Vertis Communications Announces Second Quarter 2007 Results

Vertis Communications Announces Second Quarter 2007 Results

Vertis Communications (“Vertis” or the “Company”), a leading provider of targeted advertising, media and marketing solutions, announced today results for the three and six months ended June 30, 2007.

Revenue

Revenue for the second quarter of 2007 was $332.1 million versus $350.5 million in the second quarter of 2006. The 5.2 percent decline was primarily the result of a continuing weakness in Advertising Inserts. Revenue in the Direct Mail segment was up slightly.

On a year-to-date basis, revenue was $662.8 million, a decrease of $35.8 million or 5.1 percent, from revenue of $698.6 million in the first half of 2006. The decrease was driven by revenue declines in Advertising Inserts and our “Other” segment (premedia), which were somewhat offset by revenue growth in Direct Mail.

Net Loss

Net loss during the quarter grew to $19.7 million from $5.0 million in the same quarter one year ago. Through June 30, 2007, the net loss amounted to $44.9 million versus $26.6 million in the corresponding period in the prior year. The decline in revenues was the main driver of the increased loss.

Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”)

EBITDA in the second quarter of 2007 declined, as expected, to $27.4 million from $42.1 million for the same period in 2006. Adjusted EBITDA was $31.4 million in the second quarter of 2007, a decline of $15.0 million, or 32 percent, from Adjusted EBITDA of $46.4 million in the same quarter of 2006. This decline was largely due to the above mentioned decline in revenue, investments made in maintenance, quality and sales support, somewhat offset by corporate cost reductions.

On a year to date basis, EBITDA amounted to $48.7 million in 2007 versus $67.4 million for the same period in 2006. Adjusted EBITDA amounted to $56.0 million for the first six months of 2007 versus $81.4 million in the first half of 2006.

Cash and Liquidity

The Company ended the six month period with $6.0 million in cash and debt of $1,124.3 million. In addition, the off-balance sheet Accounts Receivable facility stood at $110.1 million. The Company ended the six month period with $92.6 million available on its $250 million senior credit facility. Last 12-month Adjusted EBITDA calculated for covenant purposes was $144.1 million or $19.1 million above the minimum requirement.

Additional information on the results is available in the Company’s Form 10-Q filed with the SEC on August 9, 2007.

Management Comments

Mike DuBose, Chairman and Chief Executive Officer commented, “Although the environment remains challenging, our overall second quarter and first half financial results were, for the most part, in-line with our expectations. During the second quarter we continued to pursue our key turnaround initiatives focused on aggressively addressing the root causes of the quality, performance and customer service issues which impacted the Company in previous years. In addition, we further upgraded the organizations and infrastructure necessary to drive profitable growth into the future. Our initiatives are beginning to yield results in our quality, customer service and operating efficiency.”

DuBose continued, “In several cases our performance improvements in these areas have been noted by our customers, as significant. We have also made improvements in our selling, pricing and new business capture processes. We continue to see opportunities to improve efficiency and lower costs while simultaneously capturing new profitable business as well as providing additional value added products and services to our existing customers. While much work remains to be done, we are pleased overall with the progress and confident that we are positioning Vertis for a stronger future.”

Conference Call

Vertis will be holding a conference call on Friday, August 10, 2007 at 11:00 a.m. EDT, to discuss earnings for the six months ended June 30, 2007. Mike DuBose, Chairman and Chief Executive Officer, will host the conference call at 800.462.3053 or 1.706.902.2200 for international callers and the passcode confirmation is VERTIS Q2. A recording of the call will be available for review for one week at 800.642.1687 or 1.706.645.9291 for international callers.

About Vertis Communications

Vertis Communications is a premier provider of print advertising, direct marketing solutions and related value added services to America’s leading retail and consumer services companies. Vertis delivers marketing programs that create strategic value for clients by using creative services, color management technologies, proprietary research, customer targeting expertise, premedia and media services, combined with its world-class printing expertise. Headquartered in Baltimore with over 100 locations in the U.S., Vertis Communications has been recognized as one of Fortune magazine’s “Most Admired Companies” in advertising and marketing. For more information, visit www.vertisinc.com.

This press release and conference call may contain forward-looking statements. The words “believes, “anticipates, “expects, “estimates, “plans, “intends,” and similar expressions are intended to identify forward-looking statements. All forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from projected results. Factors that may cause these differences include fluctuations in the cost of raw materials we use, changes in the advertising, marketing and information services markets, the financial condition of our customers, actions by our competitors, changes in the legal or regulatory environment, general economic and business conditions in the U.S. and other countries, and changes in interest and foreign currency exchange rates.

Consequently, you should consider any such forward-looking statements only as our current plans, estimates, and beliefs. Even if those plans, estimates, or beliefs change because of future events or circumstances, we decline any obligation to publicly update or revise any such forward-looking statements.