UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2000
Commission File Number 000-24021
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-3561164
(State of incorporation) (I.R.S. Employer
Identification Number)
100 Burma Road
Jersey City, NJ
(Address of principal executive offices)
07305
(Zip Code)
201-217-1990
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether 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 Common Stock, no par value, of the Registrant
outstanding at April 28, 2000 was 5,757,606.
<PAGE>
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I -- Financial Information
Item 1 -- Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of December 31, 1999
and March 31, 2000 ................................................. 1
Condensed Consolidated Statements of Income for the Three Months
Ended March 31, 1999 and 2000 ...................................... 2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 2000 ......................... 3
Notes to Condensed Consolidated Financial Statements - March 31, 2000.. 4
Item 2 -- Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................................. 11
Item 3 -- Quantitative and Qualitative Disclosure of Market Risk .......... 19
Part II -- Other Information
Item 4 -- Submission of Matters to a Vote of Securtiy Holders ............. 20
Item 6 -- Exhibits and Reports on Form 8-K ................................ 20
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
</TABLE>
<PAGE>
Part I. FINANCIAL INFORMATION
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
-------- --------
(Note 1) (Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents .......................................... $ 5,131 $ 2,130
Accounts receivable ................................................ 24,906 34,999
Inventories ........................................................ 3,357 3,272
Prepaid expenses and other current assets .......................... 2,523 2,796
Deferred income taxes .............................................. 1,234 1,234
-------- --------
Total current assets ................................................... 37,151 44,431
Cash held for acquisitions and building addition ....................... 975 975
Property and equipment - net ........................................... 40,833 41,260
Goodwill - net ......................................................... 49,362 49,870
Other assets ........................................................... 4,051 4,318
-------- --------
$132,372 $140,853
======== ========
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt .................................. $ 939 $ 1,493
Revolving lines of credit .......................................... 1,622 2,097
Current portion of obligations under capital leases ................ 2,563 1,901
Accounts payable ................................................... 15,526 18,084
Accrued expenses ................................................... 10,459 8,290
-------- --------
Total current liabilities .............................................. 31,109 31,865
Long-term debt - net of current portion ................................ 7,844 7,117
Revolving line of credit - net of current portion ...................... 38,419 44,211
Obligations under capital leases - net of current portion .............. 5,689 5,651
Deferred income taxes .................................................. 3,176 3,175
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value, 10,000,000 authorized,
none issued ..................................................... -- --
Common stock, no par value, 30,000,000 authorized, 5,731,399 and
5,757,606 issued and outstanding for 1999 and 2000, respectively 36,003 36,332
Accumulated other comprehensive income (loss) ...................... 469 380
Retained earnings .................................................. 9,663 12,122
-------- --------
Total stockholders' equity ............................................. 46,135 48,834
-------- --------
$132,372 $140,853
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
1
<PAGE>
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except shares and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 2000
--------------------------------
1999 2000
----------- -----------
<S> <C> <C>
Net sales ............................... $ 18,301 $ 42,994
Operating expenses:
Costs of production ................. 12,251 29,296
Selling, general and administration . 2,965 7,161
Depreciation and amortization ....... 762 1,660
----------- -----------
15,978 38,117
Income from operations .................. 2,323 4,877
Interest expense .................... (42) (1,325)
Other income ........................ 13 130
----------- -----------
Income before income taxes .............. 2,294 3,682
Provision for income taxes .......... 899 1,223
----------- -----------
Net income .............................. $ 1,395 $ 2,459
=========== ===========
Earnings per common share:
Basic ............................... $ 0.25 $ 0.43
=========== ===========
Diluted ............................. $ 0.25 $ 0.42
=========== ===========
Weighted average number of common shares:
Basic ............................... 5,645,696 5,753,802
