<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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 0-28208
APPLIED GRAPHICS TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 13-3864004
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
</TABLE>
450 WEST 33RD STREET
NEW YORK, NY
(Address of principal executive offices)
10001
(Zip Code)
212-716-6600
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
N/A
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[ ]
The number of shares of the registrant's common stock outstanding as of April
30, 2000, was 22,584,282.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of dollars, except per-share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 14,321 $ 26,347
Marketable securities 1,187 2,127
Trade accounts receivable (net of allowances of $11,779 in 2000
and $14,000 in 1999) 121,911 143,429
Due from affiliates 5,834 6,615
Inventory 41,893 39,575
Prepaid expenses 15,805 16,064
Deferred income taxes 27,863 27,467
Other current assets 19,062 13,844
-------------- -----------------
Total current assets 247,876 275,468
Property, plant, and equipment - net 88,461 105,231
Goodwill and other intangible assets (net of accumulated amortization
of $26,266 in 2000 and $22,230 in 1999) 530,947 539,718
Other assets 20,245 19,764
-------------- -----------------
Total assets $ 887,529 $ 940,181
============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 96,001 $ 99,291
Current portion of long-term debt and obligations under capital leases 8,412 19,480
Due to affiliates 1,129 1,909
Other current liabilities 25,332 33,857
-------------- -----------------
Total current liabilities 130,874 154,537
Long-term debt 272,497 298,501
Subordinated notes 29,563 29,867
Obligations under capital leases 2,934 3,814
Deferred income taxes 3,408 3,427
Other liabilities 14,931 9,035
-------------- -----------------
Total liabilities 454,207 499,181
-------------- -----------------
Commitments and contingencies
Minority interest - Redeemable Preference Shares issued by subsidiary 33,050 33,050
-------------- -----------------
Stockholders' Equity:
Preferred stock (no par value, 10,000,000 shares authorized; no
shares outstanding)
Common stock ($0.01 par value, 150,000,000 shares authorized;
shares issued and outstanding: 22,584,282 in 2000 and 22,474,772 in 1999) 226 225
Additional paid-in capital 388,547 386,548
Accumulated other comprehensive income 504 1,264
Retained earnings 10,995 19,913
-------------- -----------------
Total stockholders' equity 400,272 407,950
-------------- -----------------
Total liabilities and stockholders' equity $ 887,529 $ 940,181
============== =================
</TABLE>
See Notes to Interim Consolidated Financial Statements
<PAGE> 3
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per-share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
----------------------------------
2000 1999
------------- --------------
<S> <C> <C>
Revenues $ 162,725 $ 112,034
Cost of revenues 106,871 74,523
------------- --------------
Gross profit 55,854 37,511
------------- --------------
Selling, general, and
administrative expenses 48,990 30,584
Amortization of intangibles 4,034 2,948
Loss (gain) on disposal of property
and equipment 224 (21)
------------- --------------
Total operating expenses 53,248 33,511
------------- --------------
Operating income 2,606 4,000
Interest expense (8,870) (3,390)
Interest income 236 44
Other income (expense) - net (87) 96
------------- --------------
Income (loss) before provision for
income taxes and minority interest (6,115) 750
Provision for income taxes 2,140 375
------------- --------------
Income (loss) before minority interest (8,255) 375
Minority interest (663) -
------------- --------------
Net income (loss) (8,918) 375
Other comprehensive income (loss) (760) (187)
------------- --------------
Comprehensive income (loss) $ (9,678) $ 188
============= ==============
Earnings (loss) per common share:
Basic $ (0.39) $ 0.02
Diluted $ (0.39) $ 0.02
Weighted average number of common shares:
Basic 22,615 22,395
Diluted 22,615 22,395
</TABLE>
See Notes to Interim Consolidated Financial Statements
<PAGE> 4
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands of dollars)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
--------------------------------
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (8,918) $ 375
Adjustments to reconcile net income (loss) to net cash from
operating activities:
Depreciation and amortization 10,808 7,546
Deferred taxes 22 (3)
Other 728 1,272
Changes in Operating Assets and Liabilities, net of effects of acquisitions and
dispositions:
Trade accounts receivable 14,587 10,347
