NEENAH, Wis.--March 26, 2003--Outlook Group Corp. today reported net sales of $12, 596,000 for the third quarter of fiscal 2003 ended March 1, 2003, compared to sales of $15,813,000 for the same period in the prior year. The company reported a net loss of $638,000 or $(0.19) per diluted share for the third quarter of fiscal 2003, compared to earnings of $78,000 or $0.02 per diluted share for the third quarter of fiscal 2002 excluding after-tax recovery of legal settlement expenses of $308,000 or $0.09 per diluted share. Including the recovery of legal settlement expenses, Outlook Group reported net earnings of $386,000 or $0.11 per diluted share for the third quarter of fiscal 2002. For the first three quarters of fiscal 2003, Outlook Group reported net sales of $46,914,000, compared to net sales of $51,513,000 for the same period in the prior year. Net earnings were $504,000 or $0.15 per diluted share for the first nine months of fiscal 2003, compared to earnings of $739,000 or $0.22 per diluted share excluding facility relocation and net legal settlement expenses of $587,000 or $0.17 per diluted share for the same period in fiscal 2002. Including the facility relocation and net legal settlement expenses, Outlook Group reported net earnings of $152,000 or $0.04 per diluted share for the first nine months of fiscal 2002. Joseph J. Baksha, president and chief operating officer of Outlook Group, said that in addition to the continued soft economic environment, the lower third quarter sales and earnings were also impacted by three other factors. "Several vendor-related quality issues resulted in lost sales revenue and additional expenses. We maintained employment levels in spite of reduced project volumes in anticipation of a major new contract. And one of our production lines was down for two weeks due to equipment problems. With all three of these factors occurring in the same quarter, the combined impact on our performance was significant," said Baksha. Baksha said the vendor quality issues were related to problems with raw materials that required replacement, resorting and reworking of client projects. "These issues resulted in approximately $400,000 in lost revenues and $300,000 in additional expenses in the third quarter. We are seeking recovery from the vendors involved for our financial losses and the impact of these occurrences on our client relationships," he said. "Maintaining existing employment levels in spite of a reduction in business from two major customers represented approximately $100,000 in expenses. The decision to maintain current staffing was made in anticipation of a major new long-term contract for supply chain management services that we expect will add significant volume to the company over a period of years. We will need to have all of our experienced associates in place when this contract begins," said Baksha. "In regard to the equipment problems, one of our two laminating production lines was down for two weeks, resulting in additional lost sales and ongoing labor costs. The equipment has now been repaired and we are resuming normal production," he said. "While the combination of unusual events of the third quarter presented a short-term challenge, Outlook Group remains financially strong and we continue to believe we are positioned to build value for our shareholders over the long term," said Baksha.