=========== ===========
Diluted ............................. 5,676,985 5,885,140
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
2
<PAGE>
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Three Months Ended March 31, 1999 and 2000
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income .......................................................... $ 1,395 $ 2,459
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization ................................... 762 1,660
Gain on sale of equipment ....................................... 5 (135)
Deferred income taxes ........................................... 1 1
Changes in operating assets and liabilities:
Accounts receivable ............................................. (1,393) (10,189)
Inventory ....................................................... 19 86
Prepaid expenses and other assets ............................... (30) (121)
Other assets .................................................... 220 (265)
Accounts payable ................................................ (1,571) 2,624
Accrued expenses ................................................ 935 (2,073)
-------- --------
Net cash provided by (used in) operating activities ................. 343 (5,953)
Cash flows from investing activities
Proceeds from the disposition of equipment ...................... 141
Acquisition of property and equipment ........................... (5,329) (1,880)
Acquisition of businesses, net of cash acquired ................. (15,625) (927)
-------- --------
Net cash used in investing activities ............................... (20,954) (2,667)
Cash flows from financing activities
Net (payments) proceeds on revolving lines of credit ............ 8,226 6,135
Proceeds from long-term borrowings .............................. 3,425 271
Principal payments on long-term borrowings ...................... (145) 220)
Principal payments on obligations under capital lease ........... (191) (726)
Proceeds from the excersise of stock options .................... 330
-------- --------
Net cash provided by financing activities ........................... 11,315 5,790
Effect of exchange rate changes on cash and cash equivalents ........ (30) (171
-------- --------
Net decrease in cash and cash equivalents .......................... (9,326) (3,001)
Cash and cash equivalents, beginning of period ...................... 11,879 6,106
-------- --------
Cash and cash equivalents, end of period ............................ $ 2,553 $ 3,105
======== ========
Supplemental disclosure of noncash investing and
financing activities
Issuance of common stock in conjunction with the acquisition
of Workable Company Limited and affiliates ...................... $ 6,181 $ --
======== ========
Debt assumed in business acquisitions ............................... $ 700 $ --
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(dollars in thousands, except per share amounts)
1. Basis of Presentation
GENERAL
Cunningham Graphics International, Inc., a New Jersey corporation, (the
"Company") provides a wide range of graphic communications services to financial
institutions and corporations, focusing on printing and distributing
time-sensitive analytical research and marketing materials and providing
on-demand printing services. The Company operates in select international
markets through its facilities in the United States, Canada, the United Kingdom,
and Hong Kong and Singapore. The Company is a major producer of financial
research reports and provides services, on a non-exclusive basis, to a variety
of major international investment banking firms.
The accompanying unaudited condensed consolidated financial statements
include the accounts of Cunningham Graphics International, Inc. and its wholly
owned subsidiaries (the "Company"). All intercompany accounts and transactions
have been eliminated.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the entire
year ending December 31, 2000.
The balance sheet at December 31, 1999 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial requirements.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended December 31, 1999.
4
<PAGE>
2. Acquisitions
On February 1, 2000, the company acquired certain printing assets owned by
an existing customer for $1 million. In connection therewith, the Company took
over the operation of five digital print shops operated by the customer and
entered into a printing contract with such customer. The cost of these assets
exceeded the fair value by $500 thousand and is being amortized over 40 years.
3. Acquisition of Real Estate
The Company has contracted, for the acquisition of an unimproved parcel of
land adjacent to its Jersey City, New Jersey facility, for a purchase price of
$975. The closing of such transaction is contingent upon the completion of
certain environmental remediation to the satisfaction of the Company and the New
Jersey Department of Environmental Protection.
4. Segment and Geographic Information
The Company's single business segment is the production and distribution of
time-sensitive analytical research marketing materials, commercial printing,
digital printing, outsourcing services and on providing on-demand printing
services.