Due from/to affiliates 1 (464)
Inventory (3,580) (2,854)
Other assets 6,344 10,803
Accounts payable and accrued expenses (806) (6,314)
Other liabilities 3,960 (2,658)
------------- ------------
Net cash provided by operating activities 23,146 18,050
------------- ------------
Cash flows from investing activities:
Property, plant, and equipment expenditures (6,140) (4,513)
Software expenditures (738) (2,293)
Proceeds from sale of property and equipment 13,093
Entities purchased, net of cash acquired (628)
Other (4,217) (112)
------------- ------------
Net cash provided by (used in) investing activities 1,998 (7,546)
------------- ------------
Cash flows from financing activities:
Proceeds from sale/leaseback transactions 1,283
Repayments of notes and capital lease obligations (1,946) (203)
Repayments of term loans (24,396)
Repayments under revolving credit line - net (11,000) (26,150)
------------- ------------
Net cash used in financing activities (37,342) (25,070)
------------- ------------
Net decrease in cash and cash equivalents (12,198) (14,566)
Effect of exchange rate changes on cash and cash equivalents 172
Cash and cash equivalents at beginning of period 26,347 20,909
------------- ------------
Cash and cash equivalents at end of period $ 14,321 $ 6,343
============= ============
</TABLE>
See Notes to Interim Consolidated Financial Statements
<PAGE> 5
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands of dollars except share amounts)
<TABLE>
<CAPTION>
For the three months ended March 31, 2000
-----------------------------------------
Accumulated
Additional other
paid-in comprehensive Retained
Common stock capital income earnings
-------------- -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Balance at January 1, 2000 $ 225 $ 386,548 $ 1,264 $ 19,913
Issuance of 109,510 common shares as
additional consideration in connection
with prior period acquisitions 1 1,999
Unrealized holding loss on available-for-
sale securities (544)
Unrealized loss from foreign currency
translation adjustments (216)
Net loss (8,918)
-------------- -------------- ----------------- --------------
Balance at March 31, 2000 $ 226 $ 388,547 $ 504 $ 10,995
============== ============== ================= ==============
</TABLE>
See Notes to Interim Consolidated Financial Statements
<PAGE> 6
APPLIED GRAPHICS TECHNOLOGIES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Applied Graphics Technologies, Inc. and its subsidiaries (the "Company"), which
have been prepared in accordance with the instructions to Form 10-Q and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations, and cash flows in
conformity with generally accepted accounting principles, should be read in
conjunction with the notes to consolidated financial statements contained in the
Company's 1999 Form 10-K. In the opinion of the management of the Company, all
adjustments (consisting primarily of normal recurring accruals) necessary for a
fair presentation have been included in the financial statements. The operating
results of any quarter are not necessarily indicative of results for any future
period.
Certain prior-period amounts in the accompanying financial statements have
been reclassified to conform with the 2000 presentation.
2. RESTRUCTURING
In 1998 and 1999, the Company commenced four separate plans to restructure
certain of its operations (the "1998 Second Quarter Plan," the "1998 Fourth
Quarter Plan," the "1999 Third Quarter Plan," and the "1999 Fourth Quarter
Plan," respectively). The amounts included in "Other current liabilities" in the
accompanying Consolidated Balance Sheets as of March 31, 2000, and December 31,
1999, for the future costs of the various restructuring plans and the amounts
charged against the respective restructuring liabilities during the three months
ended March 31, 2000, were as follows:
<TABLE>
<CAPTION>
1998 Second 1998 Fourth 1999 Third 1999 Fourth
Quarter Plan Quarter Plan Quarter Plan Quarter Plan
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Balance at December 31, 1999 $ 294 $ 502 $ 330 $ 2,279
Facility closure costs (10) (111) (238)
Employee termination costs (82) (13) (188)
Abandoned assets (63) (106) (82)
-------------- ---------------- ---------------- ----------------
Balance at March 31, 2000 $ 231 $ 304 $ 206 $ 1,771
============== ================ ================ ================
</TABLE>
The number of employees included in the charge against the various
restructuring plans' liabilities for employee termination costs for the three
months ended March 31, 2000, was 11, 4, and 11 for the 1998 Fourth Quarter Plan,
the 1999 Third Quarter Plan, and the 1999 Fourth Quarter Plan, respectively.
