CADMUS COMMUNICATIONS CORP/NEW
8-K, 1999-08-10
COMMERCIAL PRINTING
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                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                 ------------


                                   Form 8-K

                                 ------------


               CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934


   Date of Report (Date of earliest event reported)    August 10, 1999
                                                      -----------------

                       CADMUS COMMUNICATIONS CORPORATION
             ----------------------------------------------------
            (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
                                                                --------------
<PAGE>

Item 5.  Other Events.

On August 10, 1999, Cadmus Communications Corporation (the "Company") issued the
press release attached hereto as Exhibit 99.1 with respect to fourth quarter and
year end financial results. C. Stephenson Gillispie, Jr., chairman, president
and chief executive officer, Bruce V. Thomas, senior vice president and chief
financial officer, and David E. Bosher, vice president and treasurer, read the
prepared remarks attached hereto as Exhibit 99.2 on a conference call with
analysts, shareholders, prospective investors, and other interested parties.
Information in these documents 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) the
effective integration of recent acquisitions, (2) continuing competitive pricing
in the markets in which the Company competes, (3) the gain or loss of
significant customers or the decrease in demand from existing customers, (4) the
ability of the Company to continue to obtain improved efficiencies and lower
overall production costs, (5) changes in the Company's product sales mix, (6)
the performance of new management and leadership teams in the Company and its
divisions, (7) the impact of industry consolidation among key customers, (8) the
ability of the Company to operate profitably and effectively with higher levels
of indebtedness and (9) the ability to retain key employees and managers in
light of lower incentives and benefits, and (10) other factors discussed from
time to time in the filings we make with the Securities and Exchange Commission.
We are not required to, and may not, update any forward-looking statements we
make.


Item 7.  Exhibits.

      Exhibit 99.1            Press Release
      Exhibit 99.2            Prepared Remarks from Conference Call

<PAGE>

                                  Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on August 10, 1999.


                              CADMUS COMMUNICATIONS CORPORATION


                              By:     /s/ C. Stephenson Gillispie, Jr.
                                  ------------------------------------------
                                    C. Stephenson Gillispie, Jr.
                                    Chairman, President, and Chief Executive
                                    Officer
<PAGE>
                                  Exhibit Index


      Exhibit

99.1  Press Release
99.2  Prepared Remarks from Conference Call




                                                            Exhibit 99.1

NEWS RELEASE
                     David E. Bosher,  Vice  President  and Treasurer (analysts)
         Contact:    (804) 287-5685
                     Teri   Schrettenbrunner,   Director   of  Public
                     Relations (media)
                     (804) 287-6260


                    CADMUS COMMUNICATIONS CORPORATION REPORTS

                FISCAL 1999 FOURTH QUARTER AND FULL YEAR RESULTS


RICHMOND, VA, August 10, 1999 - Cadmus Communications Corporation (NASDAQ
NMS:CDMS) today announced results for its fourth quarter and fiscal year ended
June 30, 1999. Financial highlights were as follows:

o        Fourth quarter income, adjusted for one-time items, was $2.8 million,
         or $.30 per share. Full year income, adjusted for one-time items, was
         $10.1 million, or $1.22 per share.

o        Fourth quarter net sales rose 29% to $134.4 million, compared to $104.2
         million in the fourth quarter of fiscal 1998. For the year, net sales
         rose 12.5% to $443 million, compared to $393.8 million in fiscal 1998.
         Adjusted for acquisitions and divestitures, fourth quarter and fiscal
         1999 net sales rose 6%.

o        Free cash flow was $7.9 million in the fourth quarter.

o        EBITDA (earnings before interest, taxes, depreciation and
         amortization), adjusted for one-time items, totaled $17.5 million in
         the fourth quarter, up 43% from the fourth quarter of fiscal 1998.

