Exhibit 99.1
NEWS RELEASE
CONTACT
David E. Bosher
Vice President & Treasurer
(804) 287-5685
CADMUS COMMUNICATIONS CORPORATION ANNOUNCES
SECOND QUARTER RESULTS
RICHMOND, VA, January 23, 1997 - Cadmus Communications Corporation (NASDAQ
NMS:CDMS) today reported net income of $2.2 million, or $.27 per share, for its
second quarter ended December 31, 1996. Net income for the same quarter of
fiscal 1996 amounted to $1.9 million, or $.26 per share. Income before
extraordinary item was $2.7 million, or $.38 per share in the second quarter of
1996. There were 8,061,000 average outstanding shares for the second quarter of
fiscal 1997, compared to 7,458,000 average outstanding shares for the same
period of last year.
Sales for the second quarter of fiscal 1997 were $97.2 million, up 13% from
sales of $85.8 million recorded in the second quarter of fiscal 1996. This
increase was primarily attributable to acquisitions and internal growth from the
Company's Periodicals and Graphic Communications Groups. Periodicals Group sales
increased 33% due to the inclusion of Lancaster Information Group, acquired in
May 1996, and continued internal growth in the Company's research journal
business. Offsetting these gains was a 27% decline in magazine sales. Graphic
Communications Group sales rose 8% due to the inclusion this year of Cadmus
Technology Solutions, acquired in November 1995, and continued strong growth
from the Company's specialty packaging and financial communications product
lines. Marketing Group sales declined 13% in the second quarter due to lower
revenues from custom publishing and interactive. Last year's second quarter
results included $2.4 million of sales from the Company's consumer publishing
business, which was divested in the first quarter of fiscal 1997.
Gross margins declined to 21.7% of sales in the second quarter of fiscal 1997
from 24.2% last year due to lower sales and higher production costs in the
Marketing Group and excess manufacturing capacity in the Graphic Communications
Group. Partially offsetting these negative factors were gross margin
improvements in the Company's periodicals business and continued favorable
impact from the integration of Lancaster Information Group.
Operating income rose 2% in the second quarter to $5.9 million, but declined as
a percent of sales to 6.1% from 6.7% last year. However, the second quarter
operating margin represented improvement from the 5.7% operating margin of the
first quarter of fiscal 1997.
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C. Stephenson Gillispie, Jr., Cadmus president and chief executive officer,
stated, "We are pleased with the continued improvement in our operations this
quarter. Our second quarter results are in line with our expectations and
represent consistent progress compared to our first quarter of fiscal 1997 and
fourth quarter of fiscal 1996."
Gillispie added, "We are particularly pleased with the continued growth in the
profitability of our Periodicals Group. Influenced by positive gross margin
trends, lower SG&A costs, and growth in the base research journal business,
Periodicals Group operating margins improved further in the second quarter. In
addition, financial performance from Lancaster continues to exceed our
expectations. However, we continued to experience softness in our
point-of-purchase product line and from several of our marketing businesses.
Improvement in these businesses is critical to achieving our financial targets
for the remainder of fiscal 1997. We believe that with new management in place
at custom publishing and interactive, solid business development activities with
prospective full-service clients, and continued aggressive actions to
rationalize our costs to existing revenues levels, we will see improving
performance from these businesses in the second half of fiscal 1997."
Net income for the six-month period ended December 31, 1996 was $3.9 million, or
$.48 per share compared to $3.5 million, or $.50 per share, recorded in the same
period of last year. Income before extraordinary item was $4.3 million, or $.62
per share, for the six-month period ended December 31, 1995. Average shares
outstanding were 8,045,000 and 6,886,000 for the first six months of fiscal 1997
and 1996, respectively. Sales for the six months ended December 31, 1996 totaled
$191.2 million, representing a 19% increase over the $160.5 million recorded in
the same period last year.
Cadmus Communications Corporation is an integrated communications company
offering products and services in three broad areas: periodicals, graphic
communications, and marketing. Headquartered in Richmond, Virginia, Cadmus is
one of the largest graphic communications companies in North America.
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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) continuing
competitive pricing in the markets in which the Company competes, (2) the gain
or loss of significant customers or the decrease in demand from existing
customers, (3) the timing of significant orders received from customers, (4)
seasonal changes in the demand for the Company's products, (5) changes in the
Company's product sales mix, (6) continued success in the integration of
recently acquired businesses, and (7) the performance of new management and
leadership teams in the Company and its divisions.
**(See attached financial highlights)**
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
------------------------------- ---------------------------
1996 1995 1996 1995
---------- ----------- ----------- ----------
Net sales $ 97,232 $ 85,835 $ 191,154 $ 160,508
Operating expenses:
Cost of sales 76,167 65,090 148,874 121,893
Selling and administrative 15,175 14,988 31,276 28,906
Restructuring gain --- --- (250) ---
--------- -------- ---------- ---------
91,342 80,078 179,900 150,799
Operating income 5,890 5,757 11,254 9,709
Interest and other expenses:
Interest 2,093 1,395 4,169 2,817
Other, net 272 (23) 783 34
--------- -------- ---------- ---------
2,365 1,372 4,952 2,851
Income before income taxes and extraordinary
item 3,525 4,385 6,302 6,858
Income taxes 1,343 1,649 2,426 2,606
--------- -------- ---------- ---------
Income before extraordinary item 2,182 2,736 3,876 4,252
Extraordinary loss on early extinguishment
of debt (net of income tax benefit of $487) --- 795 --- 795
--------- -------- ---------- ---------
Net income $ 2,182 $ 1,941 $ 3,876 $ 3,457
========= ======== ========== =========
Earnings per share:
Income before extraordinary item $ .27 $ .38 $ .48 $ .62
Extraordinary loss on early
extinguishment of debt --- .12 --- .12
--------- -------- ---------- ---------
Net income per share $ .27 $ .26 $ .48 $ .50
========= ======== ========== =========
Weighted average common shares
outstanding 8,061 7,458 8,045 6,886
========= ======== ========== =========