The Company does not anticipate any material adverse effect on its future
results of operations from the various restructuring plans. The employees
terminated and to be terminated under the restructuring plans are principally
production workers, salespeople, and administrative support staff. The Company
completed both the 1998 Second Quarter Plan and the 1998 Fourth Quarter Plan
during 1999. The remaining liabilities for these plans primarily represent
future rental obligations for abandoned property and equipment. The Company
expects to complete the 1999 Third Quarter Plan and the 1999 Fourth Quarter Plan
by September 2000 and December 2000, respectively.
The Company is continuing to pursue operating efficiencies and synergies
and, as a result, may incur additional restructuring charges. During the three
months ended March 31, 2000, the Company terminated 75 employees, and incurred
employee termination costs of $911 that were not related to its various
restructuring plans. Such costs are included in "Selling, general, and
administrative expenses" in the accompanying Consolidated Statement of
Operations for the three months ended March 31, 2000.
<PAGE> 7
3. INVENTORY
The components of inventory were as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------------- -----------------
<S> <C> <C>
Finished Goods $ 11,509 $ 6,324
Work-in-process 25,970 27,793
Raw materials 4,414 5,458
---------------- -----------------
Total $ 41,893 $ 39,575
================ =================
</TABLE>
4. RELATED PARTY TRANSACTIONS
Sales to, purchases from, and administrative charges incurred with related
parties during the three months ended March 31, 2000 and 1999, were as follows:
<TABLE>
<CAPTION>
2000 1999
------------- --------------
<S> <C> <C>
Affiliate sales $ 2,759 $ 2,742
Affiliate purchases $ 117 $ 811
Administrative charges $ 315 $ 322
</TABLE>
Administrative charges include charges for certain legal, administrative,
and computer services provided by affiliates and for rent incurred for leases
with affiliates.
5. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Payments of interest and income taxes for the three months ended March 31,
2000 and 1999, were as follows:
<TABLE>
<CAPTION>
2000 1999
---------------- ----------------
<S> <C> <C>
Interest paid $ 6,910 $ 4,111
Income taxes paid $ 246 $ 144
</TABLE>
<PAGE> 8
Noncash investing and financing activities for the three months ended March
31, 2000 and 1999, were as follows:
<TABLE>
<CAPTION>
2000 1999
---------------- -------------------
<S> <C> <C>
Issuance of common stock as additional
consideration in connection with prior
period acquisitions $ 2,000
Reduction of goodwill from amortization of excess
tax deductible goodwill $ 92 $ 2
Acquisitions:
Fair value of assets acquired $ 2,290
Cash paid (1,331)
-------------------
Liabilities assumed $ 959
===================
</TABLE>
6. SEGMENT INFORMATION
Segment information relating to results of operations for the three months
ended March 31, 2000 and 1999, was as follows:
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Revenue:
Content Management Services $ 128,190 $ 85,405
Publishing 18,406 18,089
Other operating segments 16,129 8,540
------------ ------------
Total $ 162,725 $ 112,034
============ ============
Operating Income:
Content Management Services $ 10,978 $ 10,889
Publishing 718 (116)
Other operating segments 2,106 1,041
------------ ------------
Total 13,802 11,814
Other business activities (7,077) (5,001)
Amortization of intangibles (4,034) (2,948)
Gain (loss) on disposal of fixed assets (224) 21
Interest expense (8,731) (3,276)
Interest income 236 44
Other income (loss) (87) 96
------------ ------------
Consolidated income (loss) before provision for income
taxes and minority interest $ (6,115) $ 750
============ ============
</TABLE>
<PAGE> 9
Segment information relating to the Company's assets as of March 31, 2000,
was as follows:
<TABLE>
<S> <C>
Total Assets:
Content Management Services $ 695,015
Publishing 147,092
Other operating segments 34,572
Other business activities 10,850
-------------
Total $ 887,529
=============
</TABLE>
7. SUBSEQUENT EVENTS
In April 2000, the Company sold the photographic laboratory business that
was acquired as part of Wace for approximately $11,500. The net assets of this
business, which are a component of the Company's content management services
segment, are included in "Other current assets" in the Company's Consolidated
Balance Sheet at March 31, 2000. The Company does not expect to realize a gain
or loss on the sale of this business. The results of operations for the three
months ended March 31, 2000, include $7,210, $1,813, and $148 of revenues, gross
profit, and operating income, respectively, from this business.