C. Stephenson Gillispie, Jr., chairman, president and chief executive officer,
commented, "This quarter was an important period of transition and change for
Cadmus. We completed the acquisition of The Mack Printing Group, refinanced and
expanded our bank credit facility, and successfully completed the issuance of
$125 million in senior subordinated notes. These actions represent critical
steps in the strategic repositioning of Cadmus that we commenced in our fiscal
second quarter with the sale of our financial communications and custom
publishing businesses. As a result of these strategic moves, Cadmus is
positioned to be less cyclical, less volatile, and better able to compete in the
markets we serve."

Gillispie further noted, "We enter our fiscal 2000 with opportunities for
further growth and improved profitability. In our industry-leading journal
business, we have opportunities for even better margins and stronger cash flow
as we continue the integration of Mack. We also are expecting continued growth

<PAGE>

and improved profitability in our marketing communications businesses,
particularly in our rapidly growing specialty packaging and graphic solutions
businesses. Finally, we look for very strong free cash flows throughout the
fiscal year. These opportunities provide a platform for improved earnings and
increased shareholder value in fiscal 2000."

David G. Wilson, Jr., chairman of Cadmus' Professional Communications sector,
added, "We are very pleased with the performance of Mack during the past
quarter. They are off to a good start and the integration of Mack is proceeding
on schedule and very much according to plan. We are more convinced than ever
that the combination of Mack and Cadmus Journal Services will meet our
expectations, both strategically and operationally, in the coming year."

Fiscal Fourth Quarter Operating Results - Detailed Review

Fourth quarter 1999 results include the results of Mack, acquired on April 1,
1999, and reflect the higher interest expense associated with the
acquisition-related financing. Results for the fourth quarter of fiscal 1998
included results of operations from the Company's financial communications and
custom publishing product lines, which were divested in the third quarter of
fiscal 1999.

Net sales in the fourth quarter rose 29% to a record $134.4 million. Adjusted
for the acquisition of Mack and divested operations, net sales grew 6% in the
fourth quarter. Professional Communications sector net sales, excluding Mack,
were flat in the fourth quarter, as higher STM journal sales offset a decline in
special interest magazine revenues. Marketing Communications sector net sales,
adjusted for divested businesses, rose 17%, as the Company's specialty packaging
and graphic solutions product lines registered net sales increases of 65% and
44%, respectively. These gains were partially offset by a 23% decline in net
sales from the Company's point of purchase product line.

Operating income before one-time items in the fourth quarter totaled $10.4
million compared to $7.2 million in the same period of fiscal 1998. Operating
margins improved to 7.7% of sales in fiscal 1999 compared to 6.9% in 1998, as
the inclusion of Mack's higher margin operations offset an operating loss in the
Company's point of purchase product line.

Income before restructuring and debt curtailment charges declined 17% in the
fourth quarter to $2.8 million, or $.30 per share, compared to $3.3 million, or
$.40 per share, in the fourth quarter of fiscal 1998. Net income in the fourth
quarter was $0.5 million, or $.06 per share, compared to $0.9 million, or $0.10
per share, in the fourth quarter of 1998. There were 9,124,000 weighted average
shares outstanding for the fourth quarter of 1999, compared to 8,285,000
weighted average shares outstanding for the same period last year.

Free cash flow (cash flow before financing activities, acquisitions and
divestitures) was $7.9 million. EBITDA adjusted for one-time items totaled $17.5
million in the fourth quarter.

Fiscal Full-Year Operating Results - Detailed Review

Net sales for fiscal 1999 rose 12% to a record $443.0 million. Adjusted for
acquisitions and divested businesses, consolidated sales growth was 6%. Net
sales for the Professional Communications sector rose 3% due to continued growth
from STM journals. Marketing Communications sector net sales, adjusted for
acquisitions and divestitures, increased 14% due to double-digit growth in its
specialty packaging and graphic solutions product lines.
<PAGE>

Gross profit margins declined to 20.1% of sales from 22.8% last year due to
operating losses from the Company's point of purchase product line. Selling,
general and administrative expenses fell as a percent of sales to 13.0% from
15.8% last year due to reduced corporate expenses and overall cost controls.
Operating income before one-time items rose 9% for the year to a record $28.3
million, while comparable operating margins fell slightly to 6.4% of sales,
compared to 6.6% in fiscal 1998.

