MARKHAM, ON, May 15 - Driven by higher value-added assignments and improving operational efficiencies, PLM Group today announced it achieved strong operating profitability and net income for the three months ended March 31, 2003 - while continuing to reduce debt. Net income for the first quarter of 2003 was $0.7 million (2.6 cents per share basic and diluted) compared to $0.7 million, (2.3 cents per share basic and diluted) in the comparable period of 2002 - despite a 2.3% reduction in sales. "The most significant single reason why sales declined during the period was the Company's decision to resign from a significant account in the fall of 2002 which was not contributing the appropriate value added. This has impacted revenue figures but had no material impact on the bottom line," said Dave Stuart, PLM C.O.O. Net income a year ago benefited from three positive, non-recurring gains: a $100,000 pre-tax gain on the sale of fixed assets, $30,000 foreign exchange gain (compared to a foreign exchange loss of $122,000 in Q1 of 2003) and the recognition of $100,000 worth of future tax losses associated with a discontinued operation. In the first quarter of 2003, net income included a $44,000 gain from the sale of the remaining assets of the discontinued operation and final settlement of outstanding amounts to operate the facility to March 31, 2003. PLM has no further financial involvement with this operation. PLM also experienced a $122,000 foreign currency exchange loss on U.S. receivables due to the strengthening of the Canadian dollar. Net earnings from continuing operations were $0.7 million (2.4 cents basic and diluted) in the first quarter of 2003 versus $0.7 million (2.3 cents basic and diluted) for the comparable period in 2002. PLM's operating results in the first quarter of 2003 reflected both the impact of weak conditions in several market segments, as well as positive contributions from a newly acquired business and PLM's intensified focus on value-added client assignments. While sales were lower at $25.7 million compared to $26.3 million, as discussed earlier, EBITDA in the first quarter of 2003 was ahead almost a full percentage point to 12.8% from 11.9% in the first quarter of 2002, reflecting higher value-added assignments. Mailer Magic, acquired February 1, 2003, also made a strong contribution, generating profitable sales that were ahead of expectations. Financial Condition PLM's financial condition at March 31, 2003 reflected the Company's strong cash flow characteristics, the acquisition during the first quarter of 2003 of Mailer Magic - Canada's largest offline inkjet imaging and finishing operation - and the Company's ongoing program of debt repayment. Debt to equity declined to 39:61 from 48:52 at March 31, 2002, while operating cash flow increased to $2.7 million from $2.6 million a year ago. Subsequent Events PLM has received Toronto Stock Exchange approval to commence a normal course issuer bid to repurchase and cancel up to 1,415,341 of its common shares or 5% of its issued and outstanding shares at prevailing market prices. The purchases can commence April 25, 2003 and will terminate on or before April 24, 2004. PLM also announced it has formed a strategic sales alliance with Montreal-based Phipps Dickson to jointly secure new commercial printing opportunities in the Quebec market. Management Commentary and Outlook "As expected, market conditions remained challenging in the first quarter, reflecting subdued marketing activities in several client sectors," said Barry Pike, PLM Chairman and Chief Executive Officer. "In this context, PLM's performance was outstanding. By presenting clients with more value-added capabilities, by focusing on higher value-added assignments and by completing these assignments in an efficient manner, we were able to overcome competitive pressures and turn in a solid operating performance." "We're particularly impressed with the results of Mailer Magic," said Dave Stuart, President and Chief Operating Officer. "Although they joined us almost half way through the quarter, they produced solid, above target sales and operating profit and their integration into our newly formed PLM Digital Services operation has been on plan. They now share PLM's technology platform, allowing for seamless client service. The best news is that their order book is now solid through May, indicating their contributions will be sustainable, as we expected. Not to be overlooked is the hard work of our other operations, such as web, finishing and imaging, which held their own or improved sales over last year despite difficult markets." "To reinforce our capabilities, and better serve client demand, we are installing new equipment for PLM Imaging and PLM Digital Services in the second quarter at a cost of approximately $2 million," said Peter Bradley, Executive Vice President and Chief Financial Officer. "This equipment includes advanced thermal plate technology, intelligent direct mail insertion equipment and phone card systems that will open new market opportunities for us and enable us to handle higher volumes even more efficiently. While this will increase our debt level, the use of financial resources for this purpose is appropriate considering the strong return we expect to receive in short order." Management's expectations for 2003 remain unchanged from the outlook presented in its year-end 2002 financial press release. "We remain cautiously optimistic about 2003," said Mr. Pike, "but to date, we've seen no reason to expect a sudden turnaround in our served markets. This puts additional pressure on all printers, PLM included, to aggressively demonstrate their worth to clients. Fortunately, with our expanding print-based capabilities and fully-integrated digital services platform, we have the end-to-end solutions that allow PLM to clearly distinguish itself as a value-added supplier to the best marketers in the country."