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Certain statements made in this Quarterly Report on Form 10-Q are
"forward-looking" statements (within the meaning of the Private Securities
Litigation Reform Act of 1995). Such statements involve known and unknown risks,
uncertainties, and other factors that may cause actual results, performance, or
achievements of the Company to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are based upon reasonable assumptions, the
Company's actual results could differ materially from those set forth in the
forward-looking statements. Certain factors that might cause such a difference
include the following: the timing of completion and the success of the Company's
various restructuring plans and integration efforts; the ability to sell certain
properties and noncore businesses; the rate and level of capital expenditures;
the ability to remain in compliance with financial covenants under the 1999
Credit Agreement; and the adequacy of the Company's credit facilities and cash
flows to fund cash needs.
The following discussion and analysis (in thousands of dollars) should be
read in conjunction with the Company's Interim Consolidated Financial Statements
and notes thereto.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000, COMPARED WITH 1999
Revenues in the first quarter of 2000 were $50,691 higher than in the
comparable period in 1999. This increase was due to the revenues from Wace Group
Limited ("Wace"), which was acquired subsequent to the 1999 period. Revenues in
the 2000 period increased by $45,187 from content management services, $4,396
from digital services, $791 from broadcast media distribution services, and $317
from publishing operations. Increased revenues from content management services
resulted from revenues of $48,112 associated with the content management
businesses acquired in the acquisition of Wace, partially offset by a decrease
in revenues of $2,925 at the Company's prepress facilities operated in both
periods. Increased revenues from digital services resulted from the digital
operations acquired as part of Wace and from additional digital photography
systems sales.
Gross profit increased $18,343 in the first quarter of 2000 as a result of
the additional revenues for the period as discussed above. The gross profit
percentage in 2000 was 34.3% as compared to 33.5% in the 1999 period. This
slight increase in the gross profit percentage resulted from minor improvements
in all business segments.
Selling, general, and administrative expenses in the first quarter of 2000
were $18,406 higher than in the 1999 period, and as a percent of revenue
increased to 30.1% in the 2000 period from 27.3% in the 1999 period. Such
expenses grew at a greater rate than revenue due primarily to a higher rate of
costs incurred at the acquired Wace operations than at the Company's other
prepress operations. Selling, general, and administrative expenses in 2000
include a charge of $911 for nonrestructuring-related employee termination
costs.
Amortization expense for intangible assets increased by $1,086 in the first
quarter of 2000 due primarily to the goodwill associated with the Wace
acquisition.
Interest expense in the first quarter of 2000 was $5,480 higher than in the
1999 period due primarily to the interest on borrowings to finance the Wace
acquisition and higher interest rates under the amended and restated credit
agreement entered into in connection with the acquisition of Wace (the "1999
Credit Agreement"). Four interest rate swap agreements entered into by the
Company resulted in an immaterial reduction of interest expense in the 2000
period.
Notwithstanding the fact that the Company reported a pretax loss for the
period, the Company incurred a provision for income taxes of $2,140. A
provision was incurred, as opposed to a benefit being received, due to the
projected annual permanent items related to nondeductible goodwill and the
nondeductible portion of meals and entertainment expenses exceeding the amount
of the projected pretax loss for the year.
Revenues from business transacted with affiliates for the three months
ended March 31, 2000 and 1999, totaled $2,759 and $2,742, respectively,
representing 1.7% and 2.4%, respectively, of the Company's revenues.