Net income for the fiscal year ended June 30, 1999 was $13.7 million, or $1.65
per share, compared to $9.1 million, or $1.11 per share, for fiscal 1998. Income
before one-time items was $10.1 million, or $1.22 per share, down 12% from the
$11.5 million, or $1.41 per share, earned in 1998. Weighted average shares
outstanding were 8,336,000 and 8,176,000 for fiscal years 1999 and 1998,
respectively.



Company Description

Headquartered in Richmond, Virginia, Cadmus Communications Corporation provides
customers with integrated, end-to-end information and communications solutions.
The Company is organized around two primary business sectors: Professional
Communications serving customers who publish information, and Marketing
Communications serving customers who convey marketing messages. Cadmus is the
largest printer and producer of scientific, technical and medical journals and
publications in the United States, and is a leading national printer and
producer of special interest magazines, point of purchase materials and
specialty packaging materials. Additional Cadmus services include commercial
printing, advertising, direct marketing, software duplication, catalog
production and interactive media.



"Safe Harbor" Statement Under the Private Securities  Litigation Reform Act of
1995:

Information in this release relating to Cadmus' future prospects and performance
are "forward-looking statements" 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) the effective
integration of recent acquisitions, (2) continuing competitive pricing in the
markets in which the Company competes, (3) the gain or loss of significant
customers or the decrease in demand from existing customers, (4) the ability of
the Company to continue to obtain improved efficiencies and lower overall
production costs, (5) changes in the Company's product sales mix, (6) the
performance of new management and leadership teams in the Company and its
divisions, (7) the impact of industry consolidation among key customers, (8) the
ability of the Company to operate profitably and effectively with higher levels
of indebtedness, (9) the ability to retain key employees and managers in light
of lower incentives and benefits, and (10) other factors discussed from time to
time in the filings we make with the Securities and Exchange Commission. We are
not required to, and may not, update any forward-looking statements we make.


                   **(See attached financial highlights)**
<PAGE>


              CADMUS COMMUNICATIONS CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share data)
                                   (Unaudited)


                                    Three Months Ended      Twelve Months Ended
                                         June 30,                 June 30,
                                   ---------------------    --------------------

                                    1999         1998        1999        1998
                                   -------      --------    --------    --------

Net sales                         $134,449     $104,179    $443,045    $393,823

Operating expenses:

   Cost of sales                   106,979       80,308     353,973     304,014

   Selling and administrative       15,625       16,208      57,846      62,141

   Amortization of goodwill          1,431          434       2,884       1,731

   Restructuring charge                 --        3,950          --       3,950

   Net gain on divestitures             --           --      (9,521)         --
                                   -------      --------    --------    --------

                                   124,035      100,900     405,182     371,836


Operating income                    10,414        3,279      37,863      21,987

Interest and other expenses:

   Interest                          6,119        2,031      12,204       7,595
   Interest rate swap
     settlement charges              2,101           --       2,101          --

   Other, net                         (432)        (151)       (498)       (388)
                                   -------      -------     -------     -------
                                     7,788        1,880      13,807       7,207
Income before income taxes  and
  and extraordinary item             2,626        1,399      24,056      14,780

Income tax expense                   1,163          539       9,414       5,690
                                   -------      -------     -------     -------
Income before extraordinary item     1,463          860      14,642       9,090

Extraordinary loss on early
extinguishment
 of debt (net of income tax
benefit of $574)                       929           --         929          --
                                   -------      -------     -------     -------
Net income                         $   534      $   860     $13,713    $  9,090
                                   =======      =======     =======    ========

Earnings per share
(fully-diluted):
  Income before extraordinary
    item                           $   .16     $    .10    $   1.76    $   1.11

  Extraordinary loss on early
    extinguishment of debt            (.10)          --        (.11)         --
                                   -------     --------    --------    --------
  Net income                       $   .06     $    .10    $   1.65    $   1.11
                                   =======     ========    ========    ========

