Vermont Pure Holdings Announces Record FY02 Third Quarter Results

RANDOLPH, Vt., Sept. 12 — Vermont Pure Holdings, Ltd. announced record results today for the quarter ending July 31, 2002.

Sales revenue increased 19% to $21,579,000 from $18,172,000 in the third quarter of fiscal year 2001. Operating income advanced 59% to $3,592,000 in the quarter from $2,252,000 the previous year. Net income for the quarter increased 28% to $1,292,000, or $.06 per share, from $1,009,000, or $.05 per share, the previous year.

“We are extremely pleased with our third quarter results in light of a difficult economic environment. Despite the slow pace of the economic recovery, we are pleased to report our seventh consecutive profitable quarterly,” said Tim Fallon, Chairman and CEO of Vermont Pure Holdings, Ltd.

For the nine months ending July 31, 2002, the Company reported that revenue increased 14% to $53,802,000 from $47,197,000 in the previous year. Operating income for the nine month period was $7,348,000 which represented a 47% increase over the $5,004,000 reported for the same period of fiscal year 2001. Net income for the first three quarters of 2002 more than doubled to $2,231,000, or $.11 per share, from $1,107,000, or $.05 per share, the previous year.

The amount of the amortization the Company booked decreased significantly in 2002, resulting in a favorable effect on net income for both the three and nine month periods. Conversely, income was fully taxed in 2002 while results in fiscal year 2001 for the corresponding periods were not taxed as a result of the use of tax loss carry forwards. Net of these effects, net income increased 35% and 29% for the three and nine month periods, respectively, in 2002 compared to 2001.

The Company’s sales growth continued to be driven by a strong increase in the retail area, “The Company is well positioned to capitalize on the growing trend of retailer branded spring water products. Our private label sales have more than compensated for the softness we are experiencing on the branded side of our business,” added Fallon.

However, the profit performance is largely a result of the Company’s core Home and Office delivery segment. “The sluggish economic recovery slowed our top line sales growth in the Home and Office delivery area but we continue to manage our cost structure. This is evidenced by our growth in operating income at a rate greater than our revenue increases”, said Peter Baker, President of Vermont Pure Holdings, Ltd.

Vermont Pure Holdings, Ltd., located in Randolph Vermont, is a bottler and distributor of natural spring water under the Vermont Pure(R) and Hidden Spring(R) brands. It also markets distilled with minerals added bottled water through the Crystal Rock(R) brand. The Company’s primary businesses are the marketing of these brands throughout New England, New York, and the Mid- Atlantic regions. The Company is currently executing a growth strategy through expansion of the home and office customer base, acquisitions, and consolidation of regional home and office bottled water and coffee distributors. Vermont Pure Holdings Ltd.’s common stock trades on the American Stock Exchange under the symbol: VPS.

                        VERMONT PURE HOLDINGS, LTD
                          Results of Operations

                              (Unaudited)                  (Unaudited)
                          Nine Months Ending:           Three Months Ended:
                         July 31,      July 31,     July 31,     July 31,
                          2002           2001         2002          2001
  (000's $)

  Gross Sales            $55,840       $48,739      $22,465       $18,974

  Allowances            ($2,038)      ($1,542)       ($886)        ($802)

  Sales                  $53,802       $47,197      $21,579       $18,172

  Income from
   Operations             $7,348        $5,004       $3,592        $2,252

  Net Income              $2,231        $1,107       $1,292        $1,009

  Basic Net Earnings
   per Share               $0.11         $0.05        $0.06         $0.05

  Diluted Net Earnings
   per Share               $0.10         $0.05        $0.06         $0.05

  Basic Wgt. Avg.
   Shares Out. (000's)    21,092        20,307       21,118        20,516

  Diluted Wgt Avg.
   Shares Out. (000's)    22,111        20,465       21,978        20,883