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 March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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 (I.R.S. Employer
incorporation or organization) Identification Number)
6620 West Broad Street, Suite 500, Richmond, Virginia 23230
(Address of principal executive offices) (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 X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of April 28, 1995.
Class Outstanding at April 28, 1995
Common Stock, $.50 Par Value 6,023,075
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -- 3
March 31, 1995 and June 30, 1994
Consolidated Statements of Income -- 4
Three and Nine-Month Periods Ended
March 31, 1995 and 1994
Consolidated Statements of Cash Flows -- 5
Nine Months Ended March 31, 1995 and 1994
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12
2
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
March 31, June 30,
1995 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,027 $ 3,855
Accounts receivable 53,135 44,747
Inventories 17,555 11,219
Deferred income taxes 1,227 1,227
Prepaid expenses and other 1,308 889
Total current assets 75,252 61,937
Property, plant, and equipment (net of
accumulated depreciation of $72,099
at March 31, 1995 and $70,818 at
June 30, 1994) 83,432 77,072
Investment in unconsolidated joint venture 6,831
Other assets 2,282 6,672
Goodwill and intangibles, net 7,874 7,617
Total Assets $168,840 $160,129
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 2,365 $ 2,318
Accounts payable 21,301 17,312
Accrued expenses:
Compensation 9,653 10,612
Restructuring charge 455 1,900
Other 8,480 6,439
Income taxes 2,195
Total current liabilities 44,449 38,581
Long-term debt 55,042 56,122
Other long-term liabilities 7,201 7,575
Deferred income taxes 2,927 2,922
Shareholders' equity:
Common stock ($.50 par value; authorized-16,000
shares; issued and outstanding shares-6,023 at
March 31, 1995 and 5,984 at June 30, 1994) 3,011 2,992
Capital in excess of par value 12,144 11,796
Retained earnings 44,066 40,141
Total shareholders' equity 59,221 54,929
Total Liabilities and Shareholders' Equity $168,840 $160,129
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $74,846 $67,413 $202,466 $177,987
Operating expenses
Cost of sales 55,408 50,135 152,483 132,825
Selling and administrative 13,956 13,181 37,508 35,018
Operating income 5,482 4,097 12,475 10,144
Interest and other (income) expenses
Interest 1,323 1,319 4,063 3,300
Other (income) expenses, net 260 (37) (38) 108
Income before income taxes 3,899 2,815 8,450 6,736
Income taxes 1,831 1,133 3,624 2,708
Income before cumulative effect
of changes in accounting
principles 2,068 1,682 4,826 4,028
Cumulative effect of changes in
accounting for:
Postretirement benefits (net of
income tax benefit of $355) (532)
Income taxes 933
Net income $ 2,068 $ 1,682 $ 4,826 $ 4,429
Earnings per share:
Income before cumulative effect
of changes in accounting
principles $ .33 $ .28 $ .78 $ .67
Cumulative effect of changes in
accounting for postretirement
benefits and income taxes .07
Net income $ .33 $ .28 $ .78 $ .74
Average number of common shares
outstanding 6,195 6,069 6,189 6,054
Cash dividends per common share $ .05 $ .05 $ .15 $ .15
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
Nine Months Ended
March 31,
1995 1994
<S> <C> <C>
Operating Activities
Net income $ 4,826 $ 4,429
Adjustments to reconcile net income to net
cash provided by operating activities:
Cumulative effect of changes in
accounting for:
Postretirement benefits 532
Income taxes (933)
Depreciation and amortization 8,913 8,355
Equity in earnings of joint venture (445) (410)
Other, net 1,081 613
14,375 12,586
Changes in operating assets and liabilities,
excluding effects of acquisitions:
Accounts receivable (8,349) (1,225)
Inventories (6,336) (1,171)
Accounts payable, accrued expenses,
and income taxes 5,812 6,942
Other, net (563) (254)
(9,436) 4,292
Net cash provided by operating activities 4,939 16,878
Investing Activities
Purchases of property, plant, and equipment (16,929) (10,157)
Proceeds from sale of property and equipment 3,741 568
Sale of unconsolidated joint venture 6,800
Cash paid for businesses acquired (1,080) (17,178)
Proceeds from life insurance loans 2,939
Other, net (667) (178)
Net cash used in investing activities (5,196) (26,945)
Financing Activities
Proceeds from short-term borrowings 6,800
Repayment of short-term borrowings (6,800) (17,500)
Proceeds from long-term borrowings 118 40,000
Repayment of long-term borrowings (1,150) (4,464)
Dividends paid (901) (894)
Proceeds from exercise of stock options 367 131
Other, net (5) (306)
Net cash provided by (used in)
financing activities (1,571) 16,967
Increase (decrease) in cash and cash equivalents (1,828) 6,900
Cash and cash equivalents at beginning
of period 3,855 2,206
Cash and cash equivalents at end of period $ 2,027 $ 9,106
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
1. The interim financial statements are unaudited. In the opinion of
management, they reflect all adjustments (which consist only of
those of a normal recurring nature) necessary for a fair
presentation of results for the periods indicated. The results of
operations for any interim period are not necessarily indicative of
results for the full year. These financial statements should be
read in conjunction with the financial statements and notes thereto
contained in the Company's annual report for the year ended June 30,
1994. Certain previously reported amounts have been reclassified to
conform with the fiscal 1995 presentations.
