UNITED STATES
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, 2004
OR
| ¨ | 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: 000-12954
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 No.) |
1801 Bayberry Court, Suite 200
Richmond, Virginia 23226
(Address of principal executive offices) (Zip code)
(804) 287-5680
(Registrant’s telephone number, including area code)
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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
| Class |
Outstanding at October 31, 2004 | |
| Common Stock, $0.50 Par Value |
9,182,836 |
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
| Page Number | ||||||
| Part I. |
Financial Information | |||||
| Item 1. | Financial Statements | |||||
| Condensed Consolidated Balance Sheets — September 30, 2004 (unaudited) and June 30, 2004 |
3 | |||||
| 4 | ||||||
| 5 | ||||||
| 6 | ||||||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
7 | |||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 17 | ||||
| Item 4. | Controls and Procedures | 17 | ||||
| Part II. |
Other Information | |||||
| Item 1. | Legal Proceedings | 18 | ||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 18 | ||||
| Item 6. | Exhibits | 18 | ||||
| 20 | ||||||
2
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| September 30, 2004 |
June 30, 2004 |
|||||||
| (Unaudited) | ||||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 273 | $ | 1,899 | ||||
| Accounts receivable (net of allowance for doubtful accounts of $1,763 at September 30, 2004 and $1,712 at June 30, 2004) |
54,011 | 52,687 | ||||||
| Inventories |
22,247 | 21,510 | ||||||
| Deferred income taxes |
2,047 | 2,303 | ||||||
| Prepaid expenses and other |
5,236 | 5,503 | ||||||
| Total current assets |
83,814 | 83,902 | ||||||
| Property, plant and equipment, net |
100,359 | 103,103 | ||||||
| Goodwill |
109,884 | 109,884 | ||||||
| Other intangibles, net |
3,779 | 3,943 | ||||||
| Other assets |
16,380 | 14,918 | ||||||
| TOTAL ASSETS |
$ | 314,216 | $ | 315,750 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 30,204 | $ | 30,631 | ||||
| Accrued expenses and other current liabilities |
25,623 | 23,090 | ||||||
| Total current liabilities |
55,827 | 53,721 | ||||||
| Long-term debt |
162,961 | 167,561 | ||||||
| Long-term pension liability |
21,004 | 21,183 | ||||||
| Other long-term liabilities |
20,170 | 22,024 | ||||||
| Total liabilities |
259,962 | 264,489 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock ($0.50 par value; authorized shares-16,000,000; issued and outstanding shares- 9,198,309 at September 30, 2004 and 9,154,374 at June 30, 2004) |
4,599 | 4,577 | ||||||
| Capital in excess of par value |
69,684 | 69,362 | ||||||
| Unearned compensation |
(254 | ) | (306 | ) | ||||
| Accumulated deficit |
(7,715 | ) | (10,325 | ) | ||||
| Accumulated other comprehensive loss |
(12,060 | ) | (12,047 | ) | ||||
| Total shareholders’ equity |
54,254 | 51,261 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 314,216 | $ | 315,750 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
3
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended September 30, | |||||||
| 2004 |
2003 | ||||||
| Net sales |
$ | 102,977 | $ | 106,909 | |||
| Cost of sales |
84,236 | 87,743 | |||||
| Selling and administrative expenses |
11,514 | 11,965 | |||||
| Restructuring and other charges |
— | 114 | |||||
| Other income |
(1,000 | ) | — | ||||
| 94,750 | 99,822 | ||||||
| Operating income |
8,227 | 7,087 | |||||
| Interest and other expenses: |
|||||||
| Interest |
3,174 | 3,443 | |||||
| Securitization costs |
— | 121 | |||||
| Other, net |
(42 | ) | 42 | ||||
| 3,132 | 3,606 | ||||||
| Income before income taxes |
5,095 | 3,481 | |||||
| Income tax expense |
1,912 | 1,381 | |||||
| Net income |
$ | 3,183 | $ | 2,100 | |||
| Earnings per share – basic |
$ | 0.35 | $ | 0.23 | |||
| Weighted-average common shares outstanding |
9,166 | 9,059 | |||||
| Earnings per share – diluted |
$ | 0.34 | $ | 0.23 | |||
| Weighted-average common shares outstanding |
9,385 | 9,121 | |||||
| Cash dividends per common share |
$ | 0.0625 | $ | 0.0500 | |||
See accompanying Notes to Condensed Consolidated Financial Statements.
4
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating Activities |
||||||||
| Net income |
$ | 3,183 | $ | 2,100 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
4,900 | 4,935 | ||||||
| Restructuring and other |
— | 114 | ||||||
| Other, net |
233 | 395 | ||||||
| 8,316 | 7,544 | |||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(1,324 | ) | (873 | ) | ||||
| Inventories |
(738 | ) | 880 | |||||
| Accounts payable and accrued expenses |
2,106 | 7,770 | ||||||
| Restructuring payments |
— | (511 | ) | |||||
| Contributions to retirement plans |
(318 | ) | (8,113 | ) | ||||
| Other, net |
(1,395 | ) | (2,079 | ) | ||||
| (1,669 | ) | (2,926 | ) | |||||
| Net cash provided by operating activities |
6,647 | 4,618 | ||||||
| Investing Activities |
||||||||
| Purchases of property, plant and equipment |
(1,996 | ) | (5,538 | ) | ||||
| Proceeds from sales of property, plant and equipment |
52 | 404 | ||||||
| Net cash used in investing activities |
(1,944 | ) | (5,134 | ) | ||||
| Financing Activities |
||||||||
| (Repayment of) proceeds from long-term revolving credit facility |
(6,100 | ) | 3,200 | |||||
| Net payments on receivables securitization program |
— | (1,628 | ) | |||||
| Dividends paid |
(573 | ) | (454 | ) | ||||
| Retirement of common and restricted stock |
(365 | ) | — | |||||
| Proceeds from exercise of stock options |
709 | 159 | ||||||
| Net cash (used in) provided by financing activities |
(6,329 | ) | 1,277 | |||||
| (Decrease) increase in cash and cash equivalents |
(1,626 | ) | 761 | |||||
| Cash and cash equivalents at beginning of period |
1,899 | 566 | ||||||
| Cash and cash equivalents at end of period |
$ | 273 | $ | 1,327 | ||||
See accompanying Notes to Condensed Consolidated Financial Statements.
5
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share data)
| Common Stock |
Capital in |
Unearned |
Accumulated |
Accumulated Other Comprehensive Loss |
Total |
||||||||||||||||||||||
| Shares |
Par Value |
||||||||||||||||||||||||||
| Balance at June 30, 2003 |
9,050 | $ | 4,525 | $ | 68,342 | $ | (514 | ) | $ | (15,157 | ) | $ | (24,788 | ) | $ | 32,408 | |||||||||||
| Net income |
— | — | — | — | 6,652 | — | 6,652 | ||||||||||||||||||||
| Change in minimum pension liability, net of $6,614 deferred taxes |
— | — | — | — | — | 12,741 | 12,741 | ||||||||||||||||||||
| Comprehensive income |
19,393 | ||||||||||||||||||||||||||
| Cash dividends - $0.20 per share |
— | — | — | — | (1,820 | ) | — | (1,820 | ) | ||||||||||||||||||
| Shares issued upon exercise of stock options |
104 | 52 | 1,020 | — | — | — | 1,072 | ||||||||||||||||||||
| Amortization of unearned compensation |
— | — | — | ||||||||||||||||||||||||