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Disc Graphics Reports 3Q Results, Returns to Profitability

Press release from the issuing company

HAUPPAUGE, N.Y., Nov. 7 -- Disc Graphics, Inc. today announced its financial results for the third quarter ended September 30, 2001. Disc Graphics' third quarter 2001 revenues decreased by 24.5% to $13,448,000 compared with revenues of $17,804,000 in the third quarter of 2000. Third quarter net income was $322,000 or $.06 per diluted share compared to a net loss of $360,000 or $.07 per diluted share in 2000, an improvement of $.13 per share. The Company achieved cost reductions in the third quarter of 2001 across the board in direct materials, outside processing, labor and manufacturing costs, which led to an increase in gross profit margins to 24.4% as compared to 18.5% in the previous year. In addition, SG&A as a percentage of net sales declined 2.9 percentage points which contributed to an operating income margin of 8.1% compared to an operating loss margin of 0.6% in last year's third quarter. Revenues decreased 20.4% in the first nine months of 2001 to $39,771,000 compared with revenues of $49,972,000 for the same period in 2000. The net loss for the first nine months of 2001 was $1,291,000, or $.23 per diluted share compared to net loss of $2,196,000, or $.40 per diluted share for the same period a year ago. Commenting on the turnaround, Donald Sinkin, Chairman and Chief Executive Officer of the Company, said, "In spite of the continued weakening economy and the effects of the events of September 11th, Disc reported its first profitable quarter in some time. The initiatives implemented to reduce the operating costs of the Company have continued to improve our gross profit margins. We continue to work diligently at lowering operating costs and improving margins as well as strengthening the balance sheet of the Company through cash management and paying down debt.'' Mr. Sinkin added, "We have also been encouraged by the appearance of a more stable business environment as we head into the holiday season. One part of our program to reverse the sales decline, which began in October 2000, is our rebuilding of the sales team. This includes the addition of new sales representatives and a Vice President of Sales as well as realignment of responsibilities to allow a greater focus on marketing and new business development.'' 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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