2. Net income per common share is computed based upon the weighted
average number of shares outstanding during the periods presented.
Shares under stock options are treated as common stock equivalents
for purposes of computing primary and fully diluted net income per
share.
3. Inventories are valued at the lower of cost or market, principally
using the last-in, first-out (LIFO) method (71.3% as of March 31,
1995 and 72.6% as of June 30, 1994). The first-in, first-out (FIFO)
method is used to value the remaining inventories. The components
of inventories were as follows (in thousands):
March 31, June 30,
1995 1994
Raw materials and supplies $ 6,806 $ 3,997
Work in process:
Materials 3,473 2,219
Other manufacturing costs 5,427 3,623
Finished goods 1,849 1,380
$17,555 $11,219
4. The Company periodically enters into interest rate swap agreements
to moderate its exposure to interest rate changes and to lower the
overall cost of borrowing. On October 3, 1994, the Company entered
into two interest rate swap agreements with two banks to convert
debt with an aggregate notional value of $8.7 million from floating-
rate to fixed-rate debt. These swaps have a term of four years.
Under the terms of these agreements, the Company makes payments at a
fixed interest rate of 8.061% and will receive payments based on
six-month LIBOR in arrears. The net interest paid or received is
included in interest expense. These swaps are hedged against the
$35.0 million fixed-to-floating rate swap. See Note 8 of the Notes
to Consolidated Financial Statements in the Annual Report for
additional information on these transactions.
5. On September 29, 1994, the Company sold the land, building, and
building improvements ("property") of Three Score, Inc. in Tucker,
Georgia for $2.9 million (which approximated net book value) under
agreements for the sale and leaseback of the property. The lease is
classified as an operating lease in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 13, "Accounting for
Leases."
The Company has lease renewal options after the initial fifteen year
lease term at projected future fair market values under the agreement.
Total future minimum lease payments for each of the next five years are
$0.3 million.
6. On February 28, 1995, the Company sold its fifty percent joint
venture interest in Central Florida Press, L.C. ("CFP") to The
Lanman Companies, Inc. ("Lanman"), for $6.8 million in cash,
resulting in an after-tax charge of $0.4 million, or $.06 per share,
arising primarily from certain tax liabilities related to the
transaction. Lanman was the owner of the remaining interest in CFP.
The Company completed the joint venture with Lanman to form CFP in March
1993. The investment was accounted for on the equity basis.
6
<PAGE>
7. On November 1, 1993, the Company acquired the net assets of Waverly
Press from Waverly, Inc. ("Waverly") for up to approximately $20
million. Waverly Press, the printing division of Waverly has annual
sales of approximately $50 million; is well-known as a premier
printer of scientific, scholarly, and medical journals; and now
operates under the name Cadmus Journal Services ("CJS"). The
purchase price consisted of cash payments of $14.5 million at
closing; additional consideration of $5.5 million which was based on
several contingencies; and other direct costs of the acquisition.
The acquisition was accounted for under the purchase method and,
accordingly, the costs of the acquisition were allocated to the
assets acquired and liabilities assumed based upon their respective
fair values. The operating results of CJS have been included in the
consolidated operating results since the date of acquisition.
At closing, $1.0 million was placed in escrow pending confirmation of
representations made by Waverly until March 1, 1995, at which time an
escrow settlement payment of $0.9 million (including interest) was made
to Waverly. Also, on March 1, 1995, a $0.3 million payment was made to
Waverly in consideration for the expiration of the $1.0 million earnings
contingency. Both payments were allocated to increase non-current assets
proportionately. These payments satisfied the final contingencies under
the Purchase Agreement.
8. During the first quarter of fiscal 1995, the Company purchased the
remaining twenty percent equity interest in Tuff Stuff Publications,
Inc. ("Tuff Stuff") under the original repurchase agreement for
approximately $0.6 million to bring the Company's equity interest in
Tuff Stuff to one hundred percent. The Company purchased the
initial eighty percent equity interest in April 1992, at which time
the acquisition was accounted for using the purchase method.
Accordingly, the assets and liabilities were recorded at their
estimated fair value with the excess of the purchase price over the
estimated fair value of the identifiable net assets acquired
recorded as goodwill which is being amortized on a straight-line
basis over twenty years. The additional $0.6 million equity
interest was recorded first as a reduction of the existing minority
interest ownership and then as an addition to the excess of the
purchase price over the estimated fair value of the net assets
acquired and will be amortized on a straight-line basis over the
remaining life of the original goodwill (approximately seventeen
years).
9. A supplementary non-qualified, non-funded, pension plan
("Supplemental Plan") for certain officers is maintained and is
being provided for by charges to earnings sufficient to meet the
projected benefit obligation. The Supplemental Plan is technically
a non-funded plan; however, the Company has acquired life insurance
contracts ($13.5 million and $13.9 million face amount at March 31,
1995 and June 30, 1994, respectively) intended to be adequate to
fund future benefit payments. The cash surrender value of these
contracts, net of policy loans, was $1.0 million and $3.6 million at
March 31, 1995 and June 30, 1994, respectively, and is included in
other assets in the Consolidated Balance Sheets.