The following table presents financial information based on the Company's
geographic segments for the three months ended March 31, 1999 and 2000 (dollars
in thousands):
For the Three Months Ended March 31, 1999
Income
from
Net Sales Operations
--------- ----------
United States $13,082 $ 1,472
United Kingdom 3,026 413
Hong Kong and Singapore 2,024 408
Canada 169 30
------- -------
Total $18,301 $ 2,323
======= =======
For the Three Months Ended March 31, 2000
Income
from Identifiable
Net Sales Operations Assets
--------- ---------- ------------
United States $ 30,336 $ 2,585 $ 85,596
United Kingdom 8,601 744 34,518
Hong Kong and Singapore 2,881 1,123 13,705
Canada 1,176 425 7,034
-------- -------- --------
Total $ 42,994 $ 4,877 $140,853
======== ======== ========
<PAGE>
5. Comprehensive Income
Total comprehensive income was $1,411 and $2,371 for the three months ended
March 31, 1999 and 2000, respectively. The difference between net income and
other comprehensive income is entirely related to foreign exchange differences.
6. Earnings Per Share Data
The following table sets forth the computation of basic and diluted
earnings per share for the periods indicated:
For the three months ended
March 31,
--------------------------
1999 2000
---------- ----------
Numerator:
Net income for basic and diluted
earnings per share $ 1,395 $ 2,459
---------- ----------
Denominator
Denominator for basic earnings per share 5,645,696 5,753,802
- weighted average common shares
Effect of dilutive securities - employee
stock options 31,289 131,338
---------- ----------
Denominator for diluted earnings per
share- adjusted weighted average
common shares and assumed
conversion 5,676,985 5,885,140
---------- ----------
Basic earnings per common share $ 0.25 $ 0.43
---------- ----------
Diluted earnings per common share $ 0.25 $ 0.42
---------- ----------
7. Subsequent Events
On May 2, 2000, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Automatic Data Processing, Inc., a Delaware
corporation ("Parent") and FIS Acquisition Corp., a New Jersey corporation
("Purchaser") and a wholly owned subsidiary of Parent. Pursuant to the Merger
Agreement, and subject to the terms and conditions thereof, on May 11, 2000 the
Purchaser commenced a cash tender offer (the "Offer") to purchase all of the
outstanding shares (the "Shares") of common stock, no par value, of the Company
at a price of $22 per Share and, following the Offer, will merge with and into
the Company (the "Merger"). Following the consummation of the Merger, the
Company will continue as the surviving corporation and will be a wholly owned
subsidiary of Parent.
Contemporaneously with the execution of the Merger Agreement Parent,
Purchaser and certain shareholders of the Company (the "Shareholders") owning
approximately 44.4% of the shares, entered into a Voting and Tender Agreement
(the "Voting and Tender Agreement")
6
<PAGE>
7. Subsequent Events (Continued)
pursuant to which each Shareholder agreed, among other things, to tender his
shares pursuant to the Offer, to vote his shares in favor of the Merger
Agreement and the transaction contemplated thereby in any action taken by the
shareholders of the Company and not to transfer his shares until the termination
of the Voting and Tender Agreement.
Item 2. Management's Discussion and Analysis and Analysis of Financial
Conditions of Operations
Overview
The Company, headquartered in Jersey City, New Jersey, provides a wide
range of graphic communications services to financial institutions and
corporations, focusing on printing and distributing time-sensitive analytical
research and marketing materials, commercial printing, digital printing and
outsourcing services to a blue-chip client base in the financial services,
insurance and publishing industries, and on providing on-demand printing
services. The Company operates in select international markets through its
facilities in the United States, the United Kingdom, Canada, Hong Kong and
Singapore. The Company is a major producer of financial research reports and
provides services, on a non-exclusive basis, to a variety of major international
investment banking firms.
