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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
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 No.)
1801 Bayberry Court, Suite 200
Richmond, Virginia 23226
(Address of principal executive offices, including zip code)
____________
Registrant's telephone number, including area code: (804) 287-5680
____________
Securities registered pursuant to Section 12(g) of the Act:
Cadmus Communications Corporation Common Stock, $.50 par value, and
Preferred Stock Purchase Rights
(Title of Class)
____________
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. { }
As of July 31, 2000, 8,937,592 shares of Registrant's common stock
were outstanding, and the aggregate market value of the Registrant's common
stock held by non-affiliates was approximately $53,111,841 based on the last
sale price on July 31, 2000.
Documents Incorporated by Reference:
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended June 30, 2000 are incorporated in Parts I and II of this
report. Portions of the Proxy Statement of Registrant for the Annual Meeting of
Shareholders to be held on November 9, 2000 are incorporated in Part III of this
report.
INDEX
PART I
Page
----
Item 1. Business.................................................. 3
Item 2. Properties................................................ 6
Item 3. Legal Proceedings......................................... 7
Item 4. Submission of Matters to a Vote of Security Holders....... 7
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters............................ 10
Item 6. Selected Financial Data................................... 10
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 10
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 10
Item 8. Financial Statements and Supplementary Data............... 10
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 10
PART III
Item 10. Directors and Executive Officers of the Registrant........ 11
Item 11. Executive Compensation.................................... 11
Item 12. Security Ownership of Certain Beneficial Owners
and Management......................................... 11
Item 13. Certain Relationships and Related Transactions............ 11
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.................................... 12
2
PART I
ITEM 1. BUSINESS
Introduction
Headquartered in Richmond, Virginia, Cadmus Communications Corporation
("Cadmus" or the "Company") provides integrated graphic communications services
to professional publishers, not-for-profit societies and corporations. Cadmus
is the largest provider of production services to scientific, technical and
medical ("STM") journal publishers in the world, the fourth largest publications
printer in North America, and a leading national provider of specialty
packaging. The Company also offers commercial printing, fulfillment and
distribution services, software duplication, and catalog design and photography.
Cadmus was formed in 1984 through the merger of The William Byrd Press,
Incorporated ("Byrd"), a leading regional publications printer in Virginia, and
Washburn Graphics, Inc. ("Washburn"), a graphic arts firm based in North
Carolina. Since the merger, Cadmus has grown through enhancement of existing
products, internal development of new products, and acquisitions. The Company's
principal executive offices are located at 1801 Bayberry Court, Suite 200,
Richmond, Virginia 23226, and its telephone number is (804) 287-5680. The
Company's Internet address is http://www.cadmus.com. Unless the context
otherwise requires, references herein to Cadmus or the Company shall refer to
Cadmus Communications Corporation and its consolidated subsidiaries.
Cadmus has augmented its core printing competency through a series of
strategic mergers and acquisitions. Significant acquisitions to date include:
. in fiscal 1986, American Graphics Inc., a company located in Atlanta,
Georgia, providing graphic design services, promotional printing and
production of point of purchase advertising materials;
. in fiscal 1993, the assets of the Waverly Press Division of Waverly, Inc., a
division located in Baltimore and Easton, Maryland, engaged in the printing
of scientific, technical and medical ("STM") journals;
. in fiscal 1996, Lancaster Press, Inc. and its subsidiaries, a Pennsylvania-
based producer of STM journals; and
. in fiscal 1999, the Mack Printing Group, based in Maryland and Pennsylvania,
one of the nation's largest producers of STM journals, directories and soft-
cover books.
In fiscal 1999, the Company sold its financial communications product line
based in Charlotte, North Carolina to R.R. Donnelley & Sons, Inc. Also in
fiscal 1999, the Company sold its Custom Publishing business located in Boston,
Massachusetts to a relationship marketing company owned by the former president
of Custom Publishing.
