RICHMOND, Va., Oct. 30 -- Cadmus Communications Corporation today announced results for the first quarter of its fiscal year 2002. Financial highlights for the three months ended September 30, 2001 were as follows: * Revenues from the professional books and directories division increased by 7%; * Revenues from the scientific, technical, and medical ("STM") journal services division were flat, excluding shipping and postage; * The weak economy, lower advertising spending, combined with the events of September 11, led to a 9% decline in special interest magazine revenues; * Earnings per share were $0.06, while "cash earnings per share" (excluding goodwill amortization) totaled $0.20; * The Company reduced total debt (including securitization) by $10.0 million with cash flow from operations. Commenting on the quarter, Bruce V. Thomas, president and chief executive officer, remarked, "We continue to benefit from relatively stable market conditions for our STM journals and books and directories divisions and we are realizing the benefits of our cost reduction efforts. Unfortunately, revenues and profits were reduced, in this our seasonally softest quarter, due to the overall slowdown in the economy. In addition, the tragic events of September 11 have resulted in a further decline in advertising spending which directly impacted our special interest magazines division. During the quarter, we also experienced a delay in some projects from customers for our STM journals and books and directories divisions, which have heavy concentrations of publishers in the New York and Washington D.C. areas.'' Continuing, Mr. Thomas stated, "Despite these extraordinary business conditions, we are gratified that three of our four divisions were at or above their business plan for the quarter. However, given the uncertain outlook for the economy, we have intensified our efforts to improve both our short and long term profitability through a combination of cost reductions and strategic investment initiatives designed to enhance our competitive position in our core markets. These initiatives include programs to reduce overhead expenses, improve overall operational efficiency, complete the consolidation of certain manufacturing operations, and implement strategic purchasing programs to reduce costs of maintenance, supplies and logistics on a company-wide basis. At the same time, we will continue to invest in content management capabilities and digital technology to meet the changing demands of our customer base and grow our market share. We are seeing the positive impact of these initiatives and are encouraged by new business success as well as movement to more normal levels of business activity during the current quarter.'' Stephen E. Hare, executive vice president and chief financial officer, said, "While we are uncertain about the short-term outlook for the industry, we plan to improve our competitive position so that we can benefit from an economic recovery when it occurs. We believe that the profit improvement actions we have already begun, combined with the positive impact of reduced debt levels and lower prevailing interest rates, will help to mitigate the volume and pricing pressure that is likely to continue in the near future. We are optimistic that these efforts will permit us to achieve the sequential improvement that we had planned for the balance of fiscal 2002. Perhaps more importantly, these initiatives will serve to strengthen the Company's ability to provide better quality and cost effective services to our customers over the long term.'' Fiscal First Quarter Ended September 30, 2001 -- Operating Results Review Net sales for the fiscal first quarter, excluding divested and closed operations, totaled $113.1 million compared with $117.1 million last year, a decrease of 3%. Publication Services segment (STM journal services, special interest magazines, and professional books and directories) sales were down 4%, primarily because of the 9% decline in special interest magazine sales. The decline in special interest magazine sales resulted from a continued reduction in advertising pages as well as the impact of issue delays and cancellations by New York and Washington-based publishers. Specialty packaging sales increased 5% in the quarter, excluding closed operations. Operating income before restructuring and other charges totaled $5.9 million in the first quarter compared to $10.5 million last year. EBITDA in the first quarter totaled $12.1 million, down from $17.2 million a year ago, adjusted for restructuring and other charges. Cash flow from operations was used to reduce total debt (including securitization) by $10.0 million for the quarter. Net income for the first quarter totaled $0.5 million, or $0.06 per share, compared with $2.7 million, or $0.30 per share last year, before restructuring and other charges. The Company did not elect early adoption of Statement of Financial Accounting Standards No.142 ("SFAS 142'') which requires that goodwill not be amortized but instead be tested for impairment annually; rather it will adopt the standard effective July 1, 2002. If the Company had adopted SFAS 142 this year, first quarter earnings would have been $0.20 per share as a result of the elimination of goodwill amortization.