PALM BEACH, Fla. --March 13, 2003-- Workflow Management, Inc., today reported fiscal 2003 third quarter results for the period ended January 31, 2003. Third quarter revenues for the period ended January 31, 2003 increased 3.0% to $160.9 million compared to $156.2 million in the prior year. Third quarter operating loss was $777,000 compared to operating income of $7.9 million last year. Workflow generated $1.6 million in EBITDA in the third quarter versus $10.5 million in the same period last year. Excluding write-offs and certain other charges, Workflow produced adjusted EBITDA of $9.4 million for the third quarter. Gerald F. Mahoney, interim Chief Executive Officer stated, "Workflow has accomplished a great deal over the last two months. We believe the changes and cost reductions that have been implemented will enhance the Company and improve its long-term valuation. Unfortunately, operating results for the third quarter were less than expected, due to the sluggish economy and war uncertainty. Our customers continue to curtail spending, resulting in lower volumes and ongoing margin pressure. However, we will continue to reduce some of the effects of the negative outside influences, as we focus on cost reductions, integration and our business plan execution." Workflow reported a net loss for the quarter of $17.3 million or $1.31 per diluted share versus net income of $2.8 million or $0.21 per diluted share in the comparable period of fiscal 2002. The net loss during the third quarter consisted of a $6.1 million loss from continuing operations, or $0.46 per diluted share, and an $11.2 million loss from discontinued operations, or $0.85 per diluted share. During the quarter, the Company recorded certain non-recurring costs totaling approximately $11.3 million, or $0.54 per diluted share after applying a 37% effective tax rate, in its results from continuing operations. Excluding these costs, Workflow generated $0.08 per diluted share for the third quarter compared to $0.21 per diluted share in the same period a year ago. The items recorded in the results from continuing operations include: - $1.1 million inventory write-off included within cost of revenues - $2.1 million in abandoned software costs - $681,000 in uncollectible notes receivable - $3.8 million in severance and other employment costs - $300,000 loss on an ineffective interest rate hedge - $3.2 million in financing fees and other banking related costs Revenues for the nine months ended January 31, 2003 increased 2.2% to $470.2 million compared to $460.2 million in the prior year. For the nine months ended January 31, 2003, operating income was $14.6 million compared to $20.4 million last year. The Company generated $21.9 million in EBITDA in the nine months versus $28.1 million in the same period last year. Excluding write-offs and certain other charges, Workflow produced adjusted EBITDA of $29.9 million for the nine months ended January 31, 2003. The Company reported a net loss for the nine months ended January 31, 2003 of $19.2 million or $1.46 per diluted share versus net income of $6.5 million or $0.49 per diluted share in the comparable period of fiscal 2002. The net loss during the nine months consisted of a $8.1 million loss from continuing operations, or $0.61 per diluted share, and an $11.1 million loss from discontinued operations, or $0.85 per diluted share. During the nine months ended January 31, 2003, the Company recorded certain costs of the type described above totaling $19.6 million, or $0.96 per diluted share after applying a 35% effective tax rate, in its results from continuing operations. Excluding these costs, Workflow generated $0.35 per diluted share for the nine months ended January 31, 2003 compared to $0.46 per diluted share in the same period a year ago. Mr. Mahoney concluded, "We are now functioning as one unified Company, providing a myriad of printing and supply chain management solutions for our diverse customer base. We are focused on our core business and are finalizing plans to sell non-core assets. They have now been marked down, classified as discontinued operations, and reflect their net realizable value. We intend to raise additional funds to strengthen our balance sheet and significantly reduce our bank debt before the end of this calendar year. As we execute on our plan, we believe Workflow will be in a better position to build shareholder value." The Company has updated its earnings guidance for the fiscal year ending April 30, 2003. Based on the uncertain economic outlook, the Company anticipates continued margin and pricing pressures and expects revenues to range from $625 to $630 million resulting in adjusted EBITDA of $40 to $42 million and diluted earnings per share from continuing operations of $0.43 to $0.46 prior to non-recurring charges. Workflow also announced that Gus J. James II has resigned from the Board of Directors, effective immediately. Mr. James is the President, a director and a shareholder in the law firm Kaufman & Canoles, the Company's outside legal counsel. In addition, Thomas B. D'Agostino, Jr., Executive Vice President of Workflow, is no longer employed by the Company. Mr. D'Agostino, Jr. intends to remain on the Board of Directors at this time.