RICHMOND, Va., Aug. 2 - Cadmus Communications Corporation today announced earnings per share of $0.11 and $0.78 for the fourth quarter and full fiscal 2001 year, respectively, before restructuring and other charges. Financial highlights for the three months and year ended June 30, 2001, were as follows:
* The Company's scientific, technical, and medical ("STM") journal
services division registered sales gains of 5% for the quarter, led by
a double-digit increase in content management revenues and a strong 13%
increase in pages;
* The professional books and directories division continued its revenue
growth, posting a 7% increase for the quarter;
* Continued softness in the U. S. economy and lower advertising spending
led to a decline in special interest magazines revenue of 6%, excluding
operations now discontinued;
* "Cash earnings per share" (earnings per share before goodwill
amortization, restructuring and other charges) totaled $0.24 and $1.34
for the fourth quarter and full year, respectively;
* The Company reduced total debt (including securitization debt) in the
fourth quarter by $6.8 million, bringing full year debt reduction to
$25.0 million. In addition, the Company generated cash flow and EBITDA
for fiscal 2001 of $21.7 million and $61.3 million, respectively; and
* Restructuring and other charges of $19.9 million, pre-tax, were
recorded for fiscal 2001 to consolidate facilities, rationalize
capacity and reduce costs.
"This quarter's operating results, which were in line with expectations, were achieved in a challenging economic environment,'' remarked Bruce V. Thomas, president and chief executive officer. "As a result of the continuing economic slowdown, we have seen softness in overall demand, particularly in our special interest magazine and specialty packaging divisions. However, our STM journal services and professional books and directories divisions continue to post solid revenue gains, demonstrating again the resistance of these markets to economic volatility. In fact, these divisions recorded year-over- year revenue gains in each quarter of fiscal 2001, confirming the positive impact of our more market-focused approach and the investments we have made to enhance our content management capabilities.''
Continuing, Thomas noted, "We are particularly pleased by the results generated by our STM content management operations.For the fourth quarter, pages increased 13%; and content management revenues increased by approximately the same percentage. During the year, we invested heavily in enhancing our content management capabilities -- launching new versions of Rapid Review(TM), our peer review system, introducing s-Proof(TM), our web-based author proofing system, developing an SGML/XML ''on demand" capability, and significantly expanding our content management capacity by establishing an offshore facility in India. These enhancements are helping us gain market share and capitalize on the favorable page growth trends in the STM and related scholarly markets. We will continue to invest aggressively in these enhanced capabilities and increased capacity in fiscal 2002.''
"Our special interest magazine and specialty packaging divisions continue to be adversely affected by the difficult economic environment in the U.S.,'' Thomas added. "However, during the fourth quarter, we completed a number of key steps intended to streamline these divisions and improve their overall competitiveness. As we enter fiscal 2002, our task in these divisions is to use these enhanced capabilities and the strides they have made in penetrating less cyclical markets to gain share and regain revenue growth. In the interim, these divisions will continue to control costs and work to capture the operational efficiencies generated by our recent restructuring actions.''
Bruce G. Willis, interim chief financial officer, said, "We recognized restructuring and other charges for fiscal 2001 of $19.9 million, or $1.51 per share after taxes. Although these charges led to net losses for the fourth quarter and full year, we continued to generate substantial positive cash flow. Total cash flow for fiscal 2001 was $21.7 million, allowing us to reduce total debt (including securitization debt) by $25.0 million to $221.0 million. We expect to continue reducing our debt during fiscal 2002 and should benefit from both lower levels of borrowings and lower interest rates.''