Weighted-average common shares
outstanding                          9,124        8,285       8,336       8,176
                                   =======     ========    ========    ========

<PAGE>



                             SELECTED HIGHLIGHTS
              (In thousands, except per share data and percents)
                                 (Unaudited)
<TABLE>
<CAPTION>
                                           Three Months Ended     Twelve Months Ended
                                                June 30,               June 30,
                                          ---------------------   --------------------

                                           1999        1998        1999        1998
                                          -------     --------    --------    --------
<S>     <C>
Operating income                         $10,414     $  3,279    $ 37,863    $ 21,987
Net income                                   534          860      13,713       9,090
Depreciation & amortization expense        6,668        4,838      20,995      18,444
EBITDA                                    17,514        8,268      59,356      40,819
Percentage of net sales:
   Gross profit                             20.4%        22.9%       20.1%       22.8%
   Selling, general and administrative
     expenses                               11.6%        15.6%       13.0%       15.8%
   Amortization of goodwill                  1.1%          .4%         .6%         .4%
   Operating income                          7.7%         3.1%        8.5%        5.6%
   EBITDA                                   13.0%         7.9%       13.4%       10.4%
Earnings per share (fully-diluted)       $   .06     $    .10    $   1.65    $   1.11
</TABLE>



                     CONDENSED CONSOLIDATED BALANCE SHEET
                                (In thousands)

                                                    June 30,         June 30,
                                                      1999             1998
                                                   ------------     -----------
                                                   (unaudited)
Assets:
   Cash and cash equivalents                    $        5,068    $        --
   Accounts receivable, net                             92,532          70,571
   Inventories                                          30,586          25,610
   Property plant and equipment, net                   173,085         133,836
   Other assets                                        225,575          61,735
                                                   -----------      ----------

Total assets                                    $      526,846    $    291,752
                                                   ===========      ==========

Liabilities and shareholders' equity:
   Short-term borrowings and current
      maturities of long-term debt              $        6,637    $      8,531
   Long-term debt, less current maturities             269,242          93,224
   Other liabilities                                   114,434          80,181
   Shareholders' equity                                136,533         109,816
                                                   -----------      ----------

Total liabilities and shareholders' equity      $      526,846    $    291,752
                                                   ===========      ==========


                                                                    Exhibit 99.2

                    FOURTH QUARTER FY1999 EARNINGS RELEASE
                            CONFERENCE CALL SCRIPT


Introduction - Steve Gillispie

Good morning, everyone. This is Steve Gillispie, chairman, president and chief
executive officer of Cadmus. I very much appreciate your taking time to join us
this morning for a review of our results for the fourth quarter and for our
fiscal 1999. I am joined today by Bruce Thomas, Cadmus senior vice president and
chief financial officer, and Dave Bosher, Cadmus vice president and treasurer.
In our comments this morning, we want to provide you with an understanding of
what Cadmus is today and what you can expect of us tomorrow. After our remarks,
we will be happy to respond to whatever remaining questions that you may have.

First, let me start with this. We did not achieve the level of earnings that we
had planned to achieve this quarter or this year. We know this is unacceptable
and, as you have seen over the course of this year, we have been as aggressive
as we could be to fix the issues that led to this result. Moreover, and we think
this is important, we have worked hard to design and execute a plan to build on
our strengths, to reduce earnings volatility, and to create a platform for
consistent growth.

The actions we have taken - the sale of our financial communications and custom
publishing businesses, the acquisition of Mack, and the refinancing of our
business -- have made Cadmus a much stronger company. We are much less cyclical,
much less volatile, and better able to compete in the markets we serve. We are
also more focused -- with a few, larger businesses in specialized markets where
we can achieve leadership positions. We have enhanced our dominant position in
the very attractive STM market and are well positioned to exploit exciting
opportunities before us in our specialty packaging and in our other marketing
communication businesses. Finally, we are positioned to generate increased and
stable cash flows, allowing us to aggressively pay down our acquisition-related
debt. In short, we are pleased with the strategic repositioning we have effected
and we are excited about our prospects for improved performance and increased
shareholder value going forward.

