CADMUS COMMUNICATIONS CORP/NEW - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 0-12954

CADMUS COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

Virginia

54-1274108

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

1801 Bayberry Court, Suite 200

Richmond, Virginia 23226

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code:

(804) 287-5680

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October 31, 2002.

Class		Outstanding at October 31, 2002

Common Stock, $.50 Par Value		9,007,092

CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX

				Page Number

Part I.	Financial Information

	Item 1.		Financial Statements

		Condensed Consolidated Balance Sheets – September 30, 2002 (unaudited) and June 30, 2002		3

		Condensed Consolidated Statements of Income (unaudited) – Three Months Ended September 30, 2002 and 2001		4

		Condensed Consolidated Statements of Cash Flows (unaudited) – Three Months Ended September 30, 2002 and 2001		5

		Condensed Consolidated Statements of Shareholders’ Equity – September 30, 2002 (unaudited) and June 30, 2002		6

		Notes to Condensed Consolidated Financial Statements (unaudited)		7

	Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

	Item 3.		Quantitative and Qualitative Disclosures About Market Risk	16

	Item 4.		Controls and Procedures	16

Part II.	Other Information

	Item 1.		Legal Proceedings	16

	Item 6.		Exhibits and Reports on Form 8-K	16

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

			September 30, 2002			June 30, 2002

				(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	1,537		$	1,196
	Accounts receivable, net			30,812			34,845
	Inventories			20,717			19,545
	Deferred income taxes			3,516			3,653
	Prepaid expenses and other			5,157			4,791

		Total current assets		61,739			64,030
Property, plant, and equipment (net of accumulated depreciation of $138,739 at September 30, 2002 and $135,921 at June 30, 2002)				121,833			124,040
Goodwill and other intangibles, net				111,487			167,788
Other assets				14,767			13,737

TOTAL ASSETS			$	309,826		$	369,595

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable		$	36,459		$	38,322
	Accrued expenses and other current liabilities			25,197			24,966
	Restructuring reserve			891			1,127

		Total current liabilities		62,547			64,415
Long-term debt, less current maturities				155,095			157,246
Other long-term liabilities				29,380			29,300
Deferred income taxes				6,007			7,120

		Total liabilities		253,029			258,081
Shareholders’ equity:
	Common stock ($.50 par value; authorized shares-16,000,000 shares; issued and outstanding shares - 9,007,092 at September 30, 2002 and 8,992,092 at June 30, 2002)			4,503			4,496
	Capital in excess of par value			67,957			67,805
	Unearned compensation			(173	)		(77	)
	Retained earnings (deficit)			(14,498	)		40,282
	Accumulated other comprehensive loss			(992	)		(992	)

		Total shareholders’ equity		56,797			111,514

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	309,826		$	369,595

See accompanying Notes to Condensed Consolidated Financial Statements.

CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

		Three Months Ended September 30,

		2002			2001

Net sales		$	105,425		$	111,249

Operating expenses:
	Cost of sales		85,482			92,483
	Selling and administrative		12,747			11,711
	Amortization		—			1,203

			98,229			105,397

Operating income			7,196			5,852
Interest and other expenses:
	Interest		3,763			4,379
	Securitization costs		188			383
	Other, net		62			72

			4,013			4,834

Income from continuing operations before income taxes			3,183			1,018
Income tax expense			1,210			457

Income from continuing operations			1,973			561
(Loss) from discontinued operations			—			(39	)
Cumulative effect of a change in accounting principle			(56,301	)		—

Net income (loss)		$	(54,328	)	$	522

Earnings per share – basic:
	Income from continuing operations	$	.22		$	.06
	Loss from discontinued operations		—			—
	Cumulative effect of a change in accounting principle		(6.25	)		—

	Net income (loss) per share	$	(6.03	)	$	.06

Weighted-average common shares outstanding			9,005			8,944

Earnings per share – diluted:
	Income from continuing operations	$	.22		$	.06
	Loss from discontinued operations		—			—
	Cumulative effect of a change in accounting principle		(6.24	)		—

	Net income (loss) per share	$	(6.02	)	$	.06

Weighted-average common shares outstanding			9,030			9,009

Cash dividends per common share		$	.05		$	.05

See accompanying Notes to Condensed Consolidated Financial Statements.

CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

		Three Months Ended September 30,

		2002			2001

Operating Activities
Net income (loss)		$	(54,328	)	$	522
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization		4,913			6,337
	Cumulative effect of a change in accounting principle for goodwill		56,301			—
	Other, net		(976	)		69

			5,910			6,928

Changes in assets and liabilities, excluding debt:
	Accounts receivable, net		4,889			(2,746	)
	Inventories		(1,172	)		(290	)
	Accounts payable and accrued expenses		1,463			9,667
	Restructuring payments		(207	)		(2,124	)
	Pension payments		(3,513	)		(22	)
	Other, net		869			991

			2,329			5,476

Net cash provided by operating activities			8,239			12,404

Investing Activities
Purchases of property, plant, and equipment			(2,768	)		(2,334	)
Proceeds from sales of property, plant, and equipment			33			635 <

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CADMUS COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

Virginia		54-1274108

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1801 Bayberry Court, Suite 200
Richmond, Virginia 23226
*(Address of principal executive offices including zip code)*


Registrant’s telephone number, including area code:
(804) 287-5680