The sales of the Company are derived from graphic communications services,
including digital communications, document management, offset printing, digital
printing, data output, bindery, fulfillment services, mailing services and
outsourcing services. The Company prints brochures, booklets, confirmations of
trade, client statements and adhesive books to meet the daily, weekly and
monthly needs of its customers. To facilitate the rapid distribution of
documents globally, the Company has designed and implemented the World Research
Link(TM), an array of electronic data communication networks linking each of the
Company's facilities with its major customers. To date, the Company has
established extensive non-exclusive client relationships with leading companies
in the financial services, insurance and publishing industries, providing
certain of the printing and graphic communication needs of Credit Suisse First
Boston Corporation, Goldman, Sachs & Co., PaineWebber Inc., Lehman Brothers
Inc., Merrill Lynch & Co., Inc., The Prudential Insurance Company of America,
Empire Blue Cross/Blue Shield, New York Life Insurance Company, and The
McGraw-Hill Companies, Inc. among others.
7
<PAGE>
Results of Operations
The following tables set forth certain items from the Company's Statements
of Income as a percentage of net sales for the periods indicated:
Three Months
Ended March 31
------------------
1999 2000
------ ------
Net sales 100.0% 100.0%
Costs of production 66.9 68.1
Selling, general and administrative 16.2 16.7
Depreciation and amortization 4.2
3.9
----- -----
Income from operations 12.7 11.3
Interest expense (0.2) (3.1)
Other income 0.0 0.3
----- -----
Income before income taxes 12.5 8.5
Provision for income taxes 4.9 2.8
----- -----
Net income 7.6% 5.7%
===== =====
Acquisitions in 1999 are the primary causes of the increases in revenues
and expenses since March 31, 1999. Each of the Company's acquisitions in fiscal
1999 have been accounted for under the purchase method of accounting;
accordingly, the Company's consolidated income statements reflect revenues and
expenses of acquired businesses only for post-acquisition periods.
The following table sets forth the Company's 1999 acquisitions
(collectively the "1999 Acquired Businesses") and indicates the month in which
each business was acquired.
1999 Acquisitions:
Workable Company Limited and Affiliates January 1999
Boston Towne Press, Inc. February 1999
Griffin House Graphics Limited and Affiliates March 1999
Goldhawk Reprographics Limited and Affiliates April 1999
Bengal Graphics, Inc. and Affiliate June 1999
Venus Holdings Limited and Affiliates June 1999
MVP Graphics, Inc. and Affiliate July 1999
D&L Graphics, Inc. September 1999
Golden Crane, Incorporated September 1999
Mirror Graphics, Inc. and Affiliates October 1999
8
<PAGE>
Three months ended March 31, 2000 compared with three months ended March 31,
1999
Net sales. The Company reported net sales of $43.0 million for the three
months ended March 31, 2000 compared to $18.3 million for the same period in
1999, an increase of $24.7 million or 135%. This increase is due to the addition
of the 1999 Acquired Businesses and internal growth from the Company's existing
customer base. The internal growth resulted primarily from the increase in
business from existing customers and the assimilation of certain in-house
printing operations of third-party businesses.
Costs of production. Costs of production were $29.3 million for the three
months ended March 31, 2000, as compared to $12.3 million for the same period in
1999, an increase of $17 million or 138.2%. Costs of production were
approximately 68.1% of net sales for the three months ended March 31, 2000,
compared to 66.9% for the same period in 1999. The increase of costs of
production as a percentage of net sales was attributable to the inclusion of
higher percentage costs of production for certain 1999 Acquired Businesses and a
change in the Company's sales mix.
Selling, general and administrative expenses. Selling, general and
administrative expenses were $7.2 million for the three months ended March 31,
2000, as compared to $3.0 million for the same period in 1999, an increase of
$4.2 million or 140%. Selling, general and administrative expenses were 16.7% of
net sales for the three months ended March 31, 2000 compared to 16.2% for the
same period in 1999. This increase is due to the addition of the 1999 Acquired
Businesses and an increase in the corporate infrastructure to manage the
Company's accelerated acquisition program and internal growth.
Depreciation and amortization. Depreciation and amortization expenses were
$1.7 million for the three months ended March 31, 2000, as compared to $762
thousand for the same period in 1999, an increase of $938 thousand, or 123.1%.
