Exhibit 99.1

MOD-PAC CORP. Reports Record Quarterly and Annual Product Sales in 2012

• Fourth quarter and full-year product sales increased to a record $16.5 million and $58.9 million, respectively
• Fourth quarter custom folding carton sales up 18.5% to $12.2 million; increased 7.4% to $46.0 million in 2012
• Gross margin expanded 610 basis points to 23.3% in the fourth quarter on improved leverage and continued cost control
• Net income increased nearly 153% to $1.0 million, or $0.31 per diluted share, in the fourth quarter
• Generated $4.8 million in cash from operating activities in 2012, a 28.0% increase over 2011

BUFFALO, N.Y.--(BUSINESS WIRE)--February 6, 2013--MOD-PAC CORP. (NASDAQ: MPAC) (the “Company”), a high value-added, on-demand print services firm that designs and manufactures custom and stock folding cartons, today announced financial results for its fourth quarter and year ended December 31, 2012.

Revenue increased $2.1 million, or 14.1%, to $16.6 million in the fourth quarter from $14.6 million in the prior-year period on strong custom folding carton sales. Net income increased 152.9% to $1.0 million, or $0.31 per diluted share, compared with $0.4 million, or $0.12 per diluted share, in the fourth quarter of 2011. The substantial increase in net income reflects positive leverage on higher sales and continued cost control.

Daniel G. Keane, President and CEO, commented, “We had a very strong second half of 2012, highlighted by record product sales in the fourth quarter. We continued to see demand increase for our custom folding carton business as we deepened relationships with a number of large customers and started to realize the potential of some newer accounts as they ramped up their business.”

Record Product Sales Buoyed by Strong Custom Folding Carton Growth

• Sales of custom folding cartons increased 18.5% to $12.2 million compared with $10.3 million in the fourth quarter of 2011. The increase was primarily due to the addition of new product lines from several existing customers, the ramp-up of sales from some large customers whose business was earned last year and higher graphics charges, partially offset by lower waste paperboard sales.
• Stock packaging sales were $3.7 million and $3.5 million in the fourth quarters of 2012 and 2011, respectively, reflecting increased holiday sales as a result of Easter being early this year.
• Personalized print sales were $0.7 million in the fourth quarter of 2012 consistent with the prior-year period.

David B. Lupp, Chief Operating Officer and Chief Financial Officer, stated, “We recognized the operating leverage inherent within our business this quarter. Increased product sales and a continued focus on cost control drove our margin expansion and bottom line growth. We remain focused on increasing our sales and continue to look for productivity and operational enhancements in order to further leverage our fixed cost structure.”

Improved Leverage Drives Margin Expansion

Gross profit for the 2012 fourth quarter was $3.9 million, an increase of 54.3% when compared with gross profit of $2.5 million in the prior-year period. Fourth quarter gross margin expanded to 23.3% from 17.2% in the fourth quarter of 2011, reflecting improved leverage on higher sales combined with continued cost control.

Selling, general and administrative (SG&A) expense increased $0.3 million year-over-year to $2.2 million in the fourth quarter of 2012, due to higher employee related costs and approximately $0.2 million in expense associated with the formal proposal the Company received on October 29, 2012 to be acquired. As a percentage of revenue, SG&A was 13.5% and 13.2% in the fourth quarters of 2012 and 2011, respectively.

Earnings before interest, taxes, depreciation and amortization, and non-cash option expense (EBITDA) was $2.5 million in the fourth quarter of 2012, an increase of 79.4%, or $1.1 million, from $1.4 million in the fourth quarter of 2011. The Company believes that, when used in conjunction with GAAP measures, EBITDA, which is a non-GAAP measure, helps in the understanding of operating performance. (See the Reconciliation of Net Income to EBITDA in the attached table.)

The Company’s effective tax rate for the fourth quarter of 2012 was 33.9%, a more normalized rate when compared with 23.1% in the 2011 fourth quarter.

2012 Highlights

Total revenue for 2012 increased 5.4% to $59.3 million compared with $56.2 million in 2011. Custom folding cartons sales were $46.0 million, up 7.4% from $42.8 million in 2011, mainly due to additional business from several large existing customers and ramp-up of sales from recently acquired accounts, partially offset by decreased waste paperboard revenue. Stock packaging sales were up slightly at $10.2 million in 2012, while personalized print sales decreased 5.7% to $2.7 million compared with 2011.

Gross profit increased $0.4 million to $10.7 million in 2012. Gross margin was 18.1% for the full year period, a 20 basis point decline from 2011. The operational leverage realized from increased product sales was offset by sales mix, higher employee related expenses and increased paperboard costs for the first half of 2012.

SG&A expense in 2012 was $7.9 million, or 13.4% of revenue, compared with $7.5 million, or 13.3% of revenue in 2011. The increase primarily reflects higher employee related costs and the incremental expense associated with the proposed transaction received in October 2012.

EBITDA for 2012 was $6.2 million compared with $6.3 million in the prior-year period. (See the Reconciliation of Net Income to EBITDA in the attached table.)