During the first quarter of fiscal 2000, the Company adopted a
restructuring plan intended to effect planned synergies in connection with its
April 1999 acquisition of the Mack Printing Group ("Mack") and to focus the
Company's resources on the professional communications and specialty packaging
markets. As of June 30, 2000, these actions had taken place:
. the Atlanta-based Cadmus Point of Purchase ("POP") business unit was closed
in October 1999;
. the work flows of two composition facilities in Lancaster, Pennsylvania were
substantially integrated;
. the Richmond-based marketing agency was closed in July 1999, and the
Charlotte-based agency was sold in September 1999;
. corporate functions and overhead were consolidated, including eliminating
overhead costs associated with the Marketing Communications Group and
eliminating certain overhead within the Professional Communications Group.
3
Organizational Structure and Product Lines
The Company's organizational structure during fiscal 2000 consisted of two
primary business groups: the Professional Communications Group and the Marketing
Communications Group.
Professional Communications Group
The Professional Communications Group is comprised of three primary product
lines: STM journals, special interest and trade magazines, and books and
directories. The Professional Communications Group provides a full range of
composition, editorial, prepress, printing, warehousing and distribution
services. In addition, this group provides a full complement of digital
products and services, including website design and architecture, content
management, Internet and compact disc based electronic archiving, electronic
peer review and online publishing. The Professional Communications Group
generated approximately 74% of the Company's net sales in fiscal 2000.
Marketing Communications Group
The Marketing Communications Group focuses on the creation, production and
distribution of graphic communications. Product lines include specialty
packaging, commercial printing, fulfillment and distribution services, software
duplication, and catalog design and photography. Marketing Communications
generated approximately 26% of the Company's net sales in fiscal 2000.
.
Seasonal Fluctuations
Seasonal fluctuations occur in the overall demand for printing. Printing of
both periodicals for the educational and scholarly market and promotional
materials tends to decline in the summer months. Consumer publications tend to
peak before Christmas and before Easter. Specialty packaging tends to increase
prior to the Christmas shopping season and decline during the summer months.
All of these factors combine to give Cadmus a seasonal pattern with the months
October through June typically stronger than the months July through September.
Raw Materials
The principal raw material used in Cadmus' business is paper. Paper stock
inventories are maintained in the Professional Communications Group, where a
supply of roll paper stock is required to operate the web presses. The
Company's other operations generally purchase paper on a direct order basis for
specific jobs with minimal inventory requirements. Cadmus purchases its paper
requirements under agreements that guarantee tonnage and provide short-range
price protection for three- to six-month intervals. The price of paper charged
to customers is subject to adjustment so that, except in rare instances, Cadmus
does not have exposure to changes in the cost of paper.
The Company uses a variety of other raw materials including ink, film, offset
plates, chemicals and solvents, glue, wire, and subcontracted components. In
general, the Company has not experienced any significant difficulty in obtaining
raw materials.
Competition
Cadmus competes with a large number of companies, some of which have greater
resources and capacity. In recent years, there has been an excess of capacity
in the printing industry that has increased competition. Rapid technological
change has also brought new competitors to the market-place. The markets served
by Cadmus face competition based on a combination of factors including quality,
service levels, and price. To lessen exposure to larger competitors with
greater resources, Cadmus focuses generally on specialized markets where the
Company can achieve market leader status, and where the Company can gain
competitive advantages through knowledge of the market and ability to offer high
quality, end-to-end solutions to customers.
4
Employees
Cadmus employs approximately 3,500 persons, approximately 23% of which are
currently covered by collective bargaining agreements. Cadmus believes its
relationship with its employees is good. In addition, the Company believes that
no single collective bargaining agreement is material to the operations taken as
a whole.
Regulation
Cadmus operations are subject to federal, state and local environmental laws
and regulations relating to, among other things: air emissions; waste
generation, handling, management and disposal; wastewater treatment and
discharge; and remediation of soil and groundwater contamination. Cadmus
believes that it is in substantial compliance with environmental laws and
regulations.
Certain Financial Information
Information with respect to Cadmus' sales, operating profits, and financial
condition for each of its past five years appears in the "Selected Financial
Data" referred to in Item 6 of this Form 10-K.
5
ITEM 2. PROPERTIES
The Company considers all of its properties and the related machinery and
equipment contained therein, to be well maintained, in good operating condition,
and adequate for its present needs. The Company will expand as necessary for
the continued development of its operations. The following table contains
information regarding the Company's primary facilities as of June 30, 2000.
