Exhibit 99-1
FOR IMMEDIATE RELEASE Contact: David E. Bosher
Senior Vice President and CFO
(804) 287-5685
CADMUS COMMUNICATIONS REPORTS SECOND QUARTER EARNINGS OF $0.32 PER SHARE
BEFORE SPECIAL CHARGE
RICHMOND, VA (Jan. 31, 2001) -- Cadmus Communications Corporation (Nasdaq/NM:
CDMS) today announced results for the second quarter of its fiscal year 2001.
Financial highlights for the three months ended December 31, 2000, were as
follows:
. STM journal services sales rose 4%;
. Specialty packaging sales declined 33%, due to December order cancellations
and softness in overall demand;
. Operating margins, before special charges, were 8.4% of sales;
. Excluding goodwill amortization, income before special charges totaled $0.46
per share;
. EBITDA before special charges totaled $17.1 million; and
. Debt, before securitization, was reduced to $235.4 million.
Commenting on the quarter, Bruce V. Thomas, president and chief executive
officer, remarked "Our publication services businesses produced another good
quarter, led by a strong performance from our STM journal services business.
These businesses operate to a large extent under long-term contracts and thus
have been less sensitive to the overall economy. We have benefited from growth
in the total number of STM (scientific, technical, and medical) journal pages
produced. We also are positioned to capitalize on the opportunities presented
by changes occurring in the STM publishing process - most notably a movement
toward more article-based publishing. Those changes should play directly to our
core content management strengths. We have the advantage of being the largest
manager of content in the STM market and have been moving aggressively to
capitalize on this position by introducing new capabilities and services to
facilitate on-line and article-based delivery."
Thomas added, "As we capitalize on these evolving content management
opportunities, we continue to focus on increasing our productivity and
efficiency. To that end, during the second quarter we commenced operations at
our new content management facility in Mumbai, India. This facility increases
our capacity and replicates, in a global environment, our industry-leading
content management work flows, helping to ensure the fast turnaround times and
accuracy levels that are our trademarks. We expect its positive contribution to
become more evident in our results during the latter part of this fiscal year."
"By contrast," Thomas continued, "our specialty packaging operations did not
meet our expectations for the second quarter. Although we started the period
with strong backlogs, we experienced delays and cancellations in orders later in
the second quarter as the economy slowed. We have reduced our costs and have
been successful in securing new accounts, but we have been unable to offset the
impact of this industry-wide softness in demand. We are continuing to look at
opportunities to reduce costs and to shift the focus of this business toward
less cyclical markets. Although it appears that, absent a meaningful
strengthening of the economy, we will not see much improvement over the short
term from our specialty packaging unit, we remain positive about the longer term
growth potential for this portion of our business."
David E. Bosher, senior vice president and chief financial officer, added, "We
recognized a special charge for the second quarter of $1.7 million, or $0.11 per
share after taxes, related to post-closing contingencies and other facility
closure costs associated with the sale of our Dynamic Diagrams subsidiary, which
we announced in September 2000. Although this charge reduced our reported net
income, we remained solidly profitable and continued to generate positive cash
flow. Through the first six months of fiscal 2001, we generated $34.3 million
in EBITDA and reduced our debt, before securitization, to $235.4 million at
December 31, 2000. We remain on track to achieve a reduction in total debt of
at least $20 million for the full year."
Fiscal Second Quarter Operating Results - Detailed Review
- ---------------------------------------------------------
Net sales for the second quarter totaled $126.0 million, compared with $131.4
million last year. Adjusted for divested and closed operations, net sales
totaled $125.7 versus $127.9 million last year. Publication Services segment
(STM journal services, special interest magazines, and book and directory
businesses) sales increased 2.4% from a year ago, led by 4% growth in STM
journal sales. Other segment sales declined 19.1% in the quarter due primarily
to lower specialty packaging sales, which were attributable to industry-wide
softness and cancellations of orders.
EBITDA in the second quarter totaled $17.1 million, essentially flat with a year
ago, adjusted for restructuring and other charges. Total debt, before
securitization, was $235.4 million at December 31, 2000.
Income for the second quarter totaled $2.8 million, or $0.32 per share, compared
with $2.7 million, or $0.30 per share, last year, excluding restructuring and
special charges. Excluding goodwill amortization, income for the second quarter
was $0.46 per share compared to $0.44 last year, excluding restructuring and
other charges. The Company recorded net income in the second quarter of $1.9
million, or $0.21 per share, versus a net loss of $7.3 million, or $0.81 per
share a year ago. Restructuring and other charges recorded in the second
quarter a year ago included the write-off of intangible assets related to the
Company's point-of-purchase business, the write-off of redundant manufacturing
software resulting from the integration of Mack and a net gain on the closure
and divestiture of two marketing agencies.