In just a minute, Dave is going to walk you through a detailed review of our
fourth quarter and fiscal 1999 results. Before he does that, however, I just
want to highlight for you some of the several strong performances by our
businesses that might otherwise be lost in the various divestitures,
adjustments, and other one-time items.

o        We continued to generate solid top line growth. Internal growth was a
         solid 6% in the quarter, with our Marketing Communications businesses
         growing a robust 17%. We are particularly pleased with the sustained
         growth in our specialty packaging business, where we registered double
         digit growth throughout the year;

o        At Cadmus Journal Services, we saw year over year improvement in
         profitability once again, as this market leading business sustained and
         in fact expanded operating margins another 50 basis points;

o        In our Marketing Communications sector, with the exception of Point of
         Purchase, every remaining business group registered year over year
         growth in operating income;
<PAGE>

o        Early indications from Mack strengthen our conviction that the
         combination of Mack and CJS will meet our expectations, both
         strategically and operationally, in the coming year; and

o        Finally, as you will hear, the fourth quarter indicates that Cadmus has
         quite an impressive capability to generate free cash flow and repay
         debt.

These underlying performances strengthen our belief that Cadmus is poised to
deliver consistent and improved performance and to create increased shareholder
value.

With those remarks as background, I'd like to turn the call over to David Bosher
for more detail on the actual financial results. Dave .....


Fourth Quarter and Fiscal 1999 Review - Dave Bosher

Thank you, Steve. Good morning everyone.

Before reviewing results in detail, I'd like to point out that we had several
"one-time" items in both this year and last year that we have eliminated for
purposes of our comments today. Those items include (I) an operating charge this
year related to the settlement of interest rate swap agreements related to our
former bank credit facility, (II) an extraordinary charge this year related to
repayment of the bank debt and the bridge financing related to the acquisition
of Mack, (III) a restructuring charge last year related to the acquisition of
Germersheim and (IV) a net gain from the sale of our financial communications
and custom publishing businesses.

So, with that said, let's begin with our "executive summary" of our fourth
quarter and full year performance.

o        Fourth quarter net sales rose 29% to $134.4 million, compared to $104.2
         million in the fourth quarter of fiscal 1998. Adjusted for acquisitions
         and divestitures, fourth quarter net sales rose 6%.

o        For the year, net sales rose 12% to $443.0 million, compared to $393.8
         million last year. Adjusted for acquisitions and divestitures, fiscal
         1999 net sales also rose 6%;

o        Free cash flow in the fourth quarter was a strong $7.9 million;

o        EBITDA totaled $17.5 million in the fourth quarter, up 43% from the
         fourth quarter of fiscal 1998.

Those are the major highlights. Now let me give you a little more detailed
review - first of the fourth quarter, and then of fiscal 1999.

Fourth Quarter Review. On a consolidated basis and adjusted for the one-time
items I mentioned, Cadmus' fourth quarter earnings totaled $.30 per share. These
results were impacted by an operating loss from our point of purchase unit,

<PAGE>

higher interest expense associated with acquisition-related debt, and the
absence during this quarter of meaningful Mack-related procurement synergies.

For the quarter, net sales rose 29% to $134.4 million. Adjusted for the
acquisition of Mack and for the divested businesses, net sales rose 6%.

Consolidated gross profit margins declined to 20.4% of sales in the fourth
quarter from 22.9% in the same period last year. This decline was primarily
attributable to lower gross margins from our point of purchase business. Again
this quarter, we partially offset the gross margin pressure through SG&A cost
containment measures, as SG&A expenses declined to only 11.6% of sales in this
year's fourth quarter compared to 15.6% last year. This decline was primarily
attributable to the business mix change, as we substituted Mack's relatively low
SG&A business for the financial and custom publishing businesses, which carried
much higher SG&A costs. SG&A was also affected by reduced corporate overhead
costs and by lower expenses related to incentive compensation and other
discretionary benefits.

