Exhibit 99-1
FOR IMMEDIATE RELEASE Contact: David E. Bosher
Senior Vice President and CFO
(804) 287-5685
CADMUS COMMUNICATIONS THIRD QUARTER RESULTS MEET REVISED FORECAST
RICHMOND, VA (May 1, 2001) -- Cadmus Communications Corporation (Nasdaq/NM:
CDMS) today announced earnings for its fiscal third quarter of $.06 per share,
before restructuring and other charges. The earnings were in line with revised
forecasts announced in early April. Financial highlights for the three months
ended March 31, 2001, were as follows:
. STM journal services registered a 3% sales gain, led by an 8% growth in
pages and a corresponding 5% increase in content management revenues;
. Professional books and directories sales rose 19%;
. Continued softness in the U. S. economy and lower advertising spending led
to declines in special interest magazines and specialty packaging sales of
2% and 11%, respectively;
. Operating income before restructuring and other charges totaled $7.0
million, which included operating losses from closed and consolidated
operations and additional costs incurred in connection with certain
strategic and operational initiatives;
. Cash earnings before restructuring and other charges totaled $1.8 million,
or $.20 per share;
. Total cash flow of $9.7 million led to a $7.6 million reduction in total
debt; and
. Restructuring and other charges of $15.5 million, pre-tax, were recorded
to consolidate facilities, rationalize capacity and reduce costs.
Commenting on the announcement, Bruce V. Thomas, president and chief executive
officer, noted, "The results for the third quarter were in line with our
announcement last month about the broad trends in our business. The
restructuring and other charges we recorded this quarter, most of which were
non-cash, relate to actions taken to consolidate capacity and eliminate
unprofitable operations in our specialty packaging and commercial printing
businesses, which have been impacted significantly by the general slowdown in
the economy.
Thomas added, "We are pleased with the continued revenue growth from our core
STM journal services and books and directories businesses. Journal services
sales rose 3%, reflecting higher content management revenues driven by ongoing
growth in pages. Professional books and directories sales were up 19%, driven
by continued solid demand and market share gains. Our focus this year has been
to position these important businesses for sustained growth. We are
implementing new content management software platforms, consolidating article
reprint operations, consolidating STM journal fulfillment operations, and
completely digitizing our pre-press operations. These initiatives, which will be
completed in our fiscal fourth quarter, resulted in approximately $1.4 million
of incremental costs during the third quarter and will also affect our fiscal
fourth quarter to a somewhat lesser extent. We are now well positioned to grow
our market-leading position in the professional and STM publications industry."
Commenting on these growth opportunities, Thomas said, "We have the opportunity
to capitalize on the increasing stand-alone value of content management in the
STM and professional publishing market. Accelerating page growth is shifting the
economics of our business toward content management services where we provide
significant value in expediting the STM publishing process and assisting in the
multi-channel delivery of STM information. Since most of our value-added sales
to the STM market come from either content management or first-copy revenues,
the aggressive growth of pages and content management-related services is
integral to our business model. We have added sales, marketing and
technological resources to this higher-margin component of our business, which
we intend to grow by increasing our volume with existing accounts and broadening
our customer base."
David E. Bosher, senior vice president and chief financial officer, added, "We
recognized restructuring and other charges in the third quarter of $15.5
million, or $1.13 per share after taxes. Although these charges led to a net
loss for the third quarter and the first nine months of $1.07 per share and
$0.61 per share, respectively, we continued to generate substantial positive
cash flow. Total cash flow in the third quarter was $9.7 million, allowing us to
reduce total debt by $7.6 million to $227.7 million. Through the first nine
months of fiscal 2001, total cash flow has totaled $14.7 million and we have
reduced total debt, before securitization, by $18.3 million. We remain on track
to achieve a reduction in total debt of at least $20 million for the full year."
Bosher added, "The actions we have taken to eliminate the operating losses from
the closed and consolidated operations should be completed by the end of our
fourth fiscal quarter. Lower costs associated with the completion of our
various strategic and operational initiatives, and reduced interest costs due to
debt reduction and lower interest rates will be additional positive factors as
we move into fiscal 2002."
Fiscal Third Quarter Operating Results - Detailed Review
- --------------------------------------------------------
Net sales for the third quarter totaled $121.9 million, compared with $121.7
million last year. Publication Services segment (STM journal services, special
interest magazines, and book and directory businesses) sales rose 2% from a year
ago, led by 3% growth in STM journal sales and a 19% increase in professional
books and directories sales. Partially offsetting these gains was a 2% decline
in special interest magazine sales that resulted from lower advertising spending
and soft commercial printing markets. Other segment sales declined 9% in the
quarter due primarily to lower specialty packaging sales that were attributable
to industry-wide softness.
Operating income before restructuring and other charges totaled $7.0 million in
the third quarter compared to $11.3 million last year. Third quarter operating
income included operating losses of $1.1 million from the Company's Atlanta-
based packaging logistics and Graphic Solutions operations. Both of these
operations are being closed or consolidated with other businesses.
Consolidation costs and other expenses related to certain strategic and
operational initiatives also reduced third quarter operating income by
approximately $1.4 million. After restructuring and other charges, the Company
recorded an operating loss in the third quarter of $8.5 million.
