UFP Technologies Reports Q3 Results & Announces Acquisition

    GEORGETOWN, Mass.--Nov. 8, 2001--UFP Technologies, Inc. , a manufacturer of packaging and specialty products, today reported results for its third quarter ended September 30, 2001. The Company reported a net loss of $943,000 or $0.22 per diluted share outstanding, compared to a profit of $220,000 or $0.05 per share in the third quarter of last year. Sales for the quarter were $13.9 million vs. $18.9 million in the prior year. On a year-to-date basis the Company reported sales of $46.4 million and a loss of $0.37 per diluted share outstanding.
    According to President and CEO R. Jeffrey Bailly, "The business climate continues to be very challenging, due to softening customer demand, particularly in the automotive and computer electronics markets. As a result, we have had to strike a balance between lowering costs to properly align them with current sales levels, and maintaining the critical infrastructure needed to launch new programs and respond to new opportunities."
    "During the quarter, we launched nine new automotive programs. While they required up-front investments that contributed to third quarter losses, these programs bode well for future sales and earnings," Bailly added.
    Bailly said that UFP Technologies continues to pursue strategic acquisitions to position the company for long-term growth. For example, the company has purchased the equipment, trademarks and patents of E-Tech Inc. for their "E-cube" product line, a molded fiber cube for loose fill packaging. The acquisition enables UFP Technologies to meet customer demand for an environmentally friendly loose fill product, while advancing the company's overall strategy of offering the industry's broadest range of interior packaging solutions. In addition, Bailly noted that the new product line can be produced using available capacity on the company's existing equipment.
    "Although it is a challenging environment, I am confident that UFP Technologies will emerge from this period a leaner, more efficient company, very well positioned for long-term success," Bailly said.

    This News Release contains forward-looking information including statements about the Company's plans, objectives, expectations, beliefs and intentions. Such statements include, without limitation, statements regarding the economic outlook, opportunities, impact of investments on future sales and earnings, and estimated volume for its automotive and packaging businesses, the effectiveness of cost-cutting measures in positioning the Company for long-term success. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties include, without limitation: the Company's ability to predict accurately the demand for its products and to develop strategies to address its markets successfully; risks associated with acquisitions, including the diversion of management's attention, the assimilation of operations, personnel and products of the acquired businesses, the ability to manage geographically remote units, the potential loss of key employees of the acquired businesses and financing risks; rapid technological change; and intense competition. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date of this News Release. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statement to reflect any change in the Company's expectations or any change in events, conditions or circumstances on which any such statement is based. Further discussion of risk factors is also available in the Company's SEC filings.

            Consolidated Condensed Statements of Operations
                ($ in Thousands, Except Per Share Data)
                              (Unaudited)

                          Three Months Ended      Nine Months Ended
                          30-Sep-01  30-Sep-00   30-Sep-01  30-Sep-00
Net sales                  $ 13,935   $ 18,898   $ 46,382   $ 56,598
Cost of sales                12,123     14,478     38,151     43,282
   Gross profit               1,812      4,420      8,231     13,316
SG&A                          3,303      3,688     10,346     11,014
   Operating income (loss)   (1,491)       732     (2,115)     2,302
Interest expense / other
 income & expenses              223        331        765        982
   Income (loss) before
    income taxes             (1,714)       401     (2,880)     1,320
Income taxes                   (771)       181     (1,300)       594
   Net income (loss)           (943)       220     (1,580)       726

Weighted average diluted
 shares outstanding           4,214      4,394      4,260      4,390
Per Share Data:
Diluted net income (loss)
 per share                   ($0.22)     $0.05     ($0.37)     $0.17



                 Consolidated Condensed Balance Sheets
                           ($ in Thousands)

                                              30-Sep-01   31-Dec-00
                                              Unaudited    Audited
Assets:
   Current assets                              $18,145     $18,513
   Net property, plant, and equipment           12,081      12,453
   Other assets                                  8,999       9,386

Total assets                                   $39,225     $40,352

Liabilities and stockholders' equity:
   Notes payable                               $ 7,026     $ 4,737
   Other current liabilities                     8,565       9,637
   Long-term debt                                7,222       7,589
   Other liabilities                               777         862

   Total liabilities                            23,590      22,825
   Total stockholders' equity                   15,635      17,527

Total liabilities and stockholders' equity     $39,225     $40,352