10. In the fourth quarter of fiscal 1994, the Company recorded a
restructuring charge of $1.9 million. This charge resulted from
reductions in its work force related to the decision to close its
Springfield, Virginia facility and to consolidate its composition
and pre-press facilities in Richmond, Virginia and Baltimore,
Maryland. These actions are expected to be completed by June 30,
1995. The Company recorded a pre-tax charge of $1.6 million related
to employee termination benefits with the remaining $0.3 million
charge related to equipment write-offs and miscellaneous other
direct costs associated with the discontinuation of the operations
and other exit costs. Actual amounts charged against the reserve in
the three and nine-month periods ended March 31, 1995 were $0.7
million and $1.4 million, respectively.
7
<PAGE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents the major components from the Consolidated
Statements of Income as a percent of sales for the three and nine-month
periods ended March 31, 1995 and 1994:
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 74.0 74.4 75.3 74.6
Gross profit 26.0 25.6 24.7 25.4
Selling and administrative 18.7 19.5 18.5 19.7
Operating income 7.3 6.1 6.2 5.7
Interest expense 1.8 2.0 2.0 1.8
Other (income) expenses 0.3 (0.1) 0.0 0.1
Income before income taxes 5.2 4.2 4.2 3.8
Income taxes 2.4 1.7 1.8 1.5
Income before cumulative
effect of changes in
accounting principles 2.8 2.5 2.4 2.3
Cumulative effect of changes
in accounting principles 0.2
Net income 2.8% 2.5% 2.4% 2.5%
Sales
Net sales for the third quarter of fiscal 1995 increased 11.0% to $74.8
million compared to $67.4 million for the third quarter last year. For the
nine-month period ended March 31, 1995, net sales increased to $202.5
million up 13.8% from $178.0 million for the same period of fiscal 1994.
Excluding the effect of the acquisition of Cadmus Journal Services, year-
to-date sales rose 6.6%.
The Company categorizes sales into three business groups: printing,
marketing, and publishing. The table below displays net sales for each of
these groups expressed as a percent of total sales:
Three Months Ended Nine Months Ended
March 31, March 31,
1995 1994 1995 1994
Printing 75.6% 79.0% 75.8% 75.9%
Marketing 18.8 13.7 17.5 16.5
Publishing 5.6 7.3 6.7 7.6
100.0% 100.0% 100.0% 100.0%
Sales increased in both the printing and marketing business groups for the
three and nine-month periods of fiscal 1995. However, publishing sales
were down for the quarter and were flat for the first nine months when
compared to the same periods of fiscal 1994. The changes within each
business group from the prior year third quarter and first nine months,
respectively, are as follows: printing, 7.5% and 14.3% increases;
marketing, 54.3% and 21.4% increases; and publishing, 14.7% decrease and
0.8% increase. Adjusted for the acquisition of Cadmus Journal Services,
overall printing sales were up 5.0% for the first nine months over prior
year.
8
<PAGE>
Printing Sales
The growth in printing sales for both the third quarter and nine-month
period of fiscal 1995 was attributable to increased research journal sales
(4.7% and 33.5% increases), continued gains in sales of specialty packaging
(46.9% and 44.7% increases), higher promotional material sales (10.2% and
7.1% increases), and a turnaround in sales of specialty publications (10.7%
and 0.8% increases). Adjusted for the acquisition of Cadmus Journal
Services, research journal sales increased by 11.5% for the nine-month
period. The growth in journal revenues is attributable to the synergies
achieved through the integration of the research journal businesses into a
single organization. Specialty packaging sales continued to rise at a
steady rate driven equally by increased volume and improved pricing. After
an overall down year in fiscal 1994, sales of promotional materials posted
a third consecutive quarter of growth due entirely to expanded volume.
Both financial printing and annual and quarterly report sales rose in the
third quarter (21.0% and 3.8%, respectively), but were down year-to-date
(14.0% and 7.1%, respectively). Financial printing revenues rose following
five down quarters due to increased market activity. Annual and quarterly
report revenues showed a slight increase as new customers were established,
partially offset by lower page counts and other efforts by customers to
control costs.
Marketing Sales
The substantial growth for the third quarter and nine-month period in
marketing revenues was achieved through both internal growth in each of the
product lines combined with the introduction of several new initiatives.
In marketing services, the successful introduction of the Cadmus Sports
Marketing and "Kids Link" programs, along with the formation of Cadmus
Interactive, produced combined revenues of $1.6 million for the third
quarter and $3.8 million for the nine-month period ended March 31, 1995.
In addition, the remaining product lines each generated double-digit
internal sales growth for the third quarter as follows: point-of-sale, a
37.4% increase; catalog photography and design, a 61.3% increase; and
direct marketing, a 24.6% increase. Although the strong third quarter
marketing sales were partially attributable to some sales shifting from the
second to the third quarter, growth in these product lines should persist
as the company continues to focus resources on the expansion of this
business group.
Publishing Sales
Publishing sales decreased for the third quarter by 14.7% and were
essentially flat year-to-date, with an 0.8% increase over prior year
comparable periods. This decline in revenues was attributable to a
decrease in ad pages in contract publishing due to overall soft ad trends
for the in-flight magazine category. A decline in trading card interest,
resulting from the baseball strike, negatively impacted revenues from
owned-titles. Early signs indicate that the end of the strike has renewed
the hobbyist interest in this category and trends in this product line
should start to rebound over the next several months.
