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Disc Graphics Reports 2Q Results, Revenue Down 18%

Press release from the issuing company

HAUPPAUGE, N.Y., Aug. 15 -- Disc Graphics, Inc today announced its financial results for the second quarter ended June 30, 2001. Disc Graphics' second quarter 2001 revenues decreased by 18.1% to $12,779,000 compared with revenues of $15,595,000 in the second quarter of 2000. The second quarter net loss was $869,000 or $.16 per share based on 5,518,248 diluted shares compared with a net loss of $1,291,000 or $.23 per share based on 5,518,262 diluted shares in 2000. Revenues decreased 18.2% in the first six months of 2001 to $26,323,000 compared with revenues of $32,168,000 for the first six months of 2000. The net loss for the first six months was $1,613,000, or $.29 per share based on 5,518,248 diluted shares, compared with a net loss of $1,837,000, or $.33 per share based on 5,518,284 diluted shares for the first six months of 2000. Revenue remained soft in the second quarter due primarily to the overall slowdown in the economy. The Company saw weakness within the commercial, computer software, and music customer base, partially offset by new business, particularly DVD packaging for a major studio. Despite the economic slowdown, the gross margin increased to 17.8% compared with 11.8% in last year's second quarter. Cost reductions such as lowering headcount and consolidating our manufacturing facilities, as well as improved manufacturing efficiencies contributed to the margin improvement. Disc Graphics is continuing to implement additional programs to cut costs on a continuing basis. Commenting on the second quarter results, Donald Sinkin, Chairman and Chief Executive Officer, said: "Although sales remain soft, they did stabilize in the second quarter. In addition, new sales and marketing initiatives were implemented in the quarter creating several new business opportunities. The Company increased its presence in the fast growing video game industry by beginning to work with several lead platform video game companies. In addition, the Company will be providing much of the DVD packaging for one of the major studios during the third quarter of 2001''. Mr. Sinkin added: "We look forward to continued focus on new customers and new markets combined with cost reduction initiatives to continue to improve the Company's profitability. It has been a difficult year, but we are pleased with how our focus has resulted in a lower cost structure which is improving our efficiency and effectiveness''. Disc Graphics, headquartered in Hauppauge, NY, is a diversified manufacturer and printer of specialty packaging focused on the home video, pharmaceutical, music, publishing and cosmetic markets. Disc Graphics' products include prerecorded video, CD-ROM and audiocassette packaging, folding cartons for pharmaceuticals and cosmetics, book jackets, posters, pressure-sensitive labels and general commercial printing.

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