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Vertis Announces Q1 Earnings: Sales And Income Down

Press release from the issuing company

Baltimore, MD (April 29, 2003) -- Vertis, Inc. (“Vertis”) today reported results for its first quarter ended March 31, 2003. For the quarter ended March 31, 2003, net sales were $371.2 million, or 7.7% below the first quarter ended March 31, 2002. Operating income decreased 47.7% to $12.7 million versus $24.3 million for the first quarter of 2002. EBITDA amounted to $34.1 million, a decrease of $12.9 million, or 27.4%, as compared to the quarter ended March 31, 2002. The decline in net sales reflects the ongoing difficult economic environment and its influence on the markets we serve. In addition, the decline in net sales reflects the impact of declines in the cost of paper. For the three months ended March 31, 2003, the net loss was $5.8 million compared to a net loss of $118.8 million in the first quarter of 2002. The net loss of $118.8 million for the quarter ended March 31, 2002 includes the cumulative effect of an accounting change of $108.4 million, net of tax of $6.8 million, as a result of adoption of Statement of Financial Accounting Standards No. 142 “Goodwill and Other Intangibles”. This non-cash charge was the result of an impairment test on the Company’s goodwill. The loss before the cumulative effect of accounting change was $5.8 million in the 2003 quarter as compared to $10.4 million in 2002, a decrease of 44.2%. Donald Roland, President, Chairman and CEO of Vertis stated, “The poor economic environment was a significant factor in our first quarter 2003 performance. Even in this difficult environment, however, we continued to see positive reactions in the marketplace to our integrated approach to delivering advertising solutions to our customers. In addition, the restructuring efforts completed to date have resulted in a lower operating cost base across the platform, which mitigated a significant portion of the decline in net sales.” Dean D. Durbin, CFO, added, “At March 31, 2003, we are in compliance with our debt covenants. While we currently expect to be in compliance in future periods, if the fragile economic conditions that have influenced our results to date continue, there can be no assurance that these debt covenants will continue to be met.”