C2, Inc. Reports Financial Results for the Second Quarter and First Six Months of Fiscal 2001.

Business Editors

MILWAUKEE--(BUSINESS WIRE)--July 20, 2001

C2, Inc. (NASDAQ:CTOO) announced today its financial results for the second quarter and first six months of fiscal 2001. Net earnings for the three months ended June 30, 2001 were $307,000, or $0.06 per share fully diluted, compared to $636,000, or $0.12 per share fully diluted, reported for last year's second quarter. Revenues for the quarter increased 25 percent to a record level of $54,928,000, driven by 40 percent growth in integrated logistic service revenues attributable to its wholly-owned subsidiary Total Logistic Control ("TLC"). Net earnings were lower quarter-to-quarter due primarily to lower volume in refrigerated warehousing operations.

On a sequential quarterly basis, C2's second quarter revenues and net earnings improved 12 percent and 9 percent, respectively, over the first quarter.

For the first six months of fiscal 2001, C2 reported net earnings of $589,000, or $0.11 per share fully diluted, compared to $1,182,000, or $0.23 per share fully diluted, reported for the same period last year.

William T. Donovan, C2 President and CEO, commented:

"C2's business is continuing to grow at a strong pace reflecting success in our strategy to emphasize development in non-asset based logistic services which have substantially lower capital investment requirements. These services are, however, operationally intensive and typically carry heavy start-up expenses and lower margins than traditional asset-based services. All of our recent large contracts in this area now are producing a positive contribution to earnings and as the seasonal growth in volume typical in our warehousing business occurs, we anticipate improved operating results in Logistic Services."

Donovan added, "We are very pleased that volume and margins are holding up well in Product Sales, primarily attributable to our 70.6 percent-owned subsidiary, Zero Zone, in spite of very difficult market conditions impacting retail capital spending. Zero Zone continues to maintain exclusive or first-tier supplier relationships with most of its customers and as their expansion and refurbishment programs proceed Zero Zone's volume and margins will advance as well. While we do not foresee market conditions improving materially in the months ahead, we are optimistic in the performance of our businesses given the contractual underpinning of an increasing amount of revenues and the pipeline of business prospects at both TLC and Zero Zone."

Second Quarter Financial Results:

Revenues for the second quarter ended June 30, 2001 increased 25 percent to a record level of $54,928,000 due to growth in integrated logistic services at TLC. Consolidated operating earnings before capital charges (EBITDA) for the quarter totaled $4,454,000, reflecting a decline of 15 percent, compared to $5,241,000 reported for last year's second quarter. The decline in EBITDA was due primarily to lower volume in refrigerated warehousing operations at TLC.

Interest expense declined 14 percent quarter-to-quarter reflecting lower rates on borrowings at both TLC and Zero Zone.

Net earnings for the quarter totaled $307,000, or $0.06 per share fully diluted, compared to $636,000, or $0.12 per share fully diluted, reported for last year's second quarter. Lower volume in refrigerated warehousing operations and intensely competitive market conditions at both TLC and Zero Zone were the principal factors impacting this quarter's earnings level.

First Six Months of Fiscal 2001:

Revenues for the six months ended June 30, 2001 increased 15 percent to $103,858,000 compared to $90,485,000 reported for the same period last year driven by growth in integrated logistic services at TLC.

Consolidated operating earnings before capital charges (EBITDA) for the six-month period were $8,770,000 reflecting a 13 percent decline compared to $10,107,000 reported for the same period last year.

Net earnings for the six months totaled $589,000, or $0.11 per share fully diluted, versus $1,182,000, or $0.23 per share fully diluted reported for the comparable period a year ago. Lower volume in refrigerated warehousing and deferred volume experienced in the first quarter at Zero Zone contributed to the earnings decline.