Operating Expenses and Income Taxes
Cost of sales for the third quarter of fiscal 1995 were down by 0.4% of
sales due to an improved product mix resulting from an increase in higher-
margin marketing revenues for the current fiscal year as compared to the
prior year. In addition, selling and administrative expenses were down for
the quarter by 0.8% due to successes in both enhancing the product mix and
in effecting the cost reductions from the restructuring of the research
journal and specialty magazine operations.
Cost of sales for the nine months ended March 31, 1995, were up by 0.7% of
sales; however, selling and administrative expenses decreased for the same
period by 1.2% of sales. The increase in the cost of sales and the
decrease in the selling and administrative expenses as a percent of sales
is a result of a change in the sales mix related to the acquisition of
Cadmus Journal Services, which has a relatively higher cost of sales and a
lower general and administrative expense ratio. In addition, the
successful cost reduction efforts initiated in the fourth quarter of fiscal
1994 have generated improvement in the selling and administrative expense
ratio. Excluding the effects of Cadmus Journal Services, cost of sales and
general and administrative expenses for the nine-month period decreased by
4.6% and 1.2% of sales, respectively.
9
<PAGE>
The Company's effective income tax rate increased for both the quarter and
the nine-month period ended March 31, 1995, the result of tax liabilities
arising from the sale of the Company's fifty percent joint venture interest
in Central Florida Press, L.C. ("CFP"). The tax rate, excluding this
transaction, was 39.4%. See Note 6 of the Notes to Consolidated Financial
Statements for additional information on the sale of CFP.
LIQUIDITY AND CAPITAL RESOURCES
For the nine-month period, net cash provided by operating activities
declined from $16.8 million for fiscal 1994 to $4.9 million for fiscal year
1995. This decrease resulted primarily from increased levels of both
accounts receivable and inventories, partially offset by decreased current
liabilities. The $8.3 million increase in accounts receivable is due to
strong third quarter sales combined with the increase in days sales
outstanding from 49 at March 31, 1994 to 55 at March 31, 1995. Raw
materials and work in process inventory levels increased by a combined $6.3
million from June 30, 1994 compared to a $1.2 million increase during the
first nine months of fiscal 1994. The $2.8 million increase in raw
materials inventory results from a tightened paper market which has forced
the Company to carry additional safety stock. A $3.1 million increase in
work in process inventory resulted from an increase in backlog of orders at
March 31, 1995. These increases were partially offset by accounts payable,
accrued expenses, and income taxes which experienced a $5.8 million
increase from June 30, 1994 compared to a $6.9 million increase for the
same period of fiscal 1994.
Investments of $16.9 million in property, plant, and equipment included
$3.2 million for the purchase of a 90,000 square foot building in Richmond,
Virginia to accommodate the expansion of Cadmus Promotional, Washburn
Financial, and Cadmus Color Center; the addition of a CD press to support
the specialty packaging printing product line; the addition of a UV press
to support the point-of-sale marketing product line; the completion of the
installation of text and graphics composition software to integrate
research journals in Richmond and Baltimore/Easton at a cost of
approximately $4.5 million; and $1.3 million for the build-out of leasehold
improvements at a new facility in Baltimore, Maryland for Cadmus Journal
Services. For fiscal 1995, the Company projects that capital spending will
total approximately $20.0 million.
Also included in investing activities were proceeds of $2.9 million
generated from sale and leaseback agreements for the land, building, and
building improvements of Three Score, Inc. in Tucker, Georgia. In
addition, $6.8 million in cash was received as a result of the sale of the
Company's fifty percent joint venture interest in CFP to The Lanman
Companies, Inc. See Notes 5 and 6 of the Notes to Consolidated Financial
Statements for additional details of the property and joint venture sales,
respectively.
Total debt at March 31, 1995 was $57.4 million, representing a $1.0 million
decrease from $58.4 million at June 30, 1994. The Company's debt-to-
capital ratio at March 31, 1995 decreased to 49.2% down from 51.5% at June
30, 1994. There were no outstanding borrowings at March 31, 1995 under the
Company's $25 million revolving credit lines.
On October 3, 1994, the Company entered into two interest rate swap
agreements with two banks to convert debt with an aggregate notional value
of $8.7 million from floating-rate to fixed-rate debt. Both of these swap
agreements have a term of four years and were initiated to moderate
exposure to interest rate changes and to lower the overall cost of
borrowing. Under the terms of these agreements, the Company makes payments
at a fixed interest rate of 8.061% and will receive payments based on six-
month LIBOR in arrears. The net interest paid or received is included in
interest expense. These swaps are hedged against the $35.0 million fixed-
to-floating rate swap. See Note 4 of the Notes to Consolidated Financial
Statements for additional information on these transactions.