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 content management and
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 packaging products and services.
Additional information about Cadmus is available at www.cadmus.com.
"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 risks
and uncertainties that could cause actual results to differ materially.
Potential risks and uncertainties include but are not limited to: (1) the
overall economic environment in North America, (2) the ability of the Company to
develop and market new capabilities and services to take advantage of changes in
the STM journals publishing process and the Company's content management
business, (3) continuing competitive pricing in the markets in which the Company
competes, (4) the gain or loss of significant customers or the decrease in
demand from existing customers, (5) the ability of the Company to continue to
obtain improved efficiencies and lower overall production costs, (6) changes in
the Company's product sales mix, (7) the impact of industry consolidation among
key customers, and (8) the ability of the Company to operate profitably and
effectively with high levels of indebtedness. The information included in this
release is representative only on the date hereof, and the Company undertakes no
obligation to update any forward-looking statements made.
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,
---------------------------- ------------------------------
2000 1999 2000 1999
----------- ------------ ------------ ------------
Net sales $ 126,014 $ 131,396 $ 241,746 $ 256,153
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Operating expenses:
Cost of sales 101,575 102,940 192,458 201,637
Selling and administrative expenses 13,886 17,455 28,212 35,002
Restructuring and other charges 1,650 15,971 2,406 32,561
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117,111 136,366 223,076 269,200
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Operating income (loss) 8,903 (4,970) 18,670 (13,047)
----------- ------------ ------------ ------------
Interest and other expenses:
Interest 4,901 5,830 10,141 11,997
Securitization costs 810 411 1,570 411
Other, net 13 58 (69) (248)
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5,724 6,299 11,642 12,160
----------- ------------ ------------ ------------
Income (loss) before income taxes 3,179 (11,269) 7,028 (25,207)
Income tax expense (benefit) 1,319 (4,000) 2,917 (5,305)
----------- ------------ ------------ ------------
Net income (loss) $ 1,860 $ (7,269) $ 4,111 $ (19,902)
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Earnings per share, assuming dilution:
Net income (loss) per share $ .21 $ (0.81) $ .46 $ (2.21)
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Weighted-average common shares
outstanding 8,938 9,014 8,938 9,014
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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,
--------------------------------- --------------------------------
2000 1999 2000 1999
------------ ----------- ----------- -----------
Operating data, before restructuring and other
charges (1)
Operating income $ 10,553 $ 11,001 $ 21,076 $ 19,514
Income 2,825 2,680 5,519 4,192
EBITDA (2) 17,103 17,122 34,304 32,662
Depreciation & amortization expense 6,563 6,171 13,159 12,892
Percent to net sales:
Gross profit 19.4% 21.7% 20.4% 21.3%
Selling, general and administrative 11.0% 13.3% 11.7% 13.7%
expenses
Operating income 8.4% 8.4% 8.7% 7.6%
EBITDA 13.6% 13.0% 14.2% 12.8%
Earnings per share, assuming dilution $ .32 $ .30 $ .62 $ .47
Earnings per share, before amortization expense
and restructuring and other charges $ .46 $ .44 $ .91 $ .76
(1) Before restructuring and other charges of $1.7 million ($1.0 million net
of taxes) and $16.0 million ($10.0 million net of tax) for the three
months ended December 31, 2000 and 1999, respectively, and $2.4 million
($1.4 million net of taxes) and $32.6 million ($24.1 million net of tax)
for the six months ended December 31, 2000 and 1999, respectively.
(2) Earnings before interest, taxes, depreciation, amortization and
securitization costs
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
December 31,
2000 June 30,
(unaudited) 2000
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Assets:
Cash and cash equivalents $ 775 $ 6,411
Accounts receivable, net 41,829 31,992
Inventories 29,809 25,297
Other current assets 13,117 12,808
Property plant and equipment, net 145,234 150,979
Other assets, net 190,729 195,697
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Total assets $ 421,493 $ 423,184
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Liabilities and shareholders' equity:
Current liabilities, excluding current debt 72,915 65,661
Total debt (net of securitization) 188,487 201,705
Other long-term liabilities 38,932 37,876
Shareholders' equity 121,159 117,942
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Total liabilities and shareholders' equity $ 421,493 $ 423,184
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