EXHIBIT 99-1
FOR IMMEDIATE RELEASE CONTACT: Teri Schrettenbrunner
Corporate Communications Director
(804) 287-6260
CADMUS COMMUNICATIONS ANNOUNCES FIRST QUARTER RESULTS
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EARNINGS OF $0.17 PER SHARE RECORDED BEFORE RESTRUCTURING CHARGES
RICHMOND, VA (Nov. 2, 1999) - Cadmus Communications Corporation (Nasdaq/NM:
CDMS) today announced earnings before restructuring charges of $1.5 million, or
$0.17 per share, for the first quarter of its fiscal 2000 year. Financial
highlights for the three months ended September 30, 1999, were as follows:
o net sales increased 25% to $124.8 million compared with $99.8 million
last year;
o net income, before restructuring charges, totaled $1.5 million, or
$0.17 per share;
o after-tax charges of $14.1 million, or $1.56 per share, were recorded
for the quarter as part of the restructuring plan announced last month;
o EBITDA, adjusted for the restructuring charges, rose 40% to $15.5
million compared with $11.1 million; and,
o strong cash flows resulted in a $16 million debt reduction.
"The results for the first fiscal quarter were in line with our earlier
announcements," remarked C. Stephenson Gillispie, Jr., Cadmus' chairman,
president, and chief executive officer. "Excluding the effect of the
restructuring charges, first quarter earnings were adversely impacted by a net
operating loss of $1.9 million from our point of purchase (POP) business unit,
which we recently decided to close. The major portion of the charges recorded in
the first quarter relates to the closure of this business, which we expect to
complete next month. As anticipated, we will be recording an additional
restructuring charge in the second quarter related to the completion of the POP
closure and the other actions we are taking to focus our resources on the
professional communications and specialty packaging markets. We continue to
expect that these steps will be substantially complete by the end of fiscal 2000
and that the annual savings from these changes will total at least $6 million."
Gillispie continued, "One of our key goals for fiscal 2000 has been to reduce
our financial leverage. EBITDA, excluding restructuring charges, rose 40% in the
first quarter to $15.5 million. We were able to use our cash flow from
operations to reduce debt by over $16 million during the quarter. We are
committed to making the appropriate investments in our business units to support
our future growth, but expect to generate sufficient funds in excess of our
operating and capital investment needs to continue to reduce our total debt."
Bruce V. Thomas, executive vice president and chief operating officer,
commented, "The gain in sales for the first quarter relates to continued strong
internal growth from our specialty packaging business and the incremental
contribution from the Mack Printing Group that we acquired in April of 1999. We
are pleased with the benefits to-date of this acquisition and expect its
positive impact to continue over the balance of this fiscal year. The sales
force within our professional communications group has now been integrated; and
as we effect the planned consolidation of redundant facilities and operations,
we expect not only increased operating efficiencies but also renewed growth in
net sales. In addition, our specialty packaging, technology solutions, and
graphic solutions businesses recorded excellent year-to-year gains in net sales
for the first quarter, extending the favorable momentum they achieved during
fiscal 1999."
FISCAL FIRST QUARTER OPERATING RESULTS - DETAILED REVIEW
Net sales for the first quarter rose 25% to $124.8 million. Adjusted for the
contribution from Mack and for divested operations, net sales increased 3% for
the first quarter from $85.4 million to $87.7 million. The company
continued to experience strong internal sales growth from its specialty
packaging, technology solutions, and graphic solutions businesses. Professional
communications sales were down slightly due to lower paper prices, changes in
sales mix, and a lull in new business development activities as the Mack-CJS
sales force was being integrated.
Operating income before restructuring charges increased 37% to $8.4 million from
$6.1 million last year and adjusted operating margins improved to 6.7% of sales
from 6.1% last year. EBITDA, adjusted for restructuring charges, totaled $15.5
million, up 40% from $11.1 million a year ago. Strong cash flow from operations
(approximately $13 million), combined with proceeds from the sale of the
Company's direct marketing operation, resulted in a reduction in total debt of
$16 million for the quarter, leaving total debt at $259.5 million at the close
of the quarter.
Net income for the first quarter, excluding restructuring charges, totaled $1.5
million, or $0.17 per share, compared with $2.5 million, or $0.31 per share last
year. After restructuring charges, the Company recorded a net loss in the first
quarter of $12.6 million, or $1.39 per share, compared to net income of $2.5
million, or $.31 per share, in the same period last year.
Restructuring charges recorded in the first quarter include the write-off of
intangible assets related to the Company's POP 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. These charges
totaled $16.6 million before taxes and $14.1 million after taxes. The Company
expects an additional pre-tax charge in the second quarter of approximately $16
million to $21 million, related to the integration of Mack, the elimination of
certain corporate and marketing communications sector administrative costs, and
the completion of the POP business closure. Of the total pre-tax restructuring
charges of $33 million to $37 million, cash charges will comprise approximately
$4 million to $5 million.
Cadmus Communications Corporation provides customers with integrated, end-to-end
communications solutions. The Company is organized around two primary markets:
Professional Communications, serving customers who publish information, and
Marketing Communications, serving customers who convey marketing messages.
Additional information about Cadmus is available at the Company's web site -
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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
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
September 30,
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1999 1998
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Net sales $ 124,757 $ 99,784
Operating expenses:
Cost of sales 98,915 79,035
Selling and administrative 17,451 14,624
Restructuring charges 16,590 --
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132,956 93,659
Operating income (loss) (8,199) 6,125
Interest and other expenses:
Interest 6,167 2,143
Other, net (428) (134)
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5,739 2,009
Income (loss) before income taxes (13,938) 4,116
Income tax expense (benefit) (1,305) 1,585
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Net income (loss) $ (12,633) $ 2,531
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Net income (loss) per share, assuming dilution $ (1.39) $ .31
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Weighted-average common shares outstanding 9,080 8,206
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SELECTED HIGHLIGHTS
(In thousands, except per share data and percents)
(Unaudited)
Three Months Ended
September 30,
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1999 1998
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OPERATING DATA, BEFORE RESTRUCTURING CHARGES*:
Operating income $ 8,391 $ 6,125
Income 1,512 2,531
EBITDA 15,540 11,132
Depreciation & amortization expense 6,721 4,873
Percent to net sales
Gross profit 20.7% 20.8%
Selling, general and administrative expenses 14.0% 14.7%
Operating income 6.7% 6.1%
EBITDA 12.5% 11.2%
Earnings per share, assuming dilution $ .17 $ .31
* Before restructuring charges of $16.6 million ($14.1 million net of tax) in
fiscal 2000.
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
September 30, June 30,
1999 1999
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(Unaudited)
ASSETS:
Cash and cash equivalents $ 7,070 $ 5,068
Other current assets 128,595 135,190
Property, plant and equipment, net 163,730 173,085
Other assets 194,817 210,503
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TOTAL ASSETS $494,212 $523,846
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LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities, excluding current debt 72,188 73,292
Total debt 259,543 275,879
Other long-term liabilities 38,997 38,142
Shareholders'equity 123,484 136,533
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $494,212 $523,846
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