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Cadmus to Reduce Staff by 280, Blames Pricing Pressures, Slow Economy

Press release from the issuing company

RICHMOND, Va., April 3 - Among other cost cutting moves, Cadmus will reduce employment by 8% or 280 positions as it consolidates 2 printing plants. Cadmus Communications Corporation also announced additional actions to intensify the Company's focus on its core businesses and further reduce its exposure to the cyclical, highly price competitive commercial print market. Cadmus said that the actions announced today are prompted by the industry-wide impact of the slowing economy on commercial and magazine print demand. These actions will align resources and capacity to support growth opportunities within its core scientific, technical and medical (STM) journal and books and directories businesses. In February, Cadmus announced the decision to consolidate its technology-related logistics operations. The Company now plans additionally to consolidate its two Richmond-based commercial and magazine printing operations and reconfigure equipment to better service these markets. Cadmus will also be taking other actions to further reduce operating costs to reflect changes in demand. The Company said that these consolidations and cost saving initiatives will result in aggregate pre-tax charges of approximately $15.5 - $17.0 million, of which $11.0 million will be non-cash. The majority of the charges will be recognized in the fiscal third quarter ended March 31, 2001, and the balance is expected in the fiscal fourth quarter. The Company expects annualized cost savings of approximately $7.0 to $7.5 million before taxes as a result of these actions which, when completed, should generate approximately $13.0 million in net cash proceeds. Commenting on the announcement, Bruce V. Thomas, president and chief executive officer, noted, "Demand remains solid in our STM journal and books and directories businesses, which primarily serve the scientific, technical, and medical market. The consolidation among publishers has led to some pricing pressures, and we are experiencing higher costs related to several projects that will enhance our content-management and other STM journal services. Still, the fundamentals in these core businesses remain sound and offer us attractive growth potential. Our other operating units, however, have not been immune from much lower demand and increased competitive pressures in the commercial and magazine printing markets resulting from the economic slowdown and reduced advertising spending. These developments have affected the financial performance and prospects of both Cadmus and our industry peers."

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