and 1999, respectively, and thus had no impact on reported earnings. Previously reported quarterly sales have been increased to reflect implementation of EITF 00-10 (see Note 18).

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The FASB issued SFAS No. 141, "Business Combinations," which addresses the financial accounting and reporting for business combinations. SFAS No. 141 requires that all business combinations be accounted for by a single method (the purchase method), modifies the criteria for recognizing intangible assets, and expands disclosure requirements. The provisions of SFAS No. 141 apply to all business combinations initiated after June 30, 2001. It is anticipated that SFAS No. l4l will not have a material effect on the financial position or results of operations of the Company.
     The FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets," which addresses financial accounting and reporting for acquired goodwill and other intangible assets. Intangible assets that are acquired in an acquisition should be recognized and, if necessary, amortized. It also requires that goodwill and intangible assets that have indefinite useful lives not be amortized, but rather tested at least annually for impairment using a fair-value-based test, and intangible assets that have finite useful lives be amortized over their useful lives. In addition, SFAS No. 142 expands the disclosure requirements about goodwill and other intangible assets in the years subsequent to their acquisition. The Company must adopt SFAS No. 142 in fiscal year 2002. Goodwill and intangible assets acquired after June 30, 2001, are subject immediately to the provisions of SFAS No. 142. It is anticipated that SFAS No. 142 will not have a material effect on the financial position or results of operations of the Company.
     The FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations," effective for fiscal years beginning after June 15, 2002. This statement will require the Company to record a long-lived asset and related liability for the estimated future costs of retiring certain assets. The estimated asset retirement obligation, discounted to
reflect present value, will grow to reflect accretion of the interest component. The related retirement asset will be amortized over the economic life of the related asset. Upon adoption of this statement, a cumulative effect of a change in accounting principle would be recorded at the beginning of the effective year to recognize the deferred asset and related accumulated amortization to date, and the estimated discounted asset retirement liability together with cumulative accretion since the inception of the liability. The Company will perform assessments and obtain the appraisals required to estimate the future retirement costs. The Company has not evaluated the potential effect, if any, of this Standard, and cannot currently estimate the cumulative effect, if any, of this change in accounting principle. Currently, the Company plans to adopt this statement during the first quarter of fiscal 2003.
     The FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This statement is effective for all fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. SFAS No. 144 establishes an accounting model for long-lived assets, including discontinued operations, to be disposed of by sale. This statement requires that long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations. Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred. SFAS No. 144 also broadens the reporting of discontinued operations to include components of an entity with operations that can be distinguished from [he rest of the entity and that will be eliminated from the ongoing operations of the- entity in a disposal transaction. It is anticipated chat SFAS No. 144 will not have a material effect on the financial position or results of operations of the Company.