10
<PAGE>
RESTRUCTURING CHARGE
In the fourth quarter of fiscal 1994, the Company announced a plan to
restructure its research journal and specialty magazine divisions,
resulting in a pre-tax charge of $1.9 million. This charge resulted from
reductions in its work force related to the decision to close its Spring-
field, Virginia facility, and to consolidate its composition and pre-press
facilities in Richmond, Virginia and Baltimore, Maryland. These actions
are expected to be completed by June 30, 1995. The Company expects to
achieve pre-tax cost savings, primarily due to payroll-related savings
achieved from the separation of the employees, in the second half of
fiscal 1995 of approximately $1.5 million, with a full-year impact of
annual cost savings increasing to $3.2 million in fiscal 1996. Following
is a schedule of the costs included in and the amounts charged against the
restructuring reserve to date (in thousands):
<TABLE>
First Second Third
Original Quarter Quarter Quarter Year-to-Date
Description Reserve Charges Charges Charges Charges
<S> <C> <C> <C> <C> <C>
Employee separations $1,630 $354 $232 $636 $1,222
Equipment write-downs 75 21 93 114
Other direct costs 195 90 19 109
$1,900 $465 $232 $748 $1,445
</TABLE>
The employee separation costs relate to termination benefits for
anticipated layoffs of approximately ninety-six employees: twenty percent
management and eighty percent production. As of March 31, 1995, all
ninety-six employees have left the Company as a result of this plan.
Cash expenditures of approximately $0.7 million shifted from the second
quarter, as originally projected, to the third and fourth quarters due to
the election by many of the terminated employees to receive a stream of
separation benefits, rather than a lump sum payment. The remaining cash
expenditures under this restructuring plan will occur in the fourth quarter
of fiscal 1995 and are expected to approximate the $0.4 million remaining
reserve.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: Description
Exhibit 3.2 Bylaws of Cadmus Communications Corporation,
as amended, filed herewith
Exhibit 11 Statement Regarding Computation of Net Income
per Share
<PAGE>
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.
CADMUS COMMUNICATIONS CORPORATION
Date: May 8, 1995
/s/ C. Stephenson Gillispie, Jr.
C. Stephenson Gillispie, Jr.
Chairman, President, and Chief Executive Officer
Date: May 8, 1995
/s/ Michael Dinkins
Michael Dinkins
Vice President and Chief Financial Officer
(FEBRUARY, 1995)
RESTATED BYLAWS
OF
CADMUS COMMUNICATIONS CORPORATION
ARTICLE I
Meetings of Stockholders
Section 1. Places of Meetings: All meetings of the stockholders
shall be held at the principal office of the Corporation or at such
other place as may be stated in the notice or waiver of notice of any
such meeting.
Section 2. Annual Meeting: The annual meeting of the stockholders
of the Corporation shall be held at a time and place to be determined by
the Chairman of the Board, the President, the Board of Directors or the
Executive Committee, which time and place shall be stated in the notice
of the annual meeting.
Section 3. Special Meetings: Except as otherwise specifically
provided by law, a special meeting of the stockholders shall be held
only upon the call of the Chairman of the Board, the President, the
Board of Directors or the Executive Committee.
Section 4. Notice of Meeting. Written notice stating the place,
day and hour of every meeting of the stockholders and the purpose or
purposes for which the meeting is called, shall be given not less than
ten nor more than sixty days previous thereto (except as otherwise
required by law), either personally or by mail, by or at the direction
of the Chairman of the Board, the President, any Vice President, the
Secretary, or by the persons calling the meeting, to each stockholder of
record entitled to vote at the meeting.
Section 5. Quorum: Any number of stockholders together holding a
majority of the shares issued and outstanding of the Corporation
entitled to vote (which shall not include any treasury stock held by the
Corporation), who shall be present in person or represented by proxy at
any meeting, shall constitute a quorum for the transaction of business,
including the election of directors. If less than a quorum shall be
present or represented by proxy at the time for which a meeting shall
have been called, the meeting may be adjourned from time to time by a
majority of the stockholders present or represented by proxy, without
notice other than by announcement at the meeting, until quorum shall be
present or represented by proxy.
Section 6. Organization: The Chairman of the Board and in his
absence, the President, and in the absence of the Chairman of the Board
and the President, a chairman appointed by the stockholders present
shall call the meeting of the stockholders to order and shall act as
chairman thereof.
Section 7. Voting: At any meeting of the stockholders, each
stockholder entitled to vote shall have one vote, in person or by proxy
appointed by an instrument in writing, subscribed by such stockholder or
by his duly authorized attorney; at all meetings, each stockholder shall
have one vote, for each share of stock registered in his name.
Section 8. Listing of Stockholders: At each meeting of the
stockholders a full, true and complete list, in alphabetical order, of
all the stockholders entitled to vote at such meeting, with the number
of shares held by each, certified by the secretary, assistant secretary
or the transfer agent, shall be furnished.
ARTICLE II
Directors
Section 1. General Powers: The business and affairs of the
Corporation otherwise expressly provided by law or by
the Articles of Incorporation, or by these By-laws, all of the powers of
the Corporation shall be vested in said Board.
Section 2. Number and Qualification: The number of directors
comprising the Board of Directors shall be as established in the
Articles of Incorporation. Directors need not be stockholders or
residents of the State of Virginia. A majority of the directors
actually elected and serving at the time of any given meeting shall
constitute a quorum for the transaction of business and the act of the
majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 3. Election of Directors: The directors shall be elected at
the annual meeting of shareholders in accordance with the Article of
Incorporation.