This increase is due to the addition of the depreciation expense from the 1999
Acquired Businesses and the increase in goodwill amortization.
Provision for income taxes. The provision for income taxes was $1.2 for the
three months ended March 31, 2000, as compared to the provision for income taxes
of $899,000 for the same period in 1999. As a percentage of income before taxes
the tax rate was 33.2% for the three months ended March 31, 2000 and 39.1% for
the same period in 1999. The decrease is attributable to the inclusion of the
1999 Acquired Businesses, which generally have lower tax rates offset by
nondeductible goodwill.
Net income. Net income was $2.5 million or $0.42 per share on a diluted
basis with 5,885,140 weighted average common shares outstanding for the three
months ended March 31, 2000 compared to the net income of $1.4 million or $0.25
per share on a diluted basis with 5,676,985 weighted average common shares
outstanding for the same period of the previous year.
9
<PAGE>
Liquidity and Capital Resources
The Company's primary uses of cash are for working capital, acquisition of
property and equipment, business acquisitions and payments on long-term debt
assumed in connection with certain acquisitions or incurred to finance certain
equipment purchases. Cash utilized to acquire certain assets of in-house
printing facilities of a customer totaled $1 million for the three months ended
March 31, 2000. Cash utilized for the acquisition of property and equipment, was
$1.9 million for three months ended March 31, 2000. Payments on long-term debt
totaled $1.1 million for the three months ended March 31, 2000.
Net cash provided by operating activities was $6.0 million for the three
months ended March 31, 2000.
On August 3, 1999, the Company refinanced its domestic debt other than the
mortgage indebtedness and entered into a $60 million credit facility (the
"Credit Facility") with a group of banks. The Company may borrow up to $24
million until July 2001 for acquisitions (the "Acquisition Line"), and $26
million until July 31, 2004 for working capital, general business purposes and
letters of credit (the "Working Capital Line"), on a revolving basis. The
Company also borrowed $10 million, payable in quarterly installments beginning
on September 30, 2000 to repay existing indebtedness. At the Company's option,
the Credit Facility bears interest at either: (i) the bank's base rate plus a
number of basis points depending upon the Company's maximum leverage ratio, as
defined in the agreement or (ii) the Eurodollar rate plus a number of basis
points depending upon the Company's maximum leverage ratio, as defined. At March
31, 2000, the weighted average interest rate on the Credit Facility was 8.9%.
Among other things, the loan agreement restricts the Company's ability to incur
indebtedness, pay dividends, make capital expenditures, dispose of assets, lend
money to foreign subsidiaries and make acquisitions. The Credit Facility also
requires the Company to maintain certain financial covenants, including minimum
net worth, maximum leverage and debt coverage ratios. The facility is
collateralized by substantially all of the assets of the Company's domestic
subsidiaries and a controlling interest of the stock of the Company's foreign
subsidiaries.
As of March 31, 2000, approximately $7.6 million remained available for
borrowing for acquisitions and $5.2 million remained available for working
capital and general business purposes under the Credit Facility. Letters of
credit totaling $4.1 million were outstanding as of March 31, 2000.
The Company believes that the cash flow provided from operations and the
existing revolving line of credit facility is sufficient to fund the ongoing
operations. However the long-term growth prospects will require additional debt
or equity financing.
10
<PAGE>
Forward Looking Statements
When used in this and in future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases and in oral statements
made with the approval of an authorized executive officer of the Company, the
words or phrases "will likely result." "expects," "plans," "will continue," " is
anticipated," "estimated," "project" or "outlook" or similar expressions
(including confirmations by an authorized executive officer of the Company of
any such expressions made by a third party with respect to the Company) are
intended to identify forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements, each
of which speak only as of the date made. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or projected. The
Company has no obligation to publicly release the result of any revisions that
may be made to any forward-looking statements to reflect anticipated or
unanticipated events or circumstances occurring after the date of such
statements.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to changes in interest rates and foreign currency
exchange primarily in its cash, debt and foreign currency transactions.