Total Logistic Control

TLC, based in Zeeland, Michigan, is a unique national provider of integrated logistic services. These services include refrigerated and dry warehousing, logistic management services, transportation, dedicated facility and operations management, fulfillment services for e-commerce application, food distribution and packaging services. Operations are conducted through a network of 13 logistic centers with 36.3 million cubic feet of refrigerated capacity and more than 1 million square feet of dry warehouse space. TLC operates a fleet of 267 refrigerated transportation units. TLC recently was cited by Inbound Logistics as a Top 10 Provider of Third-Party Logistics Excellence for the third year in a row. TLC is a wholly-owned subsidiary of C2, Inc.

Zero Zone

Zero Zone is a Wisconsin-based manufacturer of refrigerated and freezer display cases used in grocery, convenience and drug store chains for retail merchandising of food, beverage and floral products. C2, Inc. acquired 70.6% of Zero Zone on March 12, 1999.

The statements contained in this release that are not historical facts are forward-looking statements. Actual results may differ materially from management's expectations. The forward-looking statements involve risks and uncertainties, including but not limited to:

      --  Demand for warehousing, transportation logistic services and
        refrigerated display cases may be adversely affected by
        increases in interest rates, adverse economic conditions,
        increased energy costs, loss of a material customer, weather
        or other factors.

      --  Growth in volume of services or products may be adversely
        affected by reduced ability to identify and hire qualified
        employees.

      --  The company's profitability may be adversely affected by
        increases in interest rates because a significant portion of
        the Company's capital structure is debt, a substantial portion
        which bears interest at variable interest rates.

      --  Consolidations within the food industry or food retailers
        could impact the Company's customers.

      --  Company's market share may be adversely affected as a result
        of new or increased competitive conditions in warehousing,
        transportation or display case manufacturing.

      Additional information about risks and uncertainties discussed
above as well as additional material risks in the Company's business
may be found in the Company's Annual Report on Form 10-K for the year
2000 and other filings the Company made from time to time with the
Securities and Exchange Commission.

      This and other C2, Inc. news releases and additional corporate
data can be accessed on the Internet at www.c2-inc.com.

                               C2, INC.
                  Consolidated Statement of Earnings
                 (In Thousands, Except Per Share Data)
                              (Unaudited)


                           Three Months Ended        Six Months Ended
                               June 30,                  June 30,
                           -------------------------------------------
                              2001       2000       2001       2000
                           -------------------------------------------
Revenues:
 Logistics Services        $ 36,447   $ 26,016   $ 68,742    $ 55,437
 Product Sales               18,481     17,938     35,116      35,048
                           -------------------------------------------
                             54,928     43,954    103,858      90,485
                           -------------------------------------------

Costs and Expenses:
 Logistics Expense           32,161     21,053     59,631      45,910
 Cost of Product Sales       14,218     13,554     27,455      26,690
 Depreciation and
   Amortization               2,144      2,065      4,285       4,106
 Selling, General &
   Administrative Expenses    4,095      4,106      8,002       7,778
                           -------------------------------------------
                             52,618     40,778     99,373      84,484
                           -------------------------------------------

Earnings from Operations      2,310      3,176      4,485       6,001

Other Income (Expense):
 Interest Expense, net       (1,288)    (1,492)    (2,736)     (2,868)
 Other Income (Expense)         (20)         2        (19)         -
                           -------------------------------------------
                             (1,308)    (1,490)    (2,755)     (2,868)

Earnings before Income Taxes,
 and Minority Interest        1,002      1,686      1,730       3,133

Income Tax Provision            439        667        764       1,255
                           -------------------------------------------

Net Earnings before
 Minority Interest              563      1,019        966       1,878

Minority Interest               256        383        377         696
                           -------------------------------------------

Net Earnings               $    307    $   636    $   589     $ 1,182
                           ===========================================

Basic Net Earnings
 Per Share                 $   0.06    $  0.13    $   0.12    $  0.23
                           ===========================================
Diluted Net Earnings
 Per Share                 $   0.06    $  0.12    $   0.11    $  0.23
                           ===========================================

Average Number of Shares
 Outstanding               5,081,864  5,180,148   5,081,864  5,130,487
Diluted Number of Shares
 Outstanding               5,223,411  5,196,132   5,227,245  5,222,587