8-K, 1997-11-20
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                                  UNITED STATES
                             WASHINGTON, D.C. 20549


                                    Form 8-K


                       THE SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported) November 12, 1997

             (Exact name of registrant as specified in its charter)

         Virginia                        0-12954               54-1274108
(State or other jurisdiction of       (Commission           (I.R.S. Employer
 incorporation or organization)        File Number)       Identification Number)

6620 West Broad Street, Suite 240, Richmond, Virginia                   23230
     (Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code              (804) 287-5680


Item 5.       Other Events.

On November 12, 1997, C. Stephenson Gillispie, Jr., Chairman, President, and
Chief Executive Officer, and Bruce V. Thomas, Senior Vice President and Chief
Financial Officer of Cadmus Communications Corporation (the "Company"), made the
prepared remarks attached hereto as Exhibit 99 at the Company's 1997 Annual
Meeting of Shareholders. Information in these remarks relating to Cadmus' future
prospects and performance are "forward-looking statements," as defined by the
Private Securities Litigation Reform Act of 1995, and, as such, are subject to
certain risks and uncertainties that could cause actual results to differ
materially. Potential risks and uncertainties include but are not limited to:
(1) continuing competitive pricing in the markets in which the Company competes,
(2) the gain or loss of significant customers or the decrease in demand from
existing customers, (3) the timing of significant orders received from
customers, (4) a successful relocation of the Company's Charlotte manufacturing
facilities, (5) seasonal changes in the demand for the Company's products, (6)
continued success in the implementations of the restructuring and re-alignment,
and (7) changes in the Company's product sales mix.

Item 7.       Exhibits.

         Exhibit 99                 Prepared Remarks from Annual Meeting




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 on November 12, 1997.

                             CADMUS COMMUNICATIONS CORPORATION

                             By: /s/C. Stephenson Gillispie, Jr.
                                C. Stephenson Gillispie, Jr.
                                Chairman, President, and Chief Executive Officer



                                  Exhibit Index


99       Prepared Remarks from Annual Meeting



                                                                     Exhibit 99

                         ANNUAL MEETING OF SHAREHOLDERS

                                November 12, 1997

Prepared Remarks of  C. Stephenson Gillispie, Jr.:

Fiscal 1997 was a challenging but gratifying year for Cadmus. While earnings did
not meet expectations, 1997 was marked by enormous progress and accomplishment.
Cadmus made strong and dramatic strides forward toward its goal of creating a
single, unified company providing customers with integrated information and
communications solutions.

In a few minutes, Bruce Thomas, our Senior Vice President and Chief Financial
Officer, will discuss our financial performance for fiscal 1997 and the first
quarter of fiscal 1998, as well as provide some guidance as to the financial
performance you can expect from Cadmus going forward. Before that, in my remarks
today, I would like to review our strategy with you and describe how Cadmus is
organized to achieve it.

Today, Cadmus is an emergent communications company -- We are emerging toward a
powerful communications and marketing partner by building on our strong and
extensive print base.

Our industry and our markets are in the midst of powerful changes. In the fierce
quest for additional market share, businesses need and are seeking greater
impact and better results from their marketing messages. They are doing this in
several ways. They are integrating and coordinating their messages across the
multiplying array of media. They are consolidating and outsourcing their
purchases of communication services for greater control, increased
accountability, and lower overall cost. They are using new digital print
technologies for increasingly personalized and targeted messages and products.

These are some of the trends behind the Cadmus strategy. They create substantial
opportunities for a company organized and committed to delivering integrated
communication services--in other words, Cadmus Communications.

To pursue this strategy, Cadmus has organized around two broad market sectors.
The first is Professional Communications, which serves those who create and
convey professional information to professional audiences. The second is
Marketing Communications, which serves those who create and convey marketing

Our strategy is classic. It has the two principal purposes of all good business
strategy--to increase value and to differentiate. Very simply, we want to be
sought after and we want to be unique.

We have asked ourselves, "what is the most important thing we can do for our
customers?" When we do that, we know we will be very valuable, perhaps nearly
essential. For our Professional Communications customers, Cadmus is most
valuable when it brings them more members, more subscribers, and more scientific
recognition. For businesses and corporations, Cadmus becomes essential when it
plays an integral part in creating more customers, more revenue, and increased
market share. In short, for all our customers we are working to become "mission
critical" with a central role in growing their "top line," however they define
it. To be truly unique, Cadmus is integrating, coordinating, and managing
services which few other providers can match and which are unavailable anywhere
else today.