Net income decreased slightly to $1.7 million, or $0.51 per diluted share, in 2012 from $1.9 million, or $0.55 per diluted share, in 2011. The prior-year period benefitted from $96 thousand in other income related to a New York State development grant.

Liquidity

Cash and cash equivalents were $3.6 million at December 31, 2012, down from the 2011 year-end balance of $3.9 million. The change was primarily the result of increased capital expenditures.

Capital expenditures for 2012 were $5.1 million compared with $2.3 million in 2011, reflecting $2.0 million associated with the purchase of a seven-color print press and approximately $1.6 million toward the infrastructure improvements needed to reconnect to the public utility electric power grid. Capital expenditures in 2013 are expected to be between $1.8 million to $2.1 million.

Mr. Lupp noted, “Our strong sales growth coupled with the limited energy capacity of our cogeneration facility necessitated that we secure additional power. In the fourth quarter, we successfully reconnected to the power grid and, earlier in 2012, were awarded low-cost power through the Recharge New York Power Program of the New York Power Authority.”

There were no shares repurchased by the Company during 2012. MOD-PAC has authorization to repurchase up to 200,000 shares.

The Company has a $3.0 million secured line of credit of which $0.2 million was in use through a standby letter of credit and there was no balance drawn on the line at the end of the quarter.

Outlook

Mr. Keane concluded, “As we enter 2013, we will look to build on the strength of our platform by continuing to make strategic investments in our business to grow our top-line and increase overall productivity and efficiency to drive sustainable long-term growth.”

Board of Directors Forms Special Committee and Appoints Independent Advisors

The Company's Board of Directors formed an independent committee (the “Committee”) comprised of Robert J. McKenna, William G. Gisel, Jr. and Howard Zemsky to consider a formal proposal the Company received on October 29, 2012 from Daniel G. Keane, Director, President and Chief Executive Officer, and Kevin T. Keane, Chairman of the Board, to acquire the Company for $7.20 in cash per share. Mr. McKenna will serve as Chairman.

The committee has appointed Western Reserve Partners LLC as its independent financial advisor and Harter Secrest & Emery LLP as its legal counsel. The independent advisors are assisting the Committee with its work in connection with the proposal. No final decisions have been made by the Committee with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other proposal will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

Webcast and Conference Call

MOD-PAC will host a conference call and webcast today at 10:30 a.m. Eastern Time. During the conference call and webcast, management will review the financial and operating results for the period, followed by a question-and-answer session.

The conference call can be accessed by dialing (201) 689-8562. The listen-only audio webcast can be monitored at www.modpac.com.

The telephonic replay will be available from 1:30 p.m. ET the day of the call until Wednesday, February 13, 2013. To listen to the archived call, dial (858) 384-5517 and enter conference ID number 407402. An archive of the webcast will be available on the Company’s website at www.modpac.com, along with a transcript, once available.

About MOD-PAC CORP.

MOD-PAC CORP. is a leading designer and manufacturer of folding carton packaging employing high value-added services and on-demand delivery. MOD-PAC provides CUSTOM FOLDING CARTONS for branded and private label consumer products in the food and food service, healthcare, medical and automotive industries. The Company also offers a line of STOCK PACKAGING primarily to the retail confectionary industry. MOD-PAC also has a PERSONALIZED PRINT product line that offers a comprehensive line of products for consumer and corporate social occasions.

MOD-PAC’s strategy for growth is to leverage its capabilities to innovate and aggressively integrate technology into its production operations providing cost-effective solutions for its customers. Applying its lean manufacturing processes, coupled with state-of-the-art printing technologies, MOD-PAC is able to address short-run, highly variable content needs of its customers with quick turn-around times relative to industry standards.

Additional information on MOD-PAC can be found at its website: http://www.modpac.com.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. One can identify these forward-looking statements by the use of the words such as "expect," "anticipate," "plan," "may," "will," "estimate" or other similar expressions. Because such statements apply to future events, they are subject to risks and uncertainties that could cause the actual results to differ materially. Important factors, which could cause actual results to differ materially, include market events, competitive pressures, changes in technology, customers preferences and choices, success at entering new markets, the execution of its strategy, marketing and sales plans, the rate of growth of internet related sales, the effectiveness of agreements with print distributors and other factors which are described in MOD-PAC’s annual report on Form 10K on file with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise.

FINANCIAL TABLES FOLLOW.

EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation and amortization and option expense. EBITDA is not a measure determined in accordance with generally accepted accounting principles in the United States, commonly known as GAAP. Nevertheless, MOD-PAC believes that providing non-GAAP information such as EBITDA is important for investors and other readers of MOD-PAC's financial statements, as it is used as an analytical indicator by MOD-PAC's management. Because EBITDA is a non-GAAP measure and is thus susceptible to varying calculations, EBITDA, as presented, may not be directly comparable to other similarly titled measures used by other companies.

CONTACT:
For more information:
Kei Advisors LLC
Deborah K. Pawlowski, 716-843-3908
Dpawlowski@keiadvisors.com