Cadmus Reports 3Q Earnings, Higher Operating Income and Earnings
Press release from the issuing company
RICHMOND, Va., April 25 -- Cadmus Communications Corporation today reported net sales of $112.7 million and net income of $1.5 million, or $0.17 per share, from continuing operations for the third quarter of its fiscal year 2002. Financial highlights for the three months ended March 31, 2002, from continuing operations excluding last year's restructuring and other charges, were as follows:
* Earnings per share improved to $0.17 versus $0.15 in the second quarter of fiscal 2002 and $0.07 in last year's third quarter;
* Cash earnings per share (excluding goodwill amortization) improved to $0.30 versus $0.28 in the second quarter of fiscal 2002 and $0.20 in last year's third quarter;
* EBITDA increased to $13.8 million from $13.0 million in the second quarter of fiscal 2002 and $13.7 million in last year's third quarter;
* EBITDA as a percentage of net sales increased to 12.3% from 11.4% in the second quarter of fiscal 2002 and 10.3% in last year's third quarter;
* The Company reduced total debt (including securitization) by another $9.6 million for a year-to-date debt reduction of $33.5 million.
Bruce V. Thomas, president and chief executive officer, remarked, "We had four primary goals at the outset of this fiscal year: to achieve sequential quarterly earnings improvement, to meaningfully reduce debt, to enhance our long-term competitive position in the scholarly publishing market, and to improve results in packaging and special interest magazines. Despite very difficult market conditions, we have made solid progress on each of these goals. First, we reported sequentially higher EPS from continuing operations in the second and third quarters. Second, we reduced debt by another $9.6 million. Third, we continued to make progress on our content-centric strategy for scholarly publishing -- continuing development of our Cadmus Knowledge System, extending our global work flows, and strengthening our leadership position in the scientific, technical, and medical ("STM") market. This progress translated into improved profitability in this division. Fourth, we generated the strongest quarterly performance of the year in our packaging division."
Mr. Thomas added, "We still have work to do in our special interest magazine division since that market downturn has been deep and prolonged. We believe that we have strengthened our operations to position us to benefit as advertising spending increases and the economy rebounds. We remain confident that our profit improvement actions and continuing service enhancements will mitigate the volume and pricing pressures that we and our industry face."
Operating Results Review
Net sales for the fiscal third quarter totaled $112.7 million compared with $122.7 million last year, a decline of 8%. Publication Services segment (STM journal services, special interest magazines, and professional books and directories) sales were down 10% because of volume and pricing pressures in these markets and lower paper prices. Specialty packaging sales increased 4% in the quarter. All sales amounts for the prior year exclude divested and closed operations.
Operating income was $7.4 million in the third quarter compared to $7.1 million last year before restructuring and other charges. Operating income improved sequentially compared to $6.8 million in the second quarter of 2002. Cash flow from operations and $3.2 million of proceeds from asset sales were used to reduce total debt (including securitization) by $9.6 million for the quarter.
Net income for the third quarter from continuing operations totaled $1.5 million, or $0.17 per share, compared with $0.6 million, or $0.07 per share, last year before restructuring and other charges. If the Company had adopted Statement of Financial Accounting Standards No.142 ("SFAS 142"), which requires that goodwill be tested for impairment annually instead of amortized, third quarter earnings for fiscal 2002 would have been $0.30 per share as a result of the elimination of goodwill amortization.
Net sales for the first nine months ended March 31, 2002 totaled $338.3 million compared with $359.6 million last year excluding divested and closed operations, a decline of 6% primarily because of lower special interest magazine sales and declining paper prices. For the nine months ended March 31, 2002, operating income was $20.1 million compared to $27.2 million last year before restructuring and other charges. Cash flow from operations and the proceeds from asset sales were used to reduce total debt (including securitization) by $33.5 million for the first nine months of this fiscal year. If the Company had adopted SFAS 142, nine-month earnings for fiscal 2002 would have been $0.78 per share as a result of the elimination of goodwill amortization.
As previously announced, the Company sold its Atlanta-based Cadmus Creative Marketing operation, a catalog design and photography business, in January 2002. An after-tax book loss on the sale of discontinued operations of $1.2 million, or $0.13 per share, was recorded this quarter and all historical results have been reclassified to report the results of this operation as discontinued.
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