Commenting on the outlook for fiscal 2002, Thomas stated, "The uncertainty surrounding the general economy makes it difficult to offer a specific projection for our operating results for the full year. We do believe that based on current trends, earnings in the first fiscal quarter, which is not historically our strongest, will likely be comparable to the level of operating profit in the fourth quarter of fiscal 2001. The momentum we are seeing in our STM journals and books and directories divisions, together with the benefits of lower debt levels and the restructuring actions we have implemented, will clearly provide an underlying impetus for progress. We expect meaningful and sequential improvement in operating earnings as we move from the first quarter through fiscal 2002. Finally, we will decide by September, 2001 whether to adopt Statement of Financial Accounting Standards 142 (which requires that goodwill not be amortized but instead be tested for impairment annually) in fiscal 2002 or fiscal 2003. We estimate that the adoption of this new Standard would add approximately $0.50 per share to our annual earnings.''
Fiscal Fourth Quarter Operating Results -- Detailed Review
Net sales for the fourth quarter, excluding divested and now discontinued operations, totaled $107.3 million, compared with $105.9 million in the year- earlier period. Publication Services segment (STM journal services, special interest magazines, and book and directory businesses) sales were flat, with growth in STM journal and professional books and directories sales offsetting a 6% decline in special interest magazine sales. This decline resulted from continued reduction in advertising pages. Specialty packaging sales increased 4% in the quarter, again excluding now discontinued operations. This revenue growth indicates the progress being made to reposition this division into pharmaceutical and other markets less economically cyclical.
Operating income before restructuring and other charges totaled $7.0 million in the fourth quarter compared to $11.5 million in the year-earlier period. Fourth quarter operating income included operating losses from the Company's Atlanta-based packaging logistics and Graphic Solutions operations that have been closed or consolidated with other businesses as well as expenses related to the consolidation of now-closed facilities. In addition, the Company also continued spending on content management and related operational initiatives. After restructuring and other charges, the Company recorded operating income in the fourth quarter of $5.0 million.
Income, before restructuring and other charges, for the fourth quarter totaled $1.0 million, or $0.11 per share, compared with $3.3 million, or $0.37 per share, in the year-earlier period. After restructuring and other charges, the Company recorded a net loss in the fourth quarter of $1.1 million, or $0.12 per share, versus net income of $2.0 million, or $0.23 per share, a year ago. Restructuring and other charges recorded in the fourth quarter of fiscal 2001 principally included the consolidation of the Atlanta-based packaging logistics operations, the consolidation of two commercial and magazine printing operations in Richmond, and other actions to reduce operating costs. Restructuring and other charges recorded in the fourth quarter of fiscal 2000 principally related to certain costs associated with the retirement of the Company's former chairman, president and chief executive officer.
Fiscal 2001 Operating Results -- Detailed Review
Net sales for fiscal 2001, excluding divested and now discontinued operations, totaled $442.6 million, compared with $424.0 million in the year- earlier period. Publication Services segment (STM journal services, special interest magazines, and book and directory businesses) sales increased 5% from fiscal 2000, again reflecting growth in STM journal and books and directories sales that was offset in part by a decline in special interest magazine sales. For the year, specialty packaging sales declined 7%, again excluding now discontinued operations, as a result of soft demand in the technology sector and the overall economy.
Operating income before restructuring and other charges totaled $35.1 million for fiscal 2001 compared to $42.3 million in the prior year. After restructuring and other charges, the Company recorded operating income of $15.2 million compared to $5.8 million in fiscal 2000.
Income, before restructuring and other charges, for fiscal 2001 totaled $7.0 million, or $.78 per share, compared with $10.7 million, or $1.19 per share, last year. After restructuring and other charges, the Company recorded a net loss for fiscal 2001 of $6.5 million, or $0.73 per share, versus a net loss of $16.0 million, or $1.78 per share, a year ago.
WhatTheyThink is the global printing industry's leading independent media organization with both print and digital offerings, including WhatTheyThink.com, PrintingNews.com and WhatTheyThink magazine versioned with a Printing News and Wide-Format & Signage edition. Our mission is to provide cogent news and analysis about trends, technologies, operations, and events in all the markets that comprise today’s printing and sign industries including commercial, in-plant, mailing, finishing, sign, display, textile, industrial, finishing, labels, packaging, marketing technology, software and workflow.