Exhibit 99-1
FOR IMMEDIATE RELEASE Contact: David E. Bosher
Senior Vice President and CFO
(804) 287-5685
CADMUS COMMUNICATIONS REPORTS SECOND QUARTER RESULTS
----------------------
REPORTS EARNINGS OF $0.30 PER SHARE BEFORE RESTRUCTURING CHARGES
RICHMOND, VA (February 2, 2000) - Cadmus Communications Corporation (Nasdaq/NM:
CDMS) today announced earnings for its fiscal second quarter of $2.7 million, or
$0.30 per share, before restructuring charges. Financial highlights for the
three months ended December 31, 1999, included the following:
o Net sales increased 21% to $131.4 million compared with $108.8 million
last year;
o Income, before restructuring charges, totaled $2.7 million, or $0.30 per
share;
o Operating income before restructuring charges increased 58% to $11.0
million from $7.0 million last year;
o EBITDA, adjusted for the restructuring charges, rose 43% to $17.1 million
in the second quarter compared with $12.0 million last year, and
o After-tax charges of $10.0 million, or $1.11 per share, were recorded for
the quarter as part of the restructuring plan announced earlier in the
fiscal year.
"Excluding restructuring charges, earnings for our second fiscal quarter were up
77% from earnings of $0.17 per share in the first fiscal quarter," remarked C.
Stephenson Gillispie, Jr., Cadmus' chairman, president, and chief executive
officer. "This positive comparison reinforces the viability of our plan to
focus the Company's resources on the professional communications and specialty
packaging markets."
Gillispie continued, "We especially are encouraged by the improvement in our
ongoing operating results. In our professional communications business, we
continued to gain momentum in our new business development activities. In
addition, we again enjoyed strong revenue growth in our other businesses,
particularly our specialty packaging businesses. At the same time, our focus on
cash flow continues to produce solid results. During the first half, our strong
cash flows from operations have allowed us to reduce debt by more than $16
million. For the balance of the year, our focus will remain the same --
increased revenue growth, continued strong cash flow, and effective execution of
our restructuring-related actions."
Commenting on the status of the Company's restructuring, Bruce V. Thomas,
executive vice president and chief operating officer, added, "Much of our
managerial focus over the last quarter has been on moving the restructuring
actions along expeditiously and efficiently. We are nearing the end of that
process, and believe that these initiatives set the foundation for sustained
progress during the second half of this year and for fiscal 2001. In the
second quarter, we realized only a small portion of the substantial cost savings
that are expected to accrue from our restructuring plan. We continue to estimate
that the annualized improvement in operating income from our restructuring plan
will exceed $6 million and that we also will achieve approximately $1 million in
annual interest savings. Our goal remains to complete this restructuring by the
end of fiscal 2000. "
During the second quarter the Company completed the closure of its point of
purchase (POP) business unit and substantially accomplished the major steps of
its restructuring program. The Company recorded an after-tax restructuring
charge of $10.0 million, or $1.11 per share, for the second quarter consisting
primarily of write-off and closure costs from the point of purchase business and
severance-related charges. Since restructuring charges can be recognized only
as actions actually occur, the Company anticipates some additional - but much
smaller - charges in its fiscal third quarter related to its previously
announced integration initiatives.
Second Fiscal Quarter Operating Results - Detailed Review
Net sales for the second quarter rose 21% to $131.4 million. Adjusted for the
contribution from Mack and for divested operations, net sales increased 9% for
the second quarter from $79.2 million to $86.3 million. The Company continued to
experience strong internal sales growth from its specialty packaging, technology
solutions, and graphic solutions businesses.
Operating income before restructuring charges increased 58% to $11.0 million
from $7.0 million last year and adjusted operating margins improved to 8.4% of
sales from 6.4% last year. EBITDA, adjusted for the restructuring charge,
totaled $17.1 million compared with $12.0 million a year ago. Strong cash flow
from operations, combined with proceeds from the sale of the Company's direct
marketing operation, resulted in a reduction in total debt of $16.3 million for
the first half, exclusive of debt repaid through securitization of receivables.
Total debt was $232.2 million at December 31, 1999.
Income for the second quarter, excluding restructuring charges, totaled $2.7
million, or $0.30 per share, compared with $3.1 million, or $0.39 per share last
year. After restructuring charges, the Company recorded a net loss in the
second quarter of fiscal 2000 of $7.3 million, or $0.81 per share.