A discussion of the Company's accounting policies for financial instruments
is included in the Summary of Significant Accounting Policies in the Notes to
the Consolidated Financial Statements included in the Company's annual report on
Form 10-K for the year ended December 31, 1999. Additional information relating
to financial instruments and debt is included in Note 9 - Revolving Line of
Credit, Long-Term Debt and Obligations Under Capital Leases.
International operations, excluding U.S. export sales which are principally
denominated in U.S. dollars, constitute 29.4% of the revenues and 26.5% of the
identifiable assets of the Company as of March 31, 2000, which were denominated
in British pounds, Hong Kong dollars and Canadian dollars. The Company has loans
to foreign affiliates which are denominated in foreign currencies. Foreign
currency changes against the U.S. dollar affect the foreign currency translation
adjustment of the Company's net investment in these affiliates and the foreign
currency transaction adjustments on long-term advances to affiliates, which
impact consolidated equity of the Company. International operations result in a
large volume of foreign currency commitment and transaction exposures and
significant foreign currency net asset exposures. The Company prints in a number
of locations around the world and has a cost base that is diversified over a
number of different currencies, as well as the U.S. dollar, which serves to
counterbalance partially its foreign currency transaction risk. The Company does
not hedge its exposure to translation gains and losses relating to foreign
currency net asset exposures; however, whenever possible, it borrows in the
local currency to reduce such exposure. Currently, the Hong Kong dollar is
"pegged" to the United States dollar, so there is minimal foreign currency
translation adjustment with respect to the Hong Kong operations.
11
<PAGE>
The Company's cash position includes amounts denominated in foreign
currencies. The Company manages its worldwide cash requirements considering
available funds among its subsidiaries and the cost effectiveness with which
these funds can be accessed. The repatriation of cash balances from certain of
the Company's affiliates could have adverse tax consequences. However, those
balances are generally available without legal restrictions to fund ordinary
business operations.
The Company's interest expense is most sensitive to changes in the general
level of U.S. interest rates. In this regard, changes in U.S. interest rates
affect the interest paid on its debt. To mitigate the impact of fluctuations in
U.S. interest rates, the Company generally maintains a portion of its debt as
fixed rate in nature.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Due to the pending offer by FIS Acquisition Corp., a wholly owned
subsidiary of Automatic Data Processing, Inc., to purchase all of the
outstanding shares of common stock of the Company, the Company has postponed
indefinitely its annual meeting of stockholders. Stockholder proposals for
inclusion in the proxy statement relating to the 2000 annual meeting were due on
December 9, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
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 hereunto duly authorized.
Cunningham Graphics International, Inc.
(Registrant)
Dated: May 15, 2000 By: /s/ Gerald (L.J.) Baillargeon
-----------------------------------
Name: Gerald (L.J.) Baillargeon
Title: Vice President and
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AT MARCH 31, 2000 AND CONSOLIDATED
STATEMENT OF INCOME 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> 2,130
<SECURITIES> 0
<RECEIVABLES> 34,999
<ALLOWANCES> 0
<INVENTORY> 3,272
<CURRENT-ASSETS> 44,431
<PP&E> 41,260
<DEPRECIATION> 0
<TOTAL-ASSETS> 140,853
<CURRENT-LIABILITIES> 31,865
<BONDS> 0
0
0
<COMMON> 36,332
<OTHER-SE> 12,502
<TOTAL-LIABILITY-AND-EQUITY> 140,853
<SALES> 42,994
<TOTAL-REVENUES> 42,994
<CGS> 29,296
<TOTAL-COSTS> 38,117
<OTHER-EXPENSES> 130
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,325
<INCOME-PRETAX> 3,682
<INCOME-TAX> 1,223
<INCOME-CONTINUING> 2,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,459
<EPS-BASIC> 0.43
<EPS-DILUTED> 0.42
</TABLE>