Consolidated operating income rose 44% in the quarter to $10.4 million; and our
operating margin rose 80 basis points to 7.7% of sales from 6.9% last year.
Again, this increase was driven primarily by the addition of the highly
profitable Mack operations.

Finally, free cash flow for the quarter was a very strong $7.9 million, as net
cash from operations was $12.2 million and capital spending remained under
control and on budget. This strong cash flow again shows the fundamental change
in our business mix. For this quarter, we replaced the lower EBITDA margin and
more working capital intensive financial printing and custom publishing
businesses with the strong cash flow and lower working capital requirements of
Mack. As you will see when we talk about next year, consistently strong free
cash flow will be a hallmark of the repositioned Cadmus.

I would like now like to spend just a few minutes detailing the operating
performances of our two business sectors.

In our Professional Communications sector, we experienced a 76% increase in
revenues as a result of the inclusion of Mack for the entire quarter. Adjusted
for the Mack acquisition and for lower paper prices, net sales in this sector
were flat, as a modest increase in journal sales was offset by a slight decline
in magazine sales. Professional Communications operating margins remained strong
again this quarter, flat with our third quarter rate. During the quarter, Mack
performed very well and met our financial expectations. Revenues for Mack of
$40.5 million and operating margins of better than 14% were consistent with our
expectations. We should also note, however, that we obtained relatively little
in the way of procurement synergies in the fourth quarter. As we begin to
receive those benefits in the first quarter of fiscal 2000, further margin
expansion should be made possible.

In our Marketing Communications sector, adjusted for divestitures, revenues
increased 17%, led by continued strong double-digit growth at our specialty
packaging and graphic solutions groups. As I mentioned, we did incur an
operating loss this quarter from our point of purchase business as revenues
declined 23% from last year. This decline was primarily due to the cancellation
by customers of certain planned promotions and by the loss in June of a
significant portion of work with a major point of purchase customer. I would
like to note, however, that with the exception of POP, each of our remaining
marketing communications business groups showed year over year revenue growth
and year over year increases in operating income in the fourth quarter.
<PAGE>

Fiscal 1999 Review - Dave Bosher

As with the fourth quarter review, the impact of one-time items, acquisitions
and divestitures makes the analysis a bit difficult. So let me provide you a few
important data points on the year.

o        Income before one-time items totaled $10.1 million, or $1.22 per share,
         down 13% from $1.41 last year.

o        Net sales totaled $443.0 million, up 12%. Adjusted for acquisitions and
         divested operations, sales rose approximately 6%. Professional
         Communications internal sales growth was 3% for the year, while our
         Marketing Communications sector grew approximately 14%.

Included in that growth were solid sales gains from most of our business groups,
including:

o        4% internal growth from our high-margin STM journals business:

o        A 65% increase in net sales from our specialty packaging product line,
         continuing its remarkable internal growth rate string another year, and

o        A 44% increase in net sales from our graphic solutions product line.

Among our remaining product lines, point of purchase sales, proforma for the
Germersheim acquisition, declined by 3% in the year and specialty magazine sales
declined by 3% for the year.

Fiscal 2000 Outlook - Dave Bosher

As Steve said, the changes we have made now position Cadmus to realize improved
earnings performance, higher free cash flow, and significantly increased
shareholder value. Cadmus is now much less cyclical, much less volatile, and
much more focused. Just to emphasize those points, let me share with you just a
few more data points:

o         Today nearly 70% of our net sales and 87% of our EBITDA before
          corporate expenses now come from our Professional Communications
          sector.

o         With Mack, we are now nearly 5 times larger than our nearest
          competitor in the STM journal market.

o         Over 40% of our net sales now come from the high-margin STM journal
          product line, so our exposure to economic volatility has been further
          reduced.

o         Finally, over 85% of our net sales in the STM journals product line
          are under long-term contract, with renewal rates, as you may know,
          historically above 97%.