<PAGE> 11
FINANCIAL CONDITION
During the first three months of 2000, the Company repaid $35,396 of its
borrowings under its credit facilities, repaid $1,946 of notes and capital lease
obligations, and made contingent payments related to acquisitions of $4,217. In
addition, the Company invested $6,140 in facility construction and new
equipment, and spent $738 on software-related projects. Such amounts were
primarily generated from cash from operating activities and the sale of property
and equipment that generated proceeds of $13,093.
Cash flows from operating activities during the first three months of 2000
increased by $5,096 as compared to the comparable period in 1999 due primarily
to the collection of trade accounts receivable and the timing of vendor
payments, partially offset by a decrease in cash from operating income.
The Company expects to spend approximately $16.0 million over the course of
the next twelve months for capital improvements and management information
systems, essentially all of which is for modernization and growth. The Company
intends to finance a substantial portion of these expenditures under operating
or capital leases, sale and leaseback arrangements, or with working capital.
Under the terms of the 1999 Credit Agreement, the Company must comply with
certain financial covenants related to leverage ratios, interest coverage
ratios, fixed charge coverage ratios, minimum net worth, and capital spending.
At March 31, 2000, the Company was in compliance with all such covenants. Based
on current operating projections and uncertainty regarding future changes in
interest rates, the Company may be out of compliance with certain of such
financial covenants in future periods. If it does not remain in compliance, the
Company intends to engage in discussions with its lending institutions to obtain
a waiver, although there can be no assurances that such a waiver will be
granted.
The Company believes that the cash flow from operations, including
potential improvements in operations as a result of its various integration and
restructuring efforts, sales of certain properties and noncore businesses, and
available borrowing capacity, subject to the Company's ability to remain in
compliance or obtain a waiver in the event of noncompliance, if any, with the
financial covenants under the 1999 Credit Agreement, will provide sufficient
cash flows to fund its cash needs for the foreseeable future.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company's primary exposure to market risk is interest rate risk. The
Company had $277,143 outstanding under its credit facilities at March 31, 2000.
Interest rates on funds borrowed under the Company's credit facilities vary
based on changes to the prime rate or LIBOR. The Company partially manages its
interest rate risk through four interest rate swap agreements under which the
Company pays a fixed rate and is paid a floating rate based on the three month
LIBOR rate. The notional amounts of the four interest rate swaps totaled $90,000
at March 31, 2000. A change in interest rates of 1.0% would result in a change
in income before taxes of $1,871 based on the outstanding balance under the
Company's credit facilities and the notional amounts of the interest rate swap
agreements at March 31, 2000.
<PAGE> 12
PART II. - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
In February 2000, the Company issued 109,510 shares of its common
stock as additional contingent consideration to the former
stockholders of Amusematte Corp., which the Company acquired in
December 1997, and Agile Enterprise, Inc., which the Company acquired
in September 1998. The sale and issuance of such securities by the
Registrant were effected in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 Asset Purchase Agreement by and among Applied Graphics
Technologies, Inc., and Flying Color Graphics, Inc. and its
Shareholders dated January 16, 1998 (Incorporated by
reference to Exhibit No. 2.1 forming part of the
Registrant's Report on Form 8-K (File No. 0-28208) filed
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, on January 30,
1998).
2.2 Agreement and Plan of Merger, dated as of February 13, 1998,
by and among Devon Group, Inc., Applied Graphics
Technologies, Inc., and AGT Acquisition Corp. (Incorporated
by reference to Exhibit No. 2.2 forming part of the
Registrant's Report on Form 10-K (File No. 0-28208) filed
with the Securities and Exchange Commission under the
Securities Act of 1934, as amended, for the fiscal year
ended December 31, 1997).
3.1(a) First Restated Certificate of Incorporation (Incorporated by
reference to Exhibit No. 3.1 forming part of the
Registrant's Registration Statement on Form S-1 (File No.
333-00478) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
3.1(b) Certificate of Amendment of First Restated Certificate of
Incorporation (Incorporated by reference to Exhibit No.
3.1(b) forming part of the Registrant's Report on Form 10-Q
(File No. 0-28208) filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as
amended, for the quarterly period ended June 30, 1998).