Let's look at how this strategy works in Professional Communications. In these
markets, we offer the entire spectrum of services necessary to create and
produce a peer-reviewed journal. This broad band of services includes an
electronic peer review system, electronic editing, digital composition and
pre-press, a full complement of press-finishing services, fulfillment and
reprint capability, and on-line Internet site management and article
distribution--to name but a few of today's services to this industry.

Today, we are the largest provider of professional journal services with a 25%
total share of the scientific, technical, and medical markets. No other
competitor today can offer this total spectrum of services, this total digital
path. No other competitor can offer a computer-assisted copy editing service
such as our proprietary EdiTech (TM) service. With its convenience and economy,
if we stopped with full service alone, we would have a powerful position. But
Cadmus goes beyond full service to integrate its capabilities for a result which
helps draw prestigious authors and editors who in their turn draw subscribers
and citations--in other words increasing our journal customers' top line. As one
example, Cadmus does this by managing and coordinating its services to reduce
cycle time and bring authors to print and mail substantially faster than our
competition. In this age of perishable information, that draws the best authors
and enhances the prestige and clout of the professional societies which
represent them.

In the future, we will seek to extend further the services and products we offer
in order to play an even more central role in helping professional
communications providers achieve their missions.

In our Marketing Communications Sector, our strategy is identical in principle
but somewhat different in practice. Again, Cadmus is working to increase its
value while becoming truly unique.

For this sector as well, Cadmus is most valuable when it plays a key role in
gaining customers and increasing market share. In other words, we are valuable
when we improve the bottom line with reduced cost and improved efficiency. But
we are essential, we are "mission critical," if we can improve the top line with
greater revenue and increased market share.

This is clearly an aspirational goal; but it is very realistic. All of this
sector's products and services are designed to get or keep customers. We know,
therefore, that when we improve the impact of these products, Cadmus' services
will be critical to growing an organization's top line.

We are convinced that combining the create, produce, and distribute functions
within the communication development process produces higher-impact marketing
materials. We offer higher impact because Cadmus can do it faster by controlling
the entire process and delivering a more timely message. We offer higher impact
by coordinating the delivery of the message across multiple media, ensuring a
more consistent look and feel. We offer higher impact because materials are more
congruent with an organization's brand and identity and much better focused. We
offer higher impact because Cadmus products will ultimately be better
graphically. Our creative work will be designed to maximize the features and
capabilities of today's state of the art printing technology in ways that other
print-challenged designers cannot hope to equal.



This approach makes Cadmus very unique. There are no other providers today
offering products and services across the full create-produce-distribute
spectrum. It is this end-to-end approach that truly differentiates Cadmus.

Let me describe a case which demonstrates what we are doing today. CFW
Communications, a provider of digital phone services, called upon Cadmus to
launch its digital phone product, Intellos. Cadmus provided an Identity
Marketing analysis from which CFW chose the slogan, "Like a home phone away from
home." This then became the basis of all marketing and promotional
materials--for example, billboards, store signage, direct response marketing,
packaging, and media. Cadmus has created all materials and from this position
has been able to assure integration and cross-media consistency and
reinforcement. For example, the core of Intellos marketing is the TV campaign
which I want to show you here. This is the box and I want you to note the
slogan, "The Home Phone Away From Home." To complete the end to end integration
of these services Cadmus also provides financial printing and will soon produce
and fulfill the box as well.

It is important to note that today's Cadmus is organized in a manner that
reflects and enables our strategy. We have become a single operating company
from a collection of autonomous business units. We have made this change because
we are convinced that integrated communications are most effectively provided by
an integrated communications company.

We also realize that for us to achieve our goals, we must know our clients very
well. Indeed, we must know our clients' markets and end users very well. For
this reason, we have worked to drive this knowledge into Cadmus by housing our
associates in organizational units dedicated to specific markets and
competencies. In Cadmus Journal Services, for example, we have a one-to-one
alignment between our business and the market that it serves.

We are creating similar alignment in the rest of our business units - financial,
packaging, point-of-sale, direct marketing, and the like.

While seeking increasing knowledge of their markets--while becoming "market
smart"--each of our business units is charged with leveraging its production
expertise to offer market-specific, end to end solutions across the
create-produce-distribute spectrum.