As we enter fiscal 2000, we know we still have some issues to address. We have
excess manufacturing capacity in Charlotte created by the sale of our financial
printing business. We will continue to absorb operating losses at POP - for at
least the first two quarters of fiscal 2000 - as we deal with lower volume from
one of our major customers, and we have much higher non-taxable goodwill

<PAGE>

amortization as a result of the Mack acquisition. Despite these challenges, we
believe that our earnings in fiscal 2000 will show solid improvement over the
$1.22 recorded this year, adjusted for one-time items. Our expectation at this
point is in the $1.30's for EPS. This improvement will come from continued
earnings growth from our Professional Communicants sector, continued
double-digit growth from our specialty packaging and graphic solutions
businesses, procurement-related synergies from the Mack acquisition, and lower
interest expense resulting from free cash flows.

We believe that this earnings expectation is realistic and, in fact, has
opportunity for upside. We have opportunities for more integration-related
savings from Mack. We have opportunities for even better top-line growth at
specialty packaging. We have opportunities for even stronger cash flows and
lower interest expense. And, we have a chance for a quicker-than-planned
turnaround at POP.

In addition to these earnings targets and factors, we are planning to generate
$20 million in free cash flow in FY 2000, or over $2.00 per share in free cash
flow. This level of cash flow is sustainable going forward and is a better
indicator, we believe, of the underlying strength of Cadmus. Inherent in this
target is a CAPEX spending level of approximately $20 million. Free cash flow
will be used to repay bank revolving credit, providing further reduction of
leverage and upside potential to EPS.

On a final note, we anticipate closing on a receivables securitization program
in the next few weeks. This program should also result in reductions in interest
expense from the fourth quarter rate.

I'd like now to turn the call back over to Steve for some final comments.

Steve....


Conclusion - Steve Gillispie

Thank you, Dave.

As you have heard from Dave's report, we made great strategic progress this
fiscal year and particularly this past quarter. The transactions we have
effected in the last several months have made us more focused and better
positioned strategically than at any time in our history. The good trends I
described in our base businesses, combined with the historically consistent and
profitable performance of Mack, provide an excellent platform for continuing
improvements in profitability and earnings growth.

Let me close by saying that I am deeply committed to delivering these
improvements as is my team. I will do every thing in my power to deliver the
earnings next year that Dave described and to work hard to generate some upside
to that forecast.

In closing let me note that certain of our comments here represent "forward
looking statements" and are subject to certain risks and uncertainties. Those
risks and uncertainties are set forth in our press release and included in a
Form 8-K, which will be filed shortly with the SEC and to which you should refer
for additional details.

We thank you again for joining us for this morning's call and for your continued
interest and support in Cadmus. I would now like to open up the session for any
questions you may have for us.


