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Vertis Provides 2009 Guidance, Updates 2008

Thursday, January 22, 2009

Press release from the issuing company

BALTIMORE – Vertis Holdings, a premier provider of targeted print advertising and direct marketing solutions to America's leading retail and consumer services companies, updated its 2008 financial guidance and announced financial guidance for full year 2009.

Pro Forma Full-Year 2008 Guidance

The Company is updating its Revenue and Pro Forma Adjusted EBITDA guidance for full-year 2008. Full-year 2008 Pro Forma Revenue is expected to range from $1,660 million to $1,670 million and Pro Forma Adjusted EBITDA is expected to range from $142 million to $145 million. The Company expects to be in compliance with all of its lending covenants as of December 31, 2008.

"2008 was a landmark year," said Alex Sorokin, interim president, Vertis Communications. "First, Vertis Communications and American Color Graphics ("ACG") completed dual financial restructurings, which reduced our combined debt by $1 billion. In addition, the two printing industry powerhouses merged to unify our talent, technology and resources. Even in the face of tremendous organizational changes and the global economic turmoil, we achieved our 2008 earnings objectives and maintained ample liquidity. I want to thank our clients, suppliers and employees for their continued loyalty because we are now well-positioned to face the challenges ahead."

See below for a reconciliation of Pro Forma Adjusted EBITDA to Net Income (Loss), which is the most comparable measure under accounting principles generally accepted in the United States ("GAAP"). The Pro Forma Revenue and Pro Forma Adjusted EBITDA for the full-year 2008 includes the results of operations of ACG as if the merger took place on January 1, 2008. As a result, the Pro Forma Revenue and Pro Forma Adjusted EBITDA includes the operations of both Vertis and ACG for the full calendar year of 2008.

Full-Year 2009 Guidance

While the Company has not recently provided guidance or published projections with respect to its future financial performance, the Company believes that the marked change in the global economy warrants such disclosure at this time. Given current economic and market conditions and the uncertain business environment faced by the Company's customers, the Company expects full-year 2009 Revenue to range from $1,460 million to $1,560 million. The Company recognizes that these are difficult times for its customers and is working with them to provide cost-effective solutions. The Company expects full-year 2009 Adjusted EBITDA to range from $165 million to $185 million. Given current economic and market conditions, the Company is not providing any guidance for periods after full-year 2009.

"We are currently finalizing our 2009 plan and the synergies from the merger are tracking above expectations," added Sorokin. "In fact, Vertis has been able to implement some of the synergies ahead of schedule and we are working to identify additional savings. These proactive steps coupled with company-wide cost reductions are allowing us to gain traction. Our market position as a comprehensive solutions provider, supporting our clients with relevant communications that engage their customers at multiple touch points makes us a leading resource for marketers and advertisers."

Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures

Adjusted EBITDA is used in calculating covenant compliance under the Company's Term Loan credit agreement. Adjusted EBITDA is defined as the Company's net income (loss) plus (a) interest expense, income taxes, depreciation expense, amortization expense, extraordinary losses, restructuring costs, costs to achieve synergies (as defined in the Company's credit agreements), other non-recurring cash charges, certain non-recurring non-cash deductions, non-cash management fees and expenses and the effect of changes in accounting principles, minus (b) certain non-recurring non-cash deductions, non-cash items increasing net income, certain extraordinary or non-recurring gains, and gains from the receipt of proceeds under insurance policies and other agreed upon adjustments. Adjusted EBITDA is not a measure of financial performance in accordance with GAAP. You should not consider it as alternatives to net income (loss) as a measure of operating performance. Our calculation of Adjusted EBITDA may be different from the calculations used by other companies and therefore comparability may be limited. We present Adjusted EBITDA to provide additional information regarding our performance and because it is a measure by which we gauge our profitability. In addition, information concerning Adjusted EBITDA is being presented because it reflects important components included in the financial covenants of the Company's credit agreements. The most comparable measure to Adjusted EBITDA in accordance with GAAP is Net Income / Loss.

The Company is in the process of finalizing its opening balance sheet as part of Fresh Start Accounting, required under Statement of Position 90-7 "Financial reporting by Entities in Reorganization Under the Bankruptcy Code". In addition, the Company is also performing the valuation required under Statement of Financial Accounting Standard No. 141 "Business Combinations" for the balance sheet of ACG. These standards require valuations of all assets and liabilities at fair value. These valuations could have a material impact on the value of the Company's fixed assets, intangibles, equity, restructuring accruals and other liabilities. While these items may have a significant impact on net income, depreciation and amortization, and other expenses they are not expected to have a material impact on Adjusted EBITDA. As such, the ranges provided below are greater for net income, depreciation and amortization and other expenses than for Adjusted EBITDA.




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