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 December 31, 1994
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 January 31, 1995
Class Outstanding at January 31, 1995
Common Stock, $.50 Par Value 6,012,775
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
Page Number
<S> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -- 3
December 31, 1994 and June 30, 1994
Consolidated Statements of Income -- 4
Three and Six-Month Periods Ended
December 31, 1994 and 1993
Consolidated Statements of Cash Flows -- 5
Six Months Ended December 31, 1994 and 1993
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 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
<TABLE>
<CAPTION>
December 31, June 30,
1994 1994
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,695 $ 3,855
Accounts receivable 45,182 44,747
Inventories 13,984 11,219
Deferred income taxes 1,227 1,227
Prepaid expenses and other 1,005 889
Total current assets 63,093 61,937
Property, plant and equipment (net of
accumulated depreciation of $74,271
at December 31, 1994 and $70,818 at
June 30, 1994) 78,645 77,072
Investment in unconsolidated joint venture 6,977 6,831
Other assets 6,266 6,672
Goodwill and intangibles, net 8,036 7,617
Total Assets $163,017 $160,129
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 395
Current maturities of long-term debt 3,460 $ 2,318
Accounts payable 18,544 17,312
Accrued expenses
Compensation 7,611 10,612
Restructuring charge 1,203 1,900
Other 7,285 6,439
Income taxes 897
Total current liabilities 39,395 38,581
Long-term debt 55,115 56,122
Other long-term liabilities 8,241 7,575
Deferred income taxes 2,927 2,922
Shareholders' equity:
Common stock ($.50 par value; authorized-16,000
shares; issued and outstanding shares-6,011 at
December 31, 1994 and 5,984 at June 30, 1994) 3,004 2,992
Capital in excess of par value 12,036 11,796
Retained earnings 42,299 40,141
Total shareholders' equity 57,339 54,929
Total Liabilities and Shareholders' Equity $163,017 $160,129
</TABLE>
See notes to consolidated financial statements.
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales $67,237 $61,448 $127,620 $110,574
Operating expenses
Cost of sales 50,444 45,973 97,075 82,690
Selling and administrative 12,555 11,809 23,552 21,837
Operating income 4,238 3,666 6,993 6,047
Interest and other (income) expenses
Interest 1,473 1,020 2,740 1,981
Other (income) expenses (179) 119 (298) 145
Income before income taxes 2,944 2,527 4,551 3,921
Income taxes 1,160 1,017 1,793 1,575
Income before cumulative effect
of changes in accounting
principles 1,784 1,510 2,758 2,346
Cumulative effect of changes in
accounting for:
Postretirement benefits (net of
income tax benefit of $355) (532)
Income taxes 933
Net income $ 1,784 $ 1,510 $ 2,758 $ 2,747
Earnings per share:
Income before cumulative effect
of changes in accounting
principles $ .29 $ .25 $ .45 $ .39
Cumulative effect of changes in
accounting for postretirement
benefits and income taxes .07
Net income $ .29 $ .25 $ .45 $ .46
Average number of common shares
outstanding 6,195 6,058 6,191 6,011
Cash dividends per common share $ .05 $ .05 $ .10 $ .10
</TABLE>
See notes to consolidated financial statements.
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
December 31,
1994 1993
Operating Activities
Net income $ 2,758 $ 2,747
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 5,989 5,510
Equity in earnings of joint venture (413) (315)
Other, net 678 569
9,012 8,110
Changes in operating assets and liabilities,
excluding effects of acquisitions:
Accounts receivable (396) (1,617)
Inventories (2,765) 723
Accounts payable, accrued expenses
and income taxes (732) 2,393
Other, net (187) (79)
(4,080) 1,420
Net cash provided by operating activities 4,932 9,530
Investing Activities
Purchases of property, plant and equipment (9,732) (7,031)
Proceeds from sale of property 2,811
Cash paid for businesses acquired (902) (15,604)
Cash paid to escrow for business acquired (1,000)
Other, net 547 (401)
Net cash used in investing activities (7,276) (24,036)
Financing Activities
Net short-term borrowings (repayments) 566 (17,500)
New long-term debt 40,000
Repayment of long-term debt (34) (4,399)
Proceeds from exercise of stock options 252 80
Other (225)
Dividends paid (600) (596)
Net cash provided by financing activities 184 17,360
Increase (decrease) in cash and cash equivalents (2,160) 2,854
Cash and cash equivalents at beginning
of period 3,855 2,206
Cash and cash equivalents at end of period $ 1,695 $ 5,060
See notes to consolidated financial statements.
CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994
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 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 (73.3% as of December 31,
1994 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):
December 31, June 30,
1994 1994
Raw materials and supplies $ 5,080 $ 3,997
Work in process:
Materials 2,221 2,219
Other manufacturing costs 5,076 3,623
Finished goods 1,607 1,380
$13,984 $11,219
4. During the first quarter of fiscal year 1995, the Company purchased
the remaining twenty percent equity interest in Tuff Stuff under a
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 the
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).
5. On September 29, 1994, the Company sold the land, building and
building improvements ("property") of 3 Score in Tucker, Georgia for
$2.9 million (which approximated net book value) under an agreement
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
agreements. Total future minimum lease payments over the next five
years are $320,900 for each of the next four years and $327,300 in
the fifth year.
6. 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 charges 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 six-month
periods ended December 31, 1994 were $0.2 million and $0.7 million,
respectively.
7. 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).
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 six-month
periods ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 75.0 74.8 76.1 74.8
Gross profit 25.0 25.2 23.9 25.2
Selling and administrative 18.7 19.2 18.4 19.7
Operating income 6.3 6.0 5.5 5.5
Interest expense 2.2 1.7 2.1 1.9
Other (income) expenses (0.3) 0.2 (0.2) 0.1
Income before income taxes 4.4 4.1 3.6 3.5
Income taxes 1.7 1.6 1.4 1.4
Income before cumulative
effect of changes in
accounting principles 2.7 2.5 2.2 2.1
Cumulative effect of changes
in accounting principles 0.4
Net income 2.7% 2.5% 2.2% 2.5%
</TABLE>
Sales
Net sales for the second quarter of fiscal 1995 increased 9.4% to $67.2
million compared to $61.4 million for the second quarter last year. For
the six-month period ended December 31, 1994, net sales increased to
$127.6 million up 15.4% from $110.6 million for the same period of
fiscal 1994. Excluding the effect of the acquisition of Cadmus Journal
Services, sales rose 4.5% and 3.0% for the second quarter and six- month
period ended December 31, 1994, respectively.
The Company groups 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:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Printing 77.4% 76.3% 76.0% 74.1%
Marketing 16.0 17.0 16.6 18.1
Publishing 6.6 6.7 7.4 7.8
100.0% 100.0% 100.0% 100.0%
</TABLE>
Sales increased in each business group for both the three and six-month
periods of fiscal 1995 compared to the same periods of fiscal 1994 as
follows: printing 11.4% and 18.6% increases; marketing 3.2% and 6.4%
increases; and publishing 9.4% and 9.7% increases. Adjusted for the
acquisition of Cadmus Journal Services, overall printing sales were up
5.3% for the second quarter and 2.5% for the first six months.
Printing Sales
The growth in printing sales for both the second quarter and six-month
period was attributable to increased research journal sales (25.0% and
57.2% increases), continued gains in sales of specialty packaging (68.9%
and 43.1% increases) and higher promotional material sales (3.4% and
5.7% increases). Adjusted for the acquisition of Cadmus Journal
Services, research journal sales increased by 12.8% for both the quarter
and first six months. These increases are attributable to the synergies
achieved through the integration of the research journal businesses into
one organization. Specialty packaging sales continued to grow at a
steady rate driven equally by increased volume and improved pricing.
After an overall down year in fiscal year 1994, sales of promotional
materials posted an increase in the second quarter and first six months
of 1995 due entirely to expanded volume.<PAGE>
RESULTS OF OPERATIONS
(continued)
Although printing revenues from specialty publications were down 4.9%
year-to-date, an increase of 3.4% was reported for the second quarter.
The year-to-date decline in specialty publication revenues was due to
the loss of several large customers in fiscal 1994 which have taken
longer than anticipated to replace. However, the Company believes that
the installation of a new state-of-the-art color pre-press system has
increased its ability to attract customers through expanded production
capabilities. This, combined with a number of new publication customers,
resulted in improved revenues for the second quarter of fiscal 1995.
Financial printing sales were down again for the second quarter as
higher interest rates slowed down both debt and equity issuances.
However, there was some improvement from the first quarter decline of
51.2% with the second quarter decline at only 6.7%, resulting in a
year-to-date decline of 28.6%. Revenues from annual and quarterly
report printing continued to be depressed, down over twenty percent for
both the second quarter and the first six months of fiscal 1995. This
decline is due to both the loss of several customers along with the
reductions made by customers in both page count and print specifications
to reduce their costs.
