Spring Capital Spending Increase Likely Market Conditions for Print January 29, 2003 -- Throughout the end of last year a large percentage of the respondents indicated that local market conditions were declining. In 2003, the number of respondents indicating that conditions are improving continues to track down but the number of respondents expecting stable conditions has increased. Market sentiment improved in the spring, but dampened in the summer of 2002. Throughout the fall market sentiment has been improving, but took a negative turn in December that has continued into January. CAP Ventures believes much of this can be related to general economic and seasonal trends. By and large the economy was improving in the spring, softened again in the summer and has firmed modestly in the fall. Also, the late summer and fall tend to be busy times for the printing industry, while December and January are often slower. Capital Equipment Purchases The market for capital equipment had been fairly steady through the spring, but softened in the late summer and early fall of 2002 and improved slightly this month. However, it appears that improvements in industry production, capacity utilization and six-month industry outlook, have resulted in a steady increase in the percentage of companies making a capital equipment purchase. Assuming continued broader economic improvement and growth in the printing industry, CAP Ventures anticipates the capital equipment markets will improve in the spring of 2003. Throughout 2002 prepress and bindery equipment were the most commonly purchased equipment. The percentage of companies buying offset equipment declined slightly since the spring of 2002 and declined a little further this month. However, CAP Ventures anticipates purchases of offset presses will improve in the spring. Capital purchases of digital printing equipment have been more erratic. All types of digital production equipment purchases fell in January of 2003. We expect digital equipment purchases will trend upwards with improved capital equipment purchase plans.