So what can you expect from Cadmus? From this point forward we will drive to
create or acquire the capabilities needed to fulfill our strategy and "pay off"
on our promise to deliver more effective communications through more integrated

This chart shows where we believe we are now strong and where we need to add
additional strength and capability. For example, our Tactical Communications
Group, recently renamed CadmusCom, is marrying its creative competencies with
the state of the art production capabilities of Cadmus Print Outsourcing to
provide increasingly integrated marketing services. With this combination Cadmus
is providing a widening array of "end-to-end" services to customers such as Fort
James, General Electric, and CFW Communications. As Howard Steinberg said in the
October 6 issue of Advertising Age, "the future will be integrated marketing." I
hope that in these remarks I have provided you with some sense of the extent of
our focus and the depth of our commitment to the creation and delivery of
unsurpassed integrated communication services.



In a very real sense we are seeking to reengineer and reinvent the printing and
marketing services industry. That kind of change is not easy or without risk.
But we see strong signs that Cadmus is on the right track and that the strategy
is indeed working. As a result, we think the future for Cadmus is bright.

Thank you.

This concludes my remarks and at this point, I would like to ask Bruce Thomas to
provide you with a brief review of fiscal 1997's financial performance and the
numbers and what you can expect from Cadmus during the rest of fiscal 1998.

Prepared remarks of Bruce V. Thomas:

Thank you Steve, and good morning everyone.

Our former  Chairman,  Wally  Stettinius,  was  famous for always  having  three
points to make,  three  issues to discuss.  So,  today I am going to  follow his
good  example.  I'm going to  review  with you  briefly . . . three things -

            o   FIRST, how we did in fiscal 1997,
            o   SECOND, what we will do in fiscal 1998, and
            o   THIRD, how we did in our 1st quarter.

First, fiscal 1997. Last year was not what we had hoped it would be from an
earnings perspective. However, it was still a year of significant financial
achievement and progress. Let's look at some of the details.

Revenues for Cadmus continued to grow consistently and impressively - up another
14% for the year and a solid 18.1% annually since 1993. Look also at the growth
in our Professional Communications Sector - the red bars on this chart. This
group has more than doubled in size - from $81 million in 1993 to just over $200
million in last year - as we have consolidated the formerly fragmented journal
market through our acquisitions of Waverly Press in 1993 and Lancaster Press in

While revenues grew, operating income and operating margins both rebounded
nicely last year. The $22.3 million of operating income you see here represented
a record for Cadmus and helped to sustain an annual growth rate of 18.5% since
1993. In addition, while operating margins are not yet where we want them to be,
they did improve substantially and are trending, as you will see, toward much
more acceptable levels.


There was also a nice rebound in both net income and earnings per share. All of
this, of course, is before the restructuring charge we took in our 4th quarter,
which took both net income and earnings per share negative for the year.

Finally, we made very solid progress on cash flow last year. In fact, the $31
million of cash from operations represented record performance for Cadmus and
our third straight year of improvement. With this strong cash flow, we delivered
on our commitment to reduce our debt levels - which fell from $110 million to
$96 million and to improve further our debt to capital ratio.

Item number two -- What can you expect of Cadmus in fiscal 1998?

We will have  relatively  modest top-line growth - in the 5-6% range - as we
remain focused on realizing all of the cost savings our  restructuring
provides.  But . . . operating  margins will expand  nicely,  up to 7.3% of
sales. As a result,  we will achieve record  earnings for Cadmus -- to $1.40 per
share . . . an increase of 42%.  Finally, we remain committed to a continuation 
of our positive cash flow trends and solid cash flow performance.

Finally, how have we done so far? Was our first quarter performance on track and
consistent with this full year plan?

In a word - ABSOLUTELY.

Revenues were in line with our expectations and only slightly below prior year.
This decline was solely the result of the sale of our consumer publishing
business last year and the closure of several operations in connection with our
restructuring. Adjusted for these divestitures and closings, sales were up 5%.

Operating income and operating margins both continued their positive trends.
Operating income rose 11% and operating margins increased to 6.2% of sales.
Again, solid progress on those fronts.

As a result,  and here is the real good news . . . . we  achieved  record 
earnings  in our first  quarter.  Our $2 million of net income and our $.25 per
share  represented  increases  of over 30% from last year's  first  quarter.
These results were right in line with our full year plan and with our

So, we're off to a good start and we are optimistic about our prospects for the
year - our prospects to achieve consistently improving financial performance,
our prospects to achieve our earnings target of $1.40 per share, and our
prospects to build an even more solid platform on which long-term financial
success can be built.

With that, as George Will says, I will subside . . and turn it back to Steve for
his concluding remarks.


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