3.2(a) Amended and Restated By-Laws of Applied Graphics
Technologies, Inc. (Incorporated by reference to Exhibit No.
3.2 forming part of Amendment No. 3 to the Registrant's
Registration Statement on Form S-1 (File No. 333-00478)
filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended).
<PAGE> 13
3.2(b) Amendment to Amended and Restated By-Laws of Applied
Graphics Technologies, Inc. (Incorporated by reference to
Exhibit No. 3.3 forming part of the Registrant's
Registration Statement on Form S-4 (File No. 333-51135)
filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended).
4 Specimen Stock Certificate (Incorporated by reference to
Exhibit No. 4 forming part of Amendment No. 3 to the
Registrant's Registration Statement on Form S-1 (File No.
333-00478) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.2 Applied Graphics Technologies, Inc. 1996 Stock Option Plan
(Incorporated by reference to Exhibit No. 10.2 forming part
of Amendment No. 3 to the Registrant's Registration
Statement on Form S-1 (File No. 333-00478) filed with the
Securities and Exchange Commission under the Securities Act
of 1933, as amended).
10.3 Applied Graphics Technologies, Inc. Non-Employee Directors
Nonqualified Stock Option Plan (Incorporated by reference to
Exhibit No. 10.3 forming part of Amendment No. 3 to the
Registrant's Registration Statement on Form S-1 (File No.
333-00478) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.6(a)(i) Employment Agreement, effective as of April 1, 1996, between
the Company and Diane Romano (Incorporated by reference to
Exhibit No. 10.6 forming part of Amendment No. 3 to the
Registrant's Registration Statement on Form S-1 (File No.
333-00478) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.6(a)(ii) Employment Agreement Extension dated March 23, 1998, between
the Company and Diane Romano (Incorporated by reference to
Exhibit No. 10.6 (a)(ii) forming part of the Registrant's
Registration Statement on Form S-4 (File No. 333-51135)
filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended).
10.6(b)(i) Employment Agreement, effective as of April 1, 1996, between
the Company and Georgia L. McCabe (Incorporated by reference
to Exhibit No. 10.6 forming part of Amendment No. 3 to the
Registrant's Registration Statement on Form S-1 (File No.
333-00478) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.6(b)(ii) Employment Agreement Extension dated March 23, 1998, between
the Company and Georgia L. McCabe (Incorporated by reference
to Exhibit No. 10.6 (b)(ii) forming part of the Registrant's
Registration Statement on Form S-4 (File No. 333-51135)
filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended).
<PAGE> 14
10.6 (c) Employment Agreement, effective as of May 24, 1999, between
the Company and Derek Ashley (Incorporated by reference to
Exhibit No. 10.6 (c) forming part of Registrant's Report on
Form 10-Q (File No. 0-28208) filed with the Securities and
Exchange Commission under the Securities Exchange Act of
1934, as amended, for the quarterly period ended June 30,
1999).
10.6(d)(i) Employment Agreement, effective as of April 1, 1996, between
the Company and Scott A. Brownstein (Incorporated by
reference to Exhibit No. 10.6 forming part of Amendment No.
3 to the Registrant's Registration Statement on Form S-1
(File No. 333-00478) filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended).
10.6(d)(ii) Employment Agreement Extension dated March 23, 1998, between
the Company and Scott Brownstein (Incorporated by reference
to Exhibit No. 10.6 (d)(ii) forming part of the Registrant's
Registration Statement on Form S-4 (File No. 333-51135)
filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended).
10.6(e)(i) Employment Agreement, effective as of June 1, 1996, between
the Company and Louis Salamone, Jr. (Incorporated by
reference to Exhibit No. 10.6(e) forming part of the
Registrant's Report on Form 10-Q (File No. 0-28208) filed
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, for the
quarterly period ended March 31, 1997).
10.6(e)(ii) Noncompetition, Nonsolicitation, and Confidentiality
Agreement, effective as of June 1, 1996, between the Company
and Louis Salamone, Jr. (Incorporated by reference to
Exhibit No. 10.6(e) forming part of the Registrant's Report
on Form 10-K (File No. 0-28208) filed with the Securities
and Exchange Commission under the Securities Exchange Act of
1934, as amended, for the fiscal year ended December 31,
1996).