===============================================================================================================
Product Line Location Primary Use Owned/ Size
Leased (sq. ft.)
- ---------------------------------------------------------------------------------------------------------------
Professional Communications Group
Journal Services Akron, PA Manufacturing/Composition Owned 50,000
Directories, Books Pikesville, MD Manufacturing/Printing Leased 175,000
Journal Services Linthicum, MD Manufacturing/Composition Leased 51,700
Directories, Books Baltimore, MD Warehouse, Distribution Leased 40,000
Magazines East Stroudsburg, Manufacturing/Printing Owned 164,570
PA
Journal Services Easton, MD Manufacturing/Printing Owned 196,800
Journal Services Hurlock, MD Warehouse, Distribution Leased 100,000
Journal Services, Magazines Easton, PA Manufacturing, Warehouse, Offices Owned 252,320
Journal Services Ephrata, PA Manufacturing/Printing Owned 142,300
Journal Services Ephrata, PA Warehouse Leased 25,027
Journal Services Lancaster, PA Manufacturing/Printing Owned 175,000
Journal Services Lancaster, PA Warehouse Owned 52,000
Journal Services, Magazines Lancaster, PA Warehouse, Distribution Leased 29,000
Journal Services, Magazines Lancaster, PA Warehouse, Distribution Leased 18,000
Journal Services, Magazines Richmond, VA Manufacturing/Printing Owned 266,900
Journal Services Richmond, VA Warehouse, Backcopy Leased 72,000
Journal Services Richmond, VA Manufacturing, Digital Services Owned 14,760
Journal Services Providence, RI Consulting/Design Leased 5,500
Marketing Communications Group
Specialty Packaging Atlanta, GA Fulfillment & Distribution Services Leased 88,000
Point of Purchase Atlanta, GA Available for sale Owned 65,300
Point of Purchase Atlanta, GA Available for lease Leased 61,175
Marketing Services (Catalogs) Atlanta, GA Catalog Services and Production Leased 60,000
Point of Purchase Atlanta, GA Sublease Leased 30,755
Specialty Packaging Charlotte, NC Manufacturing/Printing Owned 180,000
Specialty Packaging Charlotte, NC Warehouse Leased 62,400
Graphic Solutions Richmond, VA Manufacturing/Printing Owned 97,000
Marketing Services Richmond, VA Sublease Leased 13,000
Custom Publishing Boston, MA Guarantor of lease Leased 22,000
Other
Corporate Office Richmond, VA Corporate Office Leased 23,000
6
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal actions that are ordinary and
incidental to its business. Additionally, in connection with divestiture
actions, the Company guaranteed certain real estate lease obligations through
2003. Accruals for claims or lawsuits have been provided for to the extent that
losses are deemed probable and can be reasonably estimated. While the outcome
of legal actions cannot be predicted with certainty, management believes the
outcome of any of these proceedings, or all of them combined, will not have a
materially adverse effect on its consolidated financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
7
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of Cadmus are elected by the Board of Directors
("Board") of the Company to serve one-year terms. The following table contains
information about the executive officers of Cadmus:
Other Business Experience
Name (Age) Position and Length of Service During Past Five Years
---------------------- ----------------------------------------- -------------------------------------------------
Bruce V. Thomas (43) President, and Chief Executive Officer, Senior Vice President and Chief Operating
Cadmus, July 2000-present. Officer, Cadmus, 1999-2000. Senior Vice
President and Chief Financial Officer, Cadmus
1997-1999. Vice President and Chief Financial
Officer, Cadmus, 1996-1997; Vice President, Law
and Development, Cadmus, 1992-1996.
C. Stephenson Gillispie, Jr. (58) Chairman of the Board, President, and President and Chief Operating Officer, Cadmus,
Chief Executive Officer, Cadmus, 1990-1992.
1992-June 2000.
David E. Bosher (47) Senior Vice President, Chief Financial Vice President and Treasurer, Cadmus 1993-1999.
Officer and Treasurer, Cadmus,
1999-present.
Wayne B. Luck (43) Senior Vice President and Chief Vice President, eBusiness, Owens and Minor Co.,
Information Officer, Cadmus, July Inc., 1998-2000; Vice President, Information
2000-present. Systems, Owens and Minor Co., Inc., 1995-1998.