Restructuring and other charges for the second quarter totaled $16.0 million
before taxes and $10.0 million after taxes. These included the integration of
journal composition operations, the elimination of certain corporate and
marketing communications sector administrative costs, completion of the POP
business closure, and related exit costs and asset impairments. Of the total
pre-tax restructuring charges of $32.6 million for the first fiscal half, non-
cash charges comprised approximately $26.9 million. The Company expects
additional charges in its fiscal third quarter related to the additional
reductions in force in connection with the restructuring plan.
Cadmus Communications Corporation provides end-to-end, integrated graphic
communications services to professional publishers, not-for-profit societies,
and corporations. Cadmus is the largest provider of production services to
scientific, technical and medical journal publishers in the world, the fourth
largest publications printer in North America, and a leading national provider
of specialty package product and services. Additional information about the
Company is available at www.cadmus.com.
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"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: Information in this release relating to Cadmus' future prospects
and performance are "forward-looking statements" and, as such, are subject
to certain risks and uncertainties that could cause actual results to
differ materially. Potential risks and uncertainties include but are not
limited to: (1) the effective execution of the restructuring plan and the
successful integration of recent acquisitions, (2) continuing competitive
pricing in the markets in which the Company competes, (3) the gain or loss
of significant customers or the decrease in demand from existing
customers, (4) the ability of the Company to continue to obtain improved
efficiencies and lower overall production costs, (5) changes in the
Company's product sales mix, (6) the performance of new management and
leadership teams in the Company and its divisions, (7) the impact of
industry consolidation among key customers, (8) the ability of the Company
to operate profitably and effectively with higher levels of indebtedness,
and (9) the ability to retain key employees and managers in light of
lower-than-planned incentives and benefits.
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------- ------------------------------
1999 1998 1999 1998
----------- ------------ ------------ ------------
Net sales $ 131,396 $ 108,811 $ 256,153 $ 208,595
----------- ------------ ------------ ------------
Operating expenses:
Cost of sales 102,505 86,983 201,420 166,018
Selling and administrative 17,917 14,871 35,368 29,495
Restructuring and other charges 15,971 -- 32,561 --
----------- ------------ ------------ ------------
136,393 101,854 269,349 195,513
----------- ------------ ------------ ------------
Operating income (loss) (4,997) 6,957 (13,196) 13,082
----------- ------------ ------------ ------------
Interest and other expenses:
Interest 5,830 2,064 11,997 4,207
Securitization costs 411 -- 411 --
Other, net 31 (182) (397) (316)
----------- ------------ ------------ ------------
6,272 1,882 12,011 3,891
----------- ------------ ------------ ------------
Income (loss) before income taxes (11,269) 5,075 (25,207) 9,191
Income tax expense (benefit) (4,000) 1,954 (5,305) 3,539
----------- ------------ ------------ ------------
Net income (loss) $ (7,269) $ 3,121 $ (19,902) $ 5,652
=========== ============ ============ ============
Earnings per share, assuming dilution:
Net income (loss) per share $ (0.81) $ .39 $ (2.21) $ .70
=========== ============ ============ ============
Weighted-average common shares
outstanding 9,014 8,046 9,014 8,126
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Cash dividends per common share $ .05 $ .05 $ .10 $ .10
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SELECTED HIGHLIGHTS
(In thousands, except per share data and percents)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------------ -------------------------------
1999 1998 1999 1998
------------ ----------- ----------- -----------
Operating data, before restructuring charges:
Operating income $ 10,974 $ 6,957 $ 19,365 $ 13,082
Income 2,680 3,121 4,192 5,652
EBITDA* 17,114 11,977 32,654 23,109
Depreciation & amortization expense 6,171 4,838 12,892 9,711
Percent to net sales:
Gross profit 22.0% 20.1% 21.4% 20.4%
Selling, general and administrative 13.6% 13.7% 13.8% 14.1%
expenses
Operating income 8.4% 6.4% 7.6% 6.3%
EBITDA 13.0% 11.0% 12.7% 11.1%
Earnings per share, assuming dilution $ .30 $ .39 $ .47 $ .70
* Earnings before interest, taxes, depreciation, amortization and securitization
costs
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31, June 30,
1999 1999
(unaudited)
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Assets:
Cash and cash equivalents $ 944 $ 5,068
Accounts receivable, net 67,541 92,532
Inventories 28,313 30,586
Other current assets 9,807 12,072
Property plant and equipment, net 156,000 173,085
Other assets, net 194,521 210,503
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Total assets $ 457,126 $ 523,846
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Liabilities and shareholders' equity:
Current liabilities, excluding current debt 76,248 73,292
Total debt 232,248 275,879
Other long-term liabilities 32,866 38,142
Shareholders' equity 115,764 136,533
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Total liabilities and shareholders' equity $ 457,126 $ 523,846
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