Marketing Sales
The successful introduction of the "Kids Link" and Cadmus Sports
Marketing programs, along with the formation of Cadmus Interactive,
produced combined revenues of $1.9 million for the second quarter and
$2.1 million for the six-month period ended December 31, 1994. This
expansion in marketing services was the driver for increased marketing
revenues for both the second quarter and the first six months of fiscal
1995 over fiscal 1994. Declines in point-of-sale and catalog production
services revenues partially offset this growth. Point-of-sale revenues
were down for both the quarter and year-to-date due to a shift by
customers of several large promotions into the third quarter.
Publishing Sales
Publishing sales increased due to new and expanded product circulation,
market share expansion and a 25.3% cover price increase for the Tuff
Stuff magazine. New product circulation involved the introduction of
Mid-Atlantic Soccer, a regional magazine focused on promoting youth
soccer, in March 1994. In addition, circulation of Collect!, a magazine
serving the non-sports collectibles market, was expanded through an
increase in the frequency of distribution from semi-monthly to monthly.
Market share expansion was achieved through extensive telemarketing
efforts at Tuff Stuff despite declining readership by sports cards
collectors, partly due to the baseball strike. The trend of growth in
publishing sales is expected to continue.
Operating Expenses
Cost of sales for the second quarter and first six months of fiscal 1995
were up slightly by 0.2% and 1.3% of sales, respectively. However,
selling and administrative expenses decreased for the second quarter and
first six months of fiscal 1995 by 0.5% and 1.3% of sales, respectively.
The increase in the cost of sales and the decrease in the selling and
administrative expenses as a percent of sales for both periods are a
result of a change in the sales mix with a decline in high-margin
financial printing sales combined with the addition of Cadmus Journal
Services, which has a relatively higher cost of sales and a lower
general and administrative expense ratio. Excluding the effects of
Cadmus Journal Services, cost of sales decreased by 0.8% and 0.4% of
sales for the second quarter and six-month period of fiscal 1995,
respectively. Whereas, general and administrative expenses were up by
0.4% of sales for the second quarter but were down year-to-date by 0.1%.
LIQUIDITY AND CAPITAL RESOURCES
For the six-month period, net cash provided by operating activities
declined from $9.5 million for fiscal 1994 to $4.9 million for fiscal
year 1995. This decrease resulted primarily from a $2.8 million
increase in inventory levels from June 30, 1994 compared to a $0.7
million decrease during the first six months of fiscal 1994. The $1.1
million increase in raw material inventory is a continuation of a first
quarter trend, resulting from pricing pressures which tightened the
paper market and forced the Company to carry additional safety stock. A
$1.5 million increase in work in process inventory resulted from several
scheduling changes by customers which shifted point-of- sale marketing
revenues into the third quarter. Accounts payable, accrued expenses and
income taxes experienced a $0.7 million decrease compared to a $2.4
million increase for the second quarter of fiscal 1994. <PAGE>
LIQUIDITY AND
CAPITAL RESOURCES (continued)
Investing activities included purchases of property, plant and equipment
of $9.7 million and proceeds from the sale and leaseback of property of
$2.8 million during the first six months of fiscal 1995. See Note 5 of
the Notes to Consolidated Financial Statements for additional details of
the property sale. Significant expenditures included in this amount
were the $3.2 million 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 completion of the
installation of text and graphics composition software to integrate
research journals in Richmond and Baltimore/Easton for approximately
$0.7 million; the purchase of approximately $0.5 million in new Scitex
color pre-press equipment; roof repairs at Byrd for approximately $0.6
million; and the $1.2 million for the build-out of leasehold
improvements at a new facility in Baltimore, Maryland for CJS. For
fiscal 1995, the Company projects that capital spending will total
approximately $20.0 million.
Total debt at December 31, 1994 was $59.0 million, representing a $0.6
million increase from June 30, 1994. The Company's debt-to-capital
ratio at December 31, 1994 was 50.7% compared to 51.5% at June 30, 1994.
There were no outstanding borrowings under the Company's $25 million
revolving credit lines at December 31, 1994.
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 the Company's 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 7
of the Notes to Consolidated Financial Statements for additional
information on these transactions.
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
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 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:
<TABLE>
<CAPTION>
First Second
Original Quarter Quarter Year-to-Date
Description Reserve Charges Charges Charges
<S> <C> <C> <C> <C>
Employee separation $ 1,630 $ 354 $ 232 $ 586
Equipment write-downs 75 21 - 21
Other direct costs 195 90 - 90
Total $ 1,900 $ 465 $ 232 $ 697
</TABLE>
The employee separation costs relate to termination benefits for
anticipated layoffs of approximately 96 employees: 20% management and
80% production. As of December 31, 1994, 66 employees have left the
Company as a result of this plan. The remaining 30 employees will leave
the Company by the end of January 1995.