Wayne T. Tennent (54) Senior Vice President, Chief Senior Vice President, Human Resources, Cadmus,
Administrative Officer and Secretary, 1999-2000; Vice President, Human Resources,
Cadmus, May 2000-present. Marketing Communications Sector, Cadmus,
1998-1999; Vice President, Human Resources, AMF
Bowling Worldwide, 1996-1998; Senior Vice
President, Administration and Human Resources,
Best Products Co., Inc., 1977-1996.
Bruce G. Willis (39) Vice President and Controller, Cadmus, Vice President of Finance, Marketing
1999-present. Communications Group, Cadmus, 1997 to 1999;
Director, Financial Planning and Analysis,
Cadmus, 1996-1997; Director of Finance, Sales
and Marketing Group, Cadmus, 1995-1996;
David G. Wilson, Jr. (59) Vice Chairman and Group President, Chairman and President, Professional
Professional Communications Group, Communications Sector, Cadmus,
Cadmus, 2000-present. 1998-2000.Executive Vice President, Professional
Communications, Cadmus, 1997-1998; President,
Cadmus Journal Services, Cadmus, 1994-1998.
Robert A. Sadler (62) Group President-CadmusMack, Cadmus, May Executive Vice President, Operations,
2000-present. Professional Communications Sector, Cadmus,
1999-2000; Consultant to Mack Printing Group and
Cadmus, 1998-1999; Executive Vice President and
Chief Operating Officer, Mack Printing Group,
1981-1998.
David J. Hajek (48) Group President-Port City Press, Cadmus, President,Graphic Solutions, Cadmus, 1997-2000;
July 2000-present. Vice President, Customer Service, Cadmus,
1995-1997.
8
Gerard P. Lux (42) Group President-Whitehall Group, President, Specialty Packaging/Promotional
Cadmus, May 2000-present. Printing, Cadmus, 1997-2000; Vice President of
Manufacturing, Washburn Graphics, Cadmus,
1995-1997.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Information in this annual report on Form 10-K relating to Cadmus' future
prospects and performance are "forward-looking statements" and, as such, are
subject to risks and uncertainties that could cause actual results to differ
materially. Potential risks and uncertainties include but are not limited to:
(1) the effective execution of the restructuring plan and the successful
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. The
information included in this release is representative only on the date hereof,
and the Company undertakes no obligation to update any forward-looking
statements made.
9
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Cadmus common stock is traded in the over-the-counter market and is quoted
through the NASDAQ National Market System under the symbol "CDMS." Information
with respect to market prices is presented on page 34 of the 2000 Annual Report
and is incorporated herein by reference.
As of August 31, 2000, the approximate number of beneficial holders of
Cadmus common stock was 2000, which includes stockholders recorded on security
position listings.
On August 25, 2000 Cadmus declared a regular quarterly cash dividend of $.05
per share, payable on September 22, 2000, to shareholders of record as of
September 8, 2000. Additional information with respect to dividends declared is
presented on page 34 of the 2000 Annual Report and is incorporated herein by
reference.
The amount of any future dividends will depend on general business
conditions encountered by Cadmus, as well as the financial condition, earnings
and capital requirements of Cadmus, and such other factors as the Board of
Directors may deem relevant. For additional information regarding restrictions
on payment of dividends, see the Notes to Consolidated Financial Statements
(Note 7) referenced in Item 8 of this report.
ITEM 6. SELECTED FINANCIAL DATA
The information presented under the caption "Selected Financial Data" on
page 34 of the 2000 Annual Report to Shareholders is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information presented under the caption "Management's Discussion and
Analysis" on pages 35 through 39 of the 2000 Annual Report to Shareholders is
incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
For quantitative and qualitative disclosures about market risk, see the
Notes to Consolidated Financial Statements (Note 7) referenced in Item 8 of this
report, and the information presented under the caption "Management's Discussion
and Analysis - Liquidity and Capital Resources" on pages 38 through 39 of the
2000 Annual Report to Shareholders, incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and subsidiaries
contained on pages 41 through 57
of the 2000 Annual Report to Shareholders is incorporated herein by reference.