EBITDA in the third quarter totaled $13.7 million, adjusted for restructuring
and other charges. Total debt, before securitization, was $227.7 million at
March 31, 2001, compared to $235.4 million at December 31, 2000.
The Company's tax rate on earnings before restructuring and other charges for
the third quarter was 67.7%, up from 41.5% for the first six months of fiscal
2001. This increase, which reduced earnings per share by $.05 in the third
quarter, was due to the cumulative adjustment of the effective tax rate for the
first nine months to the revised estimated tax rate of 45.2% for fiscal 2001.
Income, before restructuring and other charges, for the third quarter totaled
$0.5 million, or $0.06 per share, compared with $3.2 million, or $0.36 per
share, last year. After the restructuring and other charges, the Company
recorded a net loss in the third quarter of $9.5 million, or $1.07 per share,
versus net income of $1.8 million, or $0.21 per share a year ago. Restructuring
and other charges recorded in the third quarter of fiscal 2001 principally
included the consolidation of the Atlanta-based packaging logistics operations,
the consolidation of two commercial and magazine printing operations and other
actions to reduce operating costs. Restructuring and other charges recorded in
the third quarter a year ago principally included the consolidation of the
Company's back issue fulfillment operations and elimination of overhead related
to the integration of Mack Printing with the Company's publications services
operations.
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' (the "Company") 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, (8) the ability to successfully complete
certain consolidation initiatives and effect other restructuring actions, and
(9) 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 Nine Months Ended
March 31, March 31,
------------------------------ ------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Net sales $ 121,911 $ 121,706 $ 363,657 $ 377,859
------------ ------------ ------------ ------------
Operating expenses:
Cost of sales 99,031 93,998 291,489 295,635
Selling and administrative expenses 15,849 16,407 44,061 51,409
Restructuring and other charges 15,490 1,583 17,896 34,144
------------ ------------ ------------ ------------
130,370 111,988 353,446 381,188
------------ ------------ ------------ ------------
Operating income (loss) (8,459) 9,718 10,211 (3,329)
------------ ------------ ------------ ------------
Interest and other expenses:
Interest 4,833 5,661 14,974 17,658
Securitization costs 663 465 2,233 876
Other, net (21) (186) (90) (434)
------------ ------------ ------------ ------------
5,475 5,940 17,117 18,100
------------ ------------ ------------ ------------
Income (loss) before income taxes (13,934) 3,778 (6,906) (21,429)
Income tax expense (benefit) (4,390) 1,929 (1,473) (3,376)
------------ ------------ ------------ ------------
Net income (loss) $ (9,544) $ 1,849 $ (5,433) $ (18,053)
============ ============ ============ ============
Earnings per share, assuming dilution:
Net income (loss) per share $ (1.07) $ .21 $ (.61) $ (2.00)
============ ============ ============ ============
Weighted-average common shares
outstanding 8,938 8,997 8,938 9,008
============ ============ ============ ============
Cash dividends per common share $ .05 $ .05 $ .15 $ .15
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SELECTED HIGHLIGHTS
(In thousands, except per share data and percents)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------------------- -------------------------------
2001 2000 2001 2000
------------ ----------- ----------- -----------
Operating data, before restructuring and other
charges (1)
Operating income $ 7,031 $ 11,301 $ 28,107 $ 30,815
Income 504 3,246 6,023 7,438
EBITDA (2) 13,675 18,122 47,980 50,784
Depreciation & amortization expense 6,623 6,635 19,783 19,535
Percent to net sales:
Gross profit 18.8% 22.8% 19.8% 21.8%
Selling, general and administrative expenses 13.0% 13.5% 12.1% 13.6%
Operating income 5.8% 9.3% 7.7% 8.2%
EBITDA 11.2% 14.9% 13.2% 13.4%
Earnings per share, assuming dilution $ .06 $ .36 $ .67 $ .83
Earnings per share, before amortization expense
and restructuring and other charges $ .20 $ .50 $ 1.10 $ 1.27
(1) Before restructuring and other charges of $15.5 million ($10.0 million net
of taxes) and $1.6 million ($1.4 million net of tax) for the three months
ended March 31, 2001 and 2000, respectively, and $17.9 million ($11.5 million
net of taxes) and $34.1 million ($25.5 million net of tax) for the nine months
ended March 31, 2001 and 2000, respectively.
(2) Earnings before interest, taxes, depreciation, amortization and
securitization costs
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
March 31,
2001 June 30,
(unaudited) 2000
------------------- ----------------
Assets:
Cash and cash equivalents $ 2,843 $ 6,411
Accounts receivable, net 39,930 31,992
Inventories 25,582 25,297
Other current assets 10,465 12,808
Property plant and equipment, net 141,579 150,979
Other assets, net 187,902 195,697
------------------- ----------------
Total assets $ 408,301 $ 423,184
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Liabilities and shareholders' equity:
Current liabilities, excluding current debt 76,196 65,661
Total debt (net of securitization) 186,296 201,705
Other long-term liabilities 34,642 37,876
Shareholders' equity 111,167 117,942
------------------- ----------------
Total liabilities and shareholders' equity $ 408,301 $ 423,184
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