Cash expenditures of approximately $0.7 million shifted from the second
quarter as originally projected to the third quarter 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.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the Annual Meeting of Shareholders of the Company held on
November 9, 1994, 5,229,425 shares of the Company's outstanding
common stock were present in person or by proxy and entitled to
vote.
(b) At the Annual Meeting, the following nominees, all of whom
except Mr. Daniels currently serve as directors, were elected as
Class II directors to serve until the 1997 Annual Meeting:
Frank Daniels, III
C. Stephenson Gillispie, Jr.
John D. Munford, II
Bruce A. Walker
Class III directors who will continue to serve until the 1995
Annual Meeting are:
Price H. Gwynn, III
John C. Purnell, Jr.
Russell M. Robinson, II
John W. Rosenblum
Class I directors who will continue to serve until the 1996
Annual Meeting are:
Robert I. Dalton, Jr.
Lee P. Dudley
Frank G. Louthan, Jr.
Wallace Stettinius
(c) At the Annual Meeting, the following matters were voted upon and
received the vote set forth below:
(1) Election of Directors. Provided that a quorum is present,
the nominees receiving the greatest number of votes cast are
elected as directors, and, as a result, in tabulating the
vote, votes withheld have no effect upon the election of
directors. Each nominee for Class II director was elected,
having received the following vote:
Nominee: FOR WITHHELD
Frank Daniels, III 4,959,314 270,111
G. Stephenson Gillispie, Jr. 4,958,728 270,697
John D. Munford, II 4,959,314 270,111
Bruce A. Walker 4,959,314 270,111
(2) Ratification of designation of Arthur Andersen LLP as
independent accountants for the current year. Provided that
a quorum is present, ratification of the auditors requires
the affirmative vote of a majority of the votes cast, and as
a result, in tabulating the vote, abstentions do not have
the effect of working against ratification. Designation of
the auditors was ratified, having received the following
vote:
FOR: 5,214,744
AGAINST: 1,780
ABSTAIN: 12,900
(3) Approval of Proposal to Amend the 1990 Long Term Incentive
Stock Plan. Provided that a quorum is present, approval of
the Proposal to Amend the 1990 Long Term Incentive Stock
Plan requires the affirmative vote of a majority of the
shares present and entitled to vote, and as a result, in
tabulating the vote, abstentions have the effect of a vote
against the proposal, while broker non-votes have no effect
on the vote. The proposal was approved having received the
following vote:
FOR: 3,266,267
AGAINST 1,150,033
ABSTAIN: 70,048
BROKER NON-VOTE: 743,077
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits: Description
Exhibit 11 Statement Regarding Computation of Net
Income per Share
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.
CADMUS COMMUNICATIONS CORPORATION
Date: February 10, 1995
/s/ C. Stephenson Gillispie, Jr.
C. Stephenson Gillispie, Jr.
President and Chief Executive Officer
Date: February 10, 1995
/s/ Michael Dinkins
Michael Dinkins
Vice President and Chief Financial Officer
Exhibit 11
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Net income per share
was computed as follows:
Primary:
1) Net income $ 1,784,931 $ 1,509,914 $ 2,757,655 $ 2,747,461
2) Weighted average
common shares
outstanding 6,005,070 5,963,312 5,998,436 5,954,797
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 189,894 94,467 192,439 56,224
4) Weighted average
common and common
equivalent shares
outstanding 6,194,964 6,057,779 6,190,875 6,011,021
5) Net income per share
(item 1 divided by
item 4) $ .29 $ .25 $ .45 $ .46
Fully diluted:
1) Net income $ 1,784,931 $ 1,509,914 $ 2,757,655 $ 2,747,461
2) Weighted average
common shares
outstanding 6,005,070 5,963,312 5,998,436 5,954,797
3) Incremental shares
under stock options
computed under the
treasury stock
method using the
market price of
issuer's common at
the end of the periods
if higher than the
average market price 189,894 160,463 192,439 152,085
4) Weighted average
common and common
equivalent shares
outstanding 6,194,964 6,123,775 6,190,875 6,106,882
5) Net income per share
(item 1 divided by
item 4) $ .29 $ .25 $ .45 $ .45
</TABLE>