10.6(e)(iii) Employment Agreement Extension dated March 23, 1998, between
the Company and Louis Salamone, Jr. (Incorporated by
reference to Exhibit No. 10.6(e)(iii) forming part of the
Registrant's Registration Statement on Form S-4 (File No.
333-51135) filed with the Securities and Exchange Commission
under the Securities Act of 1933, as amended).
10.7 Form of Registration Rights Agreement (Incorporated by
reference to Exhibit No. 10.7 forming part of Amendment No.
3 to the Registrant's Registration Statement on Form S-1
(File No. 333-00478) filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended).
<PAGE> 15
10.8 Applied Graphics Technologies, Inc., 1998 Incentive
Compensation Plan, as Amended and Restated (Incorporated by
reference to Exhibit No. 10.8 forming part of Registrant's
Report on Form 10-Q (File No. 0-28208) filed with the
Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended, for the quarterly period
ended June 30, 1999).
10.9(a) Amended and Restated Credit Agreement, dated as of March 10,
1999, among Applied Graphics Technologies, Inc., Other
Institutional Lenders as Initial Lenders, and Fleet Bank,
N.A. (Incorporated by reference to Exhibit 99.2 of the
Registrant's Report on Form 8-K (File No. 0-28208) filed
with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, on March 22,
1999).
10.9(b) Amendment No. 1, dated as of June 2, 1999, to the Amended
and Restated Credit Agreement among Applied Graphics
Technologies, Inc., Other Institutional Lenders as Initial
Lenders, and Fleet Bank, N.A. (Incorporated by reference to
Exhibit No. 10.9(b) forming part of Registrant's Report on
Form 10-Q (File No. 0-28208) filed with the Securities and
Exchange Commission under the Securities Exchange Act of
1934, as amended, for the quarterly period ended June 30,
1999).
10.9(c) Amendment No. 2, dated July 28, 1999, to the Amended and
Restated Credit Agreement among Applied Graphics
Technologies, Inc., Other Institutional Lenders as Initial
Lenders, and Fleet Bank, N.A. (Incorporated by reference to
Exhibit No. 10.9(c) forming part of Registrant's Report on
Form 10-Q (File No. 0-28208) filed with the Securities and
Exchange Commission under the Securities Exchange Act of
1934, as amended, for the quarterly period ended September
30, 1999).
27 Financial Data Schedule (EDGAR filing only).
- --------------------------------------------------------------------------------
(b) The Registrant did not file any reports on Form 8-K during the quarter
ended March 31, 2000.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APPLIED GRAPHICS TECHNOLOGIES, INC.
(Registrant)
By: /s/ Derek Ashley
Date: May 15, 2000 -------------------------------------------------
Derek Ashley
Vice Chairman, Chief Executive Officer,
and Chief Operating Officer
(Duly authorized officer)
/s/ Louis Salamone, Jr.
Date: May 15, 2000 -------------------------------------------------
Louis Salamone, Jr.
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF INCOME OF THE COMPANY
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 14,321
<SECURITIES> 1,187
<RECEIVABLES> 133,690
<ALLOWANCES> 11,779
<INVENTORY> 41,893
<CURRENT-ASSETS> 247,876
<PP&E> 123,626
<DEPRECIATION> 35,165
<TOTAL-ASSETS> 887,529
<CURRENT-LIABILITIES> 130,874
<BONDS> 302,060
33,050
0
<COMMON> 226
<OTHER-SE> 400,046
<TOTAL-LIABILITY-AND-EQUITY> 887,529
<SALES> 162,725
<TOTAL-REVENUES> 162,725
<CGS> 106,871
<TOTAL-COSTS> 106,871
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,870
<INCOME-PRETAX> (6,115)
<INCOME-TAX> 2,140
<INCOME-CONTINUING> (8,255)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,918)
<EPS-BASIC> (0.39)
<EPS-DILUTED> (0.39)
</TABLE>