Section 4. Meetings of Directors: Regular meetings of the Board
shall be held at such times as the Board may determine, and special
meeting shall be held whenever called by the direction of the Chairman
of the Board or the President, or by any two directors for the time
being in office. Unless otherwise specified in the notice thereof, any
and all business may be transacted at a special meeting. Meetings of
the Board of Directors shall be held at places in or outside the State
of Virginia and at times fixed by resolution of the Board, or upon call
of the Chairman of the Board or the President. The Secretary, or
officer performing his duties, shall give at least 24 hours' notice by
telegraph, letter, or telephone of all meetings of the directors;
provided, that notice need not be given of regular meetings held at
times and places fixed by resolution of the Board. Meetings may be held
at any time without notice if all directors are present, or if those not
present waive notice either before or after the meeting.
Section 5. Action Without a Meeting: Any action which is required
or which may be taken at a meeting of the directors or of a committee,
may be taken without a meeting if a consent in writing, setting forth
the actions so to be taken, shall be signed before such action by all
the directors, or all of the members of the committee, as the case may
be.
Section 6. Nominations of Director Candidates: The Executive
Committee appointed by the Board of Directors in accordance with Article
III, Section 2 shall select and recommend a slate of nominees to be
voted on for election as directors at each annual meeting. However, any
shareholder entitled to vote in the election of directors generally may
nominate one or more persons for election as directors at a meeting, but
only if written notice of such stockholder's intent to make such
nomination(s) has been given, either by personal delivery or by United
States mail, postage prepaid, to the Secretary of the Corporation not
later than (i) with respect to an election to be held at annual meeting
of stockholders, ninety days prior to the anniversary date of the
immediately preceding annual meeting of stockholders and (ii) with
respect to an election to be held at a special meeting of stockholders
for the election of directors, the close of business on the tenth day
following the date on which notice of such meeting is first given to
stockholders. Each such notice of a stockholders' intention to make
nomination(s) shall set forth: (a) the name and address of the
stockholder who intends to make the nomination of the person(s) and of
the person(s) to be nominated; (b) a representation that the stockholder
is the owner of the stock of the Corporation entitled to vote at such
meeting an intends to appear in person or by proxy at the meeting to
nominate the person(s) specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee
for director and any other person(s) (naming such person(s)) pursuant to
which the nomination(s) are to be made by the stockholder; (d) such
other information regarding such nominee proposed by such stockholder as
would be required to be included in the proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of
Directors; and (e) the written consent of each nominee to serve as a
director of the Corporation if so elected. The presiding officer at any
meeting may refuse to acknowledge the nomination of any person not made
in compliance with the foregoing sentence.
Section 7. Changes in Principal Occupation: In the event that a
director changes his principal occupation, the director shall submit a
letter of resignation to the Chairman of the Board, indicating the
nature of his new principal occupation. If the new principal occupation
results in a conflict of interest or otherwise necessitates immediate
action, the Executive Committee shall promptly take such action as it
deems appropriate with respect to the resignation. Otherwise, the
Executive Committee shall defer action on the resignation until the
expiration of the director's current term. At such time, the Executive
Committee shall consider whether to nominate such director for re-
election, taking into consideration the nature of the director's new
occupation, the attributes and qualifications necessary to maintain a
well-balanced Board, and such other factors as the Executive Committee
deems relevant.
ARTICLE III
Committees
Section 1. Committees: There will be an Executive Committee, a
Benefits and Investment Committee, an Audit Committee and such other
committees as the Board of Directors may, from time to time, create for
such purposes with such powers as the Board may determine.
Section 2. Executive Committee: The Board of Directors shall
appoint from among the directors an Executive Committee consisting of
not less than three (3) nor more than seven (7) members (or such other
number as the Board may appoint). This Committee shall have power to do
any and all acts and to exercise any and all authority between the
meetings of the Board of Directors which the Board of Directors is
authorized and empowered to exercise, except as otherwise limited under
Virginia law and under the Articles of Incorporation and Bylaws of the
Corporation.
The Executive Committee shall also perform the functions of a
nominating committee. These functions shall be to recommend to the
Board of Directors nominees for directors to be voted on at each annual
shareholders meeting; to recommend nominees to fill vacancies on the
Board of Directors; to make recommendations concerning membership on
committees of the Board of Directors, the functions of such committees,
and the creation of new committees or the discontinuance of existing
committees, as well as such other related functions as the Board of
Directors may from time to time determine; and to recommend officers for
appointment by the Board of Directors. Members of the Executive
Committee who are officers or employees of the Corporation or any of its
subsidiaries ("Management Members") shall have no vote on matters
involving the nomination of directors.
The Executive Committee shall fix its own rules of proceeding and
shall meet where and as provided by such rules, but in every case the
presence of at least a majority of the Executive Committee shall be
necessary to constitute a quorum. In every case, the affirmative vote of
a majority of all the members of the Executive Committee present at the
meeting shall be necessary for the adoption of any resolution.
The Chairman of the Corporation shall serve as the Chairman of the
Executive Committee. The Chairman shall preside at meetings of the
Executive Committee and shall have such other powers and duties as shall
be conferred upon him from time to time by the Board of Directors.
All actions of the Executive Committee shall be reported to the
Board of Directors at its next succeeding meeting.
