By Ann Levine September 12, 2003 – At a press conference on September 10th, the St. Louis, MO-based Von Hoffmann Corporation announced it has signed an agreement to acquire Lehigh Press. The agreement is expected to close within the next 60 days. Lehigh, has two major business components: Lehigh Lithographers and Lehigh Direct. Lehigh Lithographers provides commercial printing, books covers, and pre-media services. Lehigh Direct provides direct marketing services. Lehigh reported revenue as of 6/30/03 of $122 million and adjusted EBITDA of $16 million. The purchase price is stated at $110 million. Von Hoffman will finance the acquisition with 50% of the cost drawn from an existing revolver and 50% from other sources of debt. The purchase is complimentary with Von Hoffmann's education textbook market and with the acquisition will realize $3-5 million in cost savings over the next 12 months. Cost savings will be realized by elimination of redundant corporate overhead expenses, reduction in material expenditures, other operational efficiency gains. Von Hoffman representatives explained the rationale in the acquisition with the lithography business as Lehigh having a large market share in the book cover industry. They are the leading manufacturer of components and book covers in the elementary and high school market. Almost 90% of Lehigh Lithographer's revenue are recurring in nature. The acquisition strengthens Von Hoffman's position by combining the synergies under one company. Lehigh Direct, which focuses on highly specialized, value-added products, is showing a business strategy with operational and financial momentum. State of the art technology along with a diversified customer base provides the company the opportunity for growth. Both divisions have displayed revenue growth from 2001 and both divisions have sustained and improved margins even in a tough economy. Performance in the most recent months has confirmed continued positive business operations. With the acquisition, combined sales of both entities are expected to be over $500 million. Von Hoffman sales as of June 30, 2003 were reported at $382.9 million and EBITDA of $64.5 million. EBITDA guidance for the remainder of 2003 stands at the previously stated figure in the high $60's.   Q & A 1. The break out in terms of sales and working capital between Lehigh Direct and Lithographers is a 50/50 split. 2. EBITDA breakdown between the two is approximately $9 million for Lithographers and $8 million for Lehigh Direct. 3. Although Van Hoffmann will finance 50% the acquisition through other sources of debt, the company has not finalized plans on what those sources will be at this time. 4. Questions were raised as to how Lehigh Direct fit with the overall direction of the company. Van Hoffmann sources indicated Lehigh Direct is an exciting company showing momentum and has a substantial differentiation from other direct marketing competitors. Lehigh Direct focuses on highly personalized products and has leadership in platform technology that should bolster continued momentum. The customer base is diversified and includes Conde Nast, Publisher's Clearing House, AAA, Columbia House, Home Depot, etc. and other major corporations. 5. General outlook for Lehigh Lithographers is the same as Von Hoffman, both positive in the mid-term. Incremental strengthening and growth is expected in 2004, but more substantive strength in education market in the 2005-2007 window. Lehigh Direct side, short and mid-term outlook will be incremental in 2004 and beyond. 6. On the competitive front, the acquisition will result in a suite of products that will be different than that of competitors. Lehigh is foremost leader in book covers over Donnelley or Quebecor, and any other competitors, due to Lehigh's sophisticated technology. The combined company provides a strategic edge over competitors. 7. The acquisition will provide an upside on revenue opportunities due to the different customer bases. The plan is to leverage both sales organizations to provide strategic value. 8. Lehigh's estimated market share is 60-70% and they have been the de facto leader in the industry.