Applied Graphics Technologies Reports 3Q Results, Revenue of $137 Million
Press release from the issuing company
NEW YORK, Nov. 14 -- Applied Graphics Technologies, Inc., the country's largest provider of outsourced digital media asset management services, today reported results for the three and nine months ended September 30, 2001.
"Our business continues to be negatively impacted by the overall state of the economy, particularly the softness in the advertising market, including the adverse effects of September 11,'' said Joe Vecchiolla, President and Chief Operating Officer of AGT. "In response to the challenges posed by the current economic situation, we are continuing with our cost cutting and integration efforts, the benefits of which we have begun to realize. In spite of all of the obstacles we have faced this year, however, we continue to remain in full compliance with our bank covenants,'' concluded Mr. Vecchiolla.
As previously disclosed, at June 30, 2001, the Company was required to reclassify its publishing business previously reported as a discontinued operation to "Net assets held for sale.'' At that time, the Company reversed the estimated loss on disposal of the publishing business that had been recorded in June 2000. Accordingly, the results of operations for the nine months ended September 30, 2001, include income from discontinued operations of $98.7 million, and a related impairment charge of $97.8 million as a component of the loss from continuing operations. In addition, the results of operations of the publishing business, which in all prior periods were reported as discontinued operations, are included as part of the Company's results from continuing operations subsequent to June 30, 2001.
The Company's revenues in the third quarter of 2001 decreased by 3.7% to $134.8 million, as compared to $140.0 million in the same quarter of 2000. Exclusive of the publishing business, revenues in the third quarter of 2001 decreased by 21.7% to $109.7 million. This decrease resulted primarily from the adverse impact of the economy in general, and the softening advertising market in particular, on the Company's prepress and creative services operations, primarily in the East and the Midwest. The Company also experienced an anticipated reduction in revenues due to the previous sale of its digital portrait systems businesses, the results of which are included in the 2000 period. Gross profit was $47.8 million in the 2001 quarter, as compared to $48.6 million in the 2000 quarter, and as a percentage of revenue increased to 35.5% in the 2001 quarter from 34.7% in the 2000 quarter. Exclusive of the publishing business, the gross profit percentage decreased to 31.1% in the third quarter of 2001. This decrease was due primarily to lower margins at the Company's East Coast and Midwest prepress operations resulting from the aforementioned decrease in revenues. The Company had operating income before amortization and other charges of $5.1 million in the 2001 quarter, as compared to $11.4 million in the 2000 quarter. The net loss in the third quarter of 2001 includes an extraordinary loss of $3.4 million, net of tax, related to the loss on extinguishment of debt associated with the most recent amendment to the Company's credit facility.
The Company's revenues in the first nine months of 2001 decreased by 14.3% to $369.7 million, as compared to $431.4 million in the same period of 2000. Exclusive of the publishing business, revenues in the 2001 period decreased by 20.1% to $344.5 million. Gross profit was $118.7 million in the 2001 period, as compared to $146.0 million in the 2000 period, and as a percentage of revenue decreased to 32.1% in the first nine months of 2001 from 33.8% in the 2000 period. Exclusive of the publishing business, the gross profit percentage decreased to 30.5% in the 2001 period. The decrease in revenues and gross profit in the first nine months of 2001 were the result of the same factors that adversely impacted the third quarter of 2001 as described above. The Company had operating income before amortization and other charges of $6.0 million in the 2001 period as compared to $27.1 million in the 2000 period. The net loss in the 2001 period also includes the aforementioned extraordinary loss of $3.4 million.
Prior period share and per-share amounts have been adjusted for the effects of the Company's two-for-five reverse stock split on December 5, 2000.
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