Section 3. Benefits and Investment Committee. The Board of
Directors shall appoint from among its members a Benefits and Investment
Committee, consisting of not less than three (3) nor more than seven (7)
(or such other number as the Board may appoint). The Board shall
appoint one member of the Committee as Chairman. The responsibilities
of the Benefits and Investment Committee shall be to review the
operation of the employee benefit plans and programs and other fringe
benefits provided by the Corporation and to review and monitor
compliance thereof with applicable law; and to select and evaluate the
performance of any Plan Administrator(s), trustee(s) and Investment
Manager(s) and to recommend changes deemed advisable. Additionally, the
Committee monitors general employee relations and human resource
policies and practices to ensure that Cadmus' human resources are being
used as well as possible and that training and development are as
effective as practical. The Benefits and Investment Committee shall
report at least once a year to the Board of Directors.
Section 4. Executive Compensation and Organization Committee: The
Board of Directors shall appoint from among its members who are not
officers or employees of the Corporation or its subsidiaries
("Non-management Members") an Executive Compensation and Organization
Committee consisting of not less than three (3) nor more than seven (7)
members (or such other number as the Board may appoint). The Board shall
appoint one member of the Committee as Chairman. The responsibilities
of the Executive Compensation and Organization Committee shall be to
approve the design of, and to administer, senior management salary and
incentive plans and related perquisites and benefits; to make awards to
employees under the Corporation's stock incentive plan; to review and
evaluate the organizational structure, management development and
succession plans as presented by the President of the Corporation; and
to review and evaluate the goals and performance of the Chairman and the
President and their evaluation of key employees. The Executive
Compensation and Organization Committee shall report at least once a
year to the Board of Directors.
Section 5. Audit Committee: The Board of Directors shall appoint
from among its Non-management Members an Audit Committee of five (5)
members (or such other number as the Board may appoint). The Board
shall appoint one member of the Committee as Chairman. Management
members of the Board shall be counted for the purpose of determining the
presence of a quorum at meetings of the Board of Directors at which the
Audit Committee members are appointed, but shall have no vote upon the
membership of the Audit Committee.
The Audit Committee shall meet each year (i) preceding the selection
of the external auditors to perform the annual audit, (ii) at least once
after these auditors have been selected and before the audit begins or
during the early stages of the audit, and (iii) at least once after the
report of the external auditors is received. Other meetings may be held
as necessary or convenient. A quorum for any meeting of the Audit
Committee shall be any two members, but there shall be an attempt to
have all members present at each meeting.
The Audit Committee shall report to the Board of Directors at least
once each year, recommending any appropriate change in operating or
accounting practices that are or may be illegal or contrary to the
interests of the Corporation or to which the attention of the Board
should be called for other reasons, and focusing particularly on the
integrity and adequacy of disclosure of financial information relating
to the Corporation and the identification of any problem areas relating
thereto.
The Chairman of the Board of the Corporation shall designate an
officer of the Corporation to serve as a liaison between the Audit
Committee and the officers. The Audit Committee or any one or two of
its members may interview any employee, agent, customer or former or
potential customer, supplier, auditor or former or potential auditor, or
any other person, or examine any document, at any time and without
offering any reasons so long as such action is in the discharge of the
responsibilities of the Audit Committee. No officer or employee of the
Corporation shall be present at such interview or examination or seek to
learn the substance or subject of the inquiry, without the consent of
the Audit Committee or the member or members acting. The Audit
Committee may consult at any time with counsel regularly retained by the
Corporation, and may after informing the Board of Directors consult with
other counsel at the cost of the Corporation.
ARTICLE IV
Officers
Section 1. Election: The officers of the Corporation shall consist
of a Chairman of the Board, a President, a Secretary and an Treasurer,
and persons elected to such other offices as may be established from
time to time by the Board of Directors. All officers shall be elected
by the Board of Directors, and shall hold office until their successors
are elected and qualify. Vacancies may be filled at any meeting of the
Board of Directors. Any two offices may be combined in the same person
as the Board of Directors may determine.
Section 2. Removal of Officers: Any officer of the corporation may
be removed summarily with or without cause, at any time by the Board of
Directors.
Section 3. Duties: The Chairman of the Board shall preside at all
meetings of shareholders and directors and shall have such other duties
and authority as the Board shall provide from time to time. The
President shall be the Chief Executive Officer of the Corporation and
shall have the power and responsibility for carrying out policies of the
Board of Directors. The officers of the Corporation shall have such
duties as generally pertain to their offices, as well as such powers and
duties as from time to time shall be conferred upon them by the Board of
Directors.
ARTICLE V
Capital Stock
Section 1. Issuance of Certificates of Stock: Certificates of
capital stock shall be in such form as may be prescribed by the Board of
Directors and may (but need not) bear the seal of the Corporation or a
facsimile thereof. All certificates shall be signed by the Chairman of
the Board of the
President, and also by the Secretary or the Assistant Secretary,
which signatures may be facsimiles thereof.
Section 2. Certificates to be Entered: All certificates shall be
consecutively numbered, and shall contain the names of the owner, the
number of shares and the date of issue, a record whereof shall be
entered in the Corporation's books. The Corporation shall be entitled
to treat the holder of record of shares as the legal and equitable owner
thereof and accordingly shall not be bound to recognize any equitable or
other claim with respect thereto on the part of any other person so far
as the right to vote and to participate in dividends is concerned.