Top Judgements:
Saskatoon Co-operative Association Limited v United Food and Commercial Workers | Aug 15, 2022
Old Lakeshore Inc. v City of Burlington | Sep 2, 2022
Tietz v. Affinor Growers Inc. | Sep 13, 2022
Efficiencyone (E1) | Sep 6, 2022
President's Choice Bank v. The Queen | Jul 19, 2022
First Global Data Ltd | Sep 15, 2022
Rayonier v Unifor, Locals 256 and 89 | Aug 11, 2022
Alberta Workers’ Compensation Appeals Commission | Decision No. 2021-0334 | Jul 14, 2022
Metrowest Developments Ltd v Flynn Canada Ltd | Sep 14, 2022
R. v. Cameron | Jul 15, 2022
Functional Servicing and Stormwater Management | Jul 28, 2022
101034761 Saskatchewan Ltd. v Mossing | Aug 24, 2022
Waste Control Services Inc. v International Union of Operating Engineers, Local No. 115 | Aug 12, 2022
RJM56 Holdings Inc. c. Bazinet | Aug 17, 2022
Sherwood v The Owners, Strata Plan VIS 1549 | Aug 9, 2022
WCAT Decision A2001487 | Aug 8, 2022
City of Hamilton v Ontario Water Employees’ Association | Sep 12, 2022
Century Services Corp. v. LeRoy | Jul 8, 2022
United Food and Commercial Workers, Local 175 v Metro Ontario Inc. | Jul 4, 2022
Langmaid’s Island Corporation v Lake of Bays | Sep 12, 2022
WCAT Decision A2102416 | Jul 22, 2022
Inquiry about McAbee Fossil beds | Jul 14, 2022
1088558 Ontario Inc. v. Musial | Sep 16, 2022
Biogen Canada Inc. v. Pharmascience Inc. | Aug 8, 2022
CIC Management Services Inc. v City of Toronto | Jul 21, 2022
Bonterra Energy Corp v Rosells’ Enterprises Ltd | Aug 31, 2022
WCAT Decision A2100606 | Aug 17, 2022
Leffler v Aaron Behiel Legal Professional Corporation | Jun 30, 2022
Espartel Investments v. MTCC No. 993 | Aug 19, 2022
Onespace Unlimited Inc. v. Plus Development Group Corp. | Sep 19, 2022
Professional Institute of the Public Service of Canada v. Canada Revenue Agency | Jun 23, 2022
Community Savings Credit Union v. Bodnar | Jul 29, 2022
Galperti SRL v F.I.A.L. Finanziaria Industrie Alto Lario S.P.A | Jun 30, 2022
WCAT Decision A2102352 | Jul 6, 2022
WCAT Decision A2102306 | Jul 25, 2022
Thrive Capital Management Ltd. v. Noble 1324 Queen Inc. | Jul 12, 2022
Questor Technology Inc v Stagg | Sep 8, 2022
MediPharm v. Hexo and Hwang | Jul 25, 2022
Immunization rates & vaccine hesitancy | Aug 17, 2022
Morabito v. British Columbia Securities Commission | Aug 12, 2022
Killeleagh v Mountain View County (Development Authority) | Aug 24, 2022
Quality Control Council v Stanley Inspection Canada Ltd. | Sep 9, 2022
British Columbia Investment Management Corporation | Aug 17, 2022
Abbeylawn Manor Living Inc. v Sevice Employees International Union, Local 1 Canada | Jul 5, 2022
Windrift Adventures Inc. et al. v. Chief Animal Welfare Inspector | Aug 18, 2022
Irani and Khan v. Registrar, Motor Vehicle Dealers Act | Jul 14, 2022
CP REIT Ontario Properties Limited v City of Toronto | Aug 12, 2022
Potash Corporation of Saskatchewan Inc. v. The Queen | Jul 7, 2022
Wong v. Pretium Resources Inc. | Jul 22, 2022
Labourers' International Union of North America, Local 183, Union v Mulmer Services Ltd. | Aug 5, 2022
City of Mississauga v. Hung | Sep 22, 2022
Secretary of the Ministry of Health v The New South Wales Nurses and Midwives' Association (28 September 2022)
Orewa Community Church v Minister for Covid-19 Response (16 August 2022)
Yeshiva College Bondi Limited v NSW Education Standards Authority (15 August 2022)
Moreland Planning Scheme Amendment C208more | Heritage Nominations Study | Panel Report | 15 July 2022
New Zealand Tegel Growers Association Incorporated | 2 August 2022
Farrow-Smith and Comcare (Compensation) | 26 September 2022
Evolution Fleet Services Pty Ltd v Allroads Plant Pty Ltd | 14 September 2022
656621 B.C. Ltd. v David Moerman Painting Ltd. | Sep 27, 2022
Fraser Valley Packers Inc. v Raiwal Holdings Ltd | Sep 26, 2022
Parmar v Tribe Management Inc. | Sep 26, 2022
DES Studio inc. c. Shuchat | Sep 26, 2022
Van-Kam Freightways Ltd. v Teamsters Local Union No. 31 | Sep 28, 2022
Rogers Communication Inc. v British Columbia | Sep 28, 2022
Alderbridge Way GP Ltd. | Sep 28, 2022

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