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Workflow Management Revises 2002 Guidance, Will Close 2 Facilities

Press release from the issuing company

PALM BEACH, Fla.--Nov. 9, 2001--Workflow Management Inc., the nation's leading outsourcer of print and office consumables, announced today that a variety of market conditions are likely to result in a smaller than previously expected revenue gain for Fiscal 2002. The Company's revised guidance for Fiscal 2002, ending April 30, 2002, is for revenues of approximately $615 - $625 million, which is below the previous guidance of $662 million. If this revenue target is achieved, coupled with the steep economic decline and resulting gross margin pressure, the Company currently expects to report Fiscal 2002 earnings per diluted share of $0.70 to $0.80, which is lower than the initial guidance of $1.12 to $1.15. Due to the aforementioned factors, the Company expects to report diluted earnings per share of $0.09 to $0.11 for the second quarter of Fiscal 2002. Tom D'Agostino, Sr., Chairman, President and CEO stated, "Our business is being impacted by the uncertain economic environment, which was only exacerbated by the tragic events of September 11th and subsequent attacks through the U.S. mail system. As our customers reacted to these events and the impact on their businesses, we experienced an abrupt business slowdown in the second fiscal quarter as approximately 28% of our revenues are generated in the New York City metropolitan area. While we have experienced a slight sales trend improvement over the last weeks in most of our product lines, domestic security concerns regarding mail safety could have further business implications as approximately 30% of our total revenues are associated with the envelope and direct mail industries.'' Mr. D'Agostino, Sr., continued, "While we are encouraged by the recent improving sales trends, we are prudently assuming our business will remain under margin and volume pressure due to the lingering economic uncertainty. As stated in our September earnings release and conference call, we will continue implementing initiatives to significantly streamline operations. These initiatives include enhanced expense controls, headcount reductions, facilities integration, reduced discretionary spending and improved working capital management. In October, we implemented additional aggressive cost reductions exceeding a $7.5 million annual run-rate, the benefit of which should start materializing over the next two quarters. In anticipation of a further economic weakening and the considerable additional safety concerns regarding direct mailings, we are also closing two production facilities associated with direct mail, thereby reducing our production capacity to further improve gross margins and insulate our bottom line. These plant closings will occur within the next few months.'' Mr. D'Agostino, Sr., concluded, "Despite our expectation of a steeper decline in the economy for the next several quarters, weremain confident with our long-term strategic direction. We believe our considerable business and geographic diversification will mitigate the downside during this challenging environment.'' The Company expects to provide additional comments regarding expectations for Fiscal 2002 during its second quarter earnings release and conference call scheduled for December 4, 2001.