Section 3. Transfer of Stock: The stock of the Corporation shall be
transferable or assignable on the books of the Corporation by the
holders in person or by attorney on surrender of the certificate or
certificates for such shares duly endorsed, and, if sought to be
transferred by attorney, accompanied by a written power of attorney to
have the same transferred on the books of the Corporation. To the
extent that any provision of the Rights Agreement between the
Corporation and First Union National Bank of North Carolina, NA., as
Rights Agent, dated as of February 1, 1989, is deemed to constitute a
restriction on the transfer of any securities of the Corporation,
including, without limitation, the Rights, as defined therein, such
restriction is hereby authorized by the bylaws of the Corporation.
Section 4. Lost, Destroyed and Mutilated Certificates: The holder
of stock of the Corporation shall immediately notify the Corporation of
any loss, destruction, or mutilation of the certificate therefor, and
the Board of Directors may in its discretion cause one or more new
certificates for the same number of shares in the aggregate to be issued
to such stockholder upon the surrender of the mutilated certificate, or
upon satisfactory proof of such form and amount and with such surety as
the Board of Directors may require.
Section 5. Regulations: The Board of Directors may make such rules
and regulations as it may deem expedient regulating the issue, transfer
and registration of certificates of stock of the Corporation.
Section 6. Determination of Stockholders of Record. The share
transfer books may be closed by order of the Board of Directors for not
more than seventy days for the purpose of determining stockholders
entitled to notice of or to vote at any meeting of the stockholders or
any adjournment thereof (or entitled to receive any distribution or in
order to make a determination of stockholders for any other purposes).
In lieu of closing such books, the Board of Directors may fix in advance
as the record date for any such determination a date not more than
seventy days before the date on which such meeting is to be held (or
such distribution made or other action requiring such determination is
to be taken). If the books are not thus closed or the record date is not
thus fixed, the record date shall be the close of business on the day
before the effective date of the notice to stockholders.
ARTICLE VI
Miscellaneous Provisions
Section 1. Seal: The seal of the Corporation shall contain the name
of the Corporation and shall be in such form as shall be approved by the
Board of Directors.
Section 2. Fiscal: The fiscal year of the Corporation shall begin
on the 1st day of July and end on the 30th day of June.
Section 3. Examination of Books: The Board of Directors shall,
subject to the laws of the State of Virginia, have power to determine
from time to time whether and to what extent and under what conditions
and limitations the accounts and books of the Corporation, or any of
them, shall be open to the inspection of the stockholders.
Section 4. Contracts, Checks, Notes and Drafts:: All contracts,
checks, notes, drafts, and other orders for the payment of money shall
be signed by such persons as the Board of Directors from time to time
may authorize.
Section 5. Amendment of By-Laws: These By-Laws may be amended,
altered, or repealed by the Board of Directors at any meeting. the
stockholders shall have the power to rescind, alter, amend, or repeal
any By-Laws which, if so expressed by the stockholders, may not be
rescinded, altered, amended, or repealed by the Board of Directors.
Section 6. Application of the Control Share Acquisition Act.
Article 14.1 of Chapter 9 of Title 13.1 of the Code of Virginia,
consisting of Sections 13.1- 728.1 through 13.1-728.9, shall not apply
to acquisitions of shares of the Corporation.
Exhibit 11
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
<TABLE>
Three Months Ended Nine Months Ended
March 31, March 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net income per share
was computed as follows:
Primary:
1) Net income $2,067,669 $1,682,015 $4,825,324 $4,429,476
2) Weighted average
common shares
outstanding 6,016,405 5,970,286 6,004,833 5,959,291
3) Incremental shares
under stock options
computed under the
treasury stock
method using the
average market price
of issuer's common
stock during the
periods 178,108 98,464 184,557 95,098
4) Weighted average
common and common
equivalent shares
outstanding 6,194,513 6,068,750 6,189,390 6,054,389
5) Net income per share $ .33 $ .28 $ .78 $ .74
Fully diluted:
1) Net income $2,067,669 $1,682,015 $4,825,324 $4,429,476
2) Weighted average
common shares
outstanding 6,016,405 5,970,286 6,004,833 5,959,291
3) Incremental shares
under stock options
computed under the
treasury stock
<PAGE>
method using the
market price of
issuer's common at
the end of the periods
if higher than the
average market price 208,618 161,194 207,798 155,124
4) Weighted average
common and common
equivalent shares
outstanding 6,225,023 6,131,480 6,212,631 6,114,415
5) Net income per share $ .33 $ .27 $ .78 $ .72
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> .001
<CASH> 2,027
<SECURITIES> 0
<RECEIVABLES> 54,415
<ALLOWANCES> 1,280
<INVENTORY> 17,555
<CURRENT-ASSETS> 75,252
<PP&E> 155,531
<DEPRECIATION> 72,099
<TOTAL-ASSETS> 168,840
<CURRENT-LIABILITIES> 44,449
<BONDS> 55,042
<COMMON> 3,011
0
0
<OTHER-SE> 56,210
<TOTAL-LIABILITY-AND-EQUITY> 168,840
<SALES> 74,846
<TOTAL-REVENUES> 74,846
<CGS> 55,408
<TOTAL-COSTS> 55,408
<OTHER-EXPENSES> 260
<LOSS-PROVISION> 494
<INTEREST-EXPENSE> 1,323
<INCOME-PRETAX> 3,899
<INCOME-TAX> 1,831
<INCOME-CONTINUING> 2,068
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,068
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
