Hauppauge, NY (October 27, 2000) - Disc Graphics, Inc. (NASDAQ Small Cap Symbol: DSGR), a national folding carton and specialty printing company, today announced results for the third quarter ended September 30, 2000. In October, the Company also announced the reduction of approximately 5% of the total workforce in its New York and Indiana facilities. The workforce reduction continues the streamlining of the Company's operations begun earlier this year with the closing of its Edgewood, New York facility. In addition, the Company has completed its planned capital improvement program of investments in new technologies and equipment to improve efficiencies. Disc Graphics' third quarter revenues were $17,804,000 compared with revenues of $18,972,000 in the third quarter of 1999. The net loss for the third quarter was $360,000, or $.07 per share based on 5,518,262 diluted shares, compared to net income of $748,000, or $.14 per share based on 5,534,731 diluted shares in the third quarter of 1999. The $1,168,000 decline in revenues was due principally to a decrease in sales to commercial customers. These customers were part of a business which was acquired on July 1, 1999. The decrease in sales to commercial customers was partially the result of the Company's decision to eliminate low margin and unprofitable commercial sales in an effort to concentrate our resources on more profitable sectors within the commercial category. Additionally, the quarter's results were impacted by lower than anticipated sales from existing and potential new customers. The lower than expected sales volume coupled with the increased cost structure associated with our decision to expand our facilities to accommodate large format equipment continues to negatively impact the Company's operating results. Certain initiatives put into place during the year have begun to improve our margins, as gross profit of 18.5% for the three months ended September 30, 2000 is an improvement on the 11.8% experienced in the three months ended June 30, 2000, however, it trails the 25.8% during the same period in 1999. Revenues in the first nine months of 2000 increased 2.9% to $49,972,000 compared with revenues of $48,575,000 for the first nine months of 1999. The net loss for the first nine months of 2000 was $2,196,000, or $.40 per share based on 5,518,277 diluted shares, compared to net income of $1,749,000, or $.32 per share based on 5,544,583 diluted shares for the first nine months of 1999. Don Sinkin, Chairman and Chief Executive Officer, said, "The initiatives we have taken to reduce the operating costs of Contemporary Color Graphics, Inc. (which was acquired by the Company on July 1, 1999) and to complete the planned capital improvement of the Hauppauge, New York facility have begun to result in improvements to our margins. As stated, the gross profit percent of 18.5% is a 6.7 percentage point improvement from the quarter ending June 30, 2000. We believe that this trend will continue as a result of the "right sizing" of our workforce and the renegotiation of our paper costs which both occurred in early October 2000. With these cost initiatives in place, our top priority for the balance of 2000 and going into 2001 is to pursue aggressively new markets to fill our expanded capacity. These efforts will be directed toward new and existing customers who require high quality packaging which serves as a marketing tool. It is in this area that we believe we outperform the competition and provide the greatest value to our customers and shareholders." Mr. Sinkin continued, "Our vision is to grow sales resulting in greater utilization of our capacity to achieve greater efficiencies. We are optimistic about the Company's future growth prospects." In an unrelated matter, Allied Digital Technologies, Corp. ("Allied"), one of the Company's long term customers, filed on October 25, 2000 a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. In anticipation of Allied's financial difficulties, the Company has fully reserved for any loss it may incur.