14OG Hsbc Bk. 2032

RNS Number:8931F
Applied Graphics Technologies Inc
21 February 2000


Contacts: David Lilly             Louis Salamone, Jr., CFO
          Molly Morse             Applied Graphics Technologies
          Kekst and Company       (212) 716-6630
          (212) 521-4800
             

                     APPLIED GRAPHICS TECHNOLOGIES REPORTS
                PRELIMINARY FOURTH QUARTER AND YEAR-END RESULTS

    -Retains Investment Banker to Assist In Sale of Devon Publishing Group-

New York, February 16, 1999 - Applied Graphics Technologies, Inc- (NASDAQ:
AGTX), the country's largest provider of outsourced digital media asset
management services, today reported that it expects its fourth quarter and
year-end 1999 results to be below those reported for the same period last year
and below certain analysts' expectations.

AGT expects to report a loss of between $0.22 and $0.27 per weighted average
common share from operations for the fourth quarter of 1999, before
restructuring, impairment, and other charges. For the full year the Company
expects to report a loss of between $0.16 and $0.21 per weighted average common
share from operations before the fourth quarter restructuring, impairment and
other charges. This compares with net income of $0.16 per weighted average
common share before restructuring and other charges in the fourth quarter of
1998, and net income of $0.86 per weighted average common share before
restructuring and other charges for the twelve months ended December 31, 1998.
On a pro forma basis, the Company expects its 1999 earnings before interest,
taxes, depreciation, amortization ("EBITDA") and restructuring and other
charges to be approximately $3.25 per weighted average common share.

AGT said it expects to record restructuring and other charges for the 1999
fourth quarter of at least $12.0 million before income tax effect or at least 
$0.31 per weighted average common share, net of income taxes. These charges are
related to the Company's ongoing activities to integrate its operations
primarily in the United States and to a lesser extent in the United Kingdom.

The Company also announced today that it has retained Chase Securities, Inc. to
assist it with the sale of its Devon Publishing Group subsidiary, subject to
receipt of an adequate price. The proposed sale is part of the Company's plan to
sell non-core assets in order to allow it to focus on improving its core
operations, and to use the proceeds therefrom to pay down debt incurred in
connection with its acquisition activities of the last few years. As a result of
its actions with respect to the potential sale of the Devon Publishing Group and
subject to receipt of an adequate bid price, AGT expects to reflect this
business as a discontinued operation and record an estimated charge related to
the disposal in the fourth quarter of 1999 related to its investment in that
operation, the amount of which will be known, by mid-March. The Company said
there can be no assurance that the sale of the Devon Publishing Group will
occur.

"Obviously we are very disappointed in these results," said Fred Drasner, Chief
Executive Officer. "The loss from operations is due to lower than anticipated
results. especially in the Creative Advertising businesses. While the creative
side of our business has grown rapidly in the fourth quarter, costs to complete
projects seriously impaired the margins we expected to realize on this business.
We are taking steps to improve management of product pricing and to better
monitor and control costs on jobs. Additionally, while we have made some
progress in the integration of our business, we have not accomplished the
integration as fast as we had anticipated. This has resulted in our carrying
duplicative operating costs longer than we had expected.'

"We are moving ahead with our plan to sell the Devon Publishing Group, which
will leave us strategically well-positioned to focus all of our attention on
improving and growing our core business. The proceeds from the sale of Devon
Publishing Group, if consummated, and certain other non-core assets (most of
which are either under contract or have offers outstanding), including the
previously announced sale of our Photolab business, will also allow us to
continue to pay down our bank debt."

"While our operating results have been negatively impacted by the factors
mentioned above, our ability to generate cash continues to be strong. On a pro
forma basis in 1999, earnings before interest, taxes, depreciation, amortization
("EBITDA") and restructuring and other charges should be approximately $3.25 per
weighted average common share.  This ability to generate cash, the planned sales
of non-core assets and our borrowing capacity under our bank lines should permit
us to fund the turnaround of our business as well as begin the expansion of our
business planned for in 2000. Additionally, the more rigorous implementation of
our integration activities in 2000 should result in improved performance and
generate further cash with which we plan to pay down our debt and grow our
Company."

The results are subject to completion of AGT's annual audit, which is expected
to be completed in mid-March, at which time the Company will report its final
results for the quarter and full year 1999.

Applied Graphics Technologies, Inc. is a major international provider of
outsourced advanced digital media asset management and archiving services,
through its proprietary Digital Link(R) system, to magazine and newspaper
publishers, advertisers and their agencies, entertainment companies, catalogers
and retailers. and consumer goods and packaging companies. From locations across
the United States, the United Kingdom. and Australia, AGT supplies a complete
range of digital and traditional processes for images, including scanning, color
enhancement, image editing, archiving and electronic distribution. AGT tailors
these services to fit specific customer needs, from conventional project and
contract vendor relationships to today's more progressive arrangements,
consisting of outsourcing on-site facilities management and complete turnkey
operations. Additionally, AGT provides a wide range of advertising and
marketing-related creative services for customers primarily in retailing. These
services include assistance in creation of newspaper advertising campaigns,
development of in-store and collateral media and photographic services. AGT also
provides content management and the volume
reproduction and distribution of television and radio commercials to broadcast
and cable media for ad agencies and their clients.

Certain statements in this press release contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are inherently subject to known and unknown risks uncertainties and
other factors that may cause actual results, performance or achievements of the
Company to be materially different from those expected or anticipated in the
forward-looking statements. In addition to the factors described in the
Company's SEC filings, including its quarterly reports on Form 1O-Q and its
annual reports on Form 10-K, the following factors, among others, could cause
actual results to differ materially from those expressed herein: (a) higher or
lower restructuring and asset impairment charges than anticipated; (b) lower
than expected net sales, operating income and earnings in 2000; (c) delays in
the Company's ability to integrate its operations and reduce costs; (d) failure
to sell Devon Publishing Group and other non-core assets; (e) less than expected
growth, even following the refocus of the Company on sales and streamlined
operations; (f) actions of competitors including business combinations,
technological breakthroughs, new product offerings and marketing
and promotional successes; (g) the risk that anticipated new business may not
occur or be delayed; and (h) general economic conditions that adversely impact
the Company's customers' willingness or ability to purchase or pay for services
from the Company. The Company has no responsibility to update forward-looking
statements contained herein to reflect events or circumstances occurring after
the date of this release.
    
Additional information about Applied Graphics Technologies can be obtained by
visiting the AGT website: http://www.agt.com.

END

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