The supplementary data regarding quarterly results presented under the
caption "Selected Quarterly Data" on page 40 of the 2000 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
10
PART III
Except as otherwise indicated, information called for by the following items
under Part III is contained in the Proxy Statement for the Annual Meeting of
Cadmus Stockholders ("Proxy Statement") to be mailed to the Stockholders on or
about October 9, 2000.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors of the Registrant is contained on pages 6
through 10 and page 25 of the Proxy Statement and is incorporated herein by
reference.
Executive Officers
For more information regarding the executive officers of Cadmus, see
"Executive Officers of the Registrant" at the end of Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information on Executive Compensation is contained on pages 13 through 22 of
the Proxy Statement and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Information on Security Ownership of Certain Beneficial Owners and
Management is contained on pages 2 through 4 of the Proxy Statement and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information on Certain Relationships and Related Transactions is contained
on pages 12 and 13 of the Proxy Statement and is incorporated herein by
reference.
11
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) Financial Statements and Schedules
The financial statements incorporated by reference into item 8 of this
report and the financial statement schedules filed as part of this report are
listed in the Index to Financial Statements and Schedules on page 14 hereof.
(b) Reports on Form 8-K
On May 3, 2000, the Company filed a Form 8-K that included the press
release regarding fiscal 2000 third quarter financial results, as well as a copy
of the prepared remarks made on a conference call to analysts on the same date.
On May 15, 2000, the Company filed a Form 8-K, that included the press
release announcing the retirement of C. Stephenson Gillispie, Jr. as chairman,
president and chief executive officer and as a director effective June 30, 2000,
the appointment of Bruce V. Thomas to replace Mr. Gillispie as president and
chief executive officer, and Russell M. Robinson, II, to serve as the
nonexecutive chairman of the board.
On August 4, 2000, the Company filed a Form 8-K that included the press
release regarding fiscal 2000 fourth quarter and year end financial results, as
well as a copy of the prepared remarks made on a conference call to analysts on
the same date.
(c) Exhibits
The Exhibits listed in the accompanying "Index of Exhibits" on pages 17
through 20 hereof are filed as a part of this report.
12
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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, as of the 28th day of
September, 2000.
CADMUS COMMUNICATIONS CORPORATION
/s/ Bruce V. Thomas
--------------------
Bruce V. Thomas
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of the 28th day of September
2000.
Signature Title
--------- -----
/s/ Bruce V. Thomas President, Chief Executive Officer and Director
-------------------- (Principal Executive Officer)
Bruce V. Thomas
/s/ David E. Bosher Senior Vice President and Chief Financial Officer
-------------------- (Principal Financial and Accounting Officer)
David E. Bosher
*/s/ Frank Daniels, III Director
-----------------------
Frank Daniels, III
*/s/ G. Waddy Garrett Director
---------------------
G. Waddy Garrett
Nathu R. Puri Director
------------------
Nathu R. Puri
*/s/ John C. Purnell, Jr. Director
------------------------
John C. Purnell, Jr.
*/s/ Jerry I. Reitman Director
---------------------
Jerry I. Reitman
*/s/ Russell M. Robinson, II Chairman of the Board
----------------------------
Russell M. Robinson, II
John W. Rosenblum Director
----------------------
John W. Rosenblum
*/s/ Wallace Stettinius Director
-----------------------
Wallace Stettinius
*/s/ Bruce A. Walker Director
---------------------
Bruce A. Walker
*/s/ David G. Wilson Director
--------------------
David G. Wilson
*By /s/ Bruce V. Thomas
----------------------
Bruce V. Thomas
Attorney-in-fact
13
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The Consolidated Balance Sheets of Cadmus Communications Corporation and
Subsidiaries as of June 30, 2000 and 1999, and the related Consolidated
Statements of Income, Cash Flows, and Shareholders' Equity for each of the three
years in the period ended June 30, 2000, including the notes thereto, are
included on pages 41 through 57 of the Registrant's 2000 Annual Report to
Shareholders and are incorporated herein by reference. With the exception of
the information incorporated by reference in numbered items 5, 6, 7 and 8, no
other data appearing in the 2000 Annual Report is deemed to be "filed" as part
of this 10K. The following additional financial data should be read in
conjunction with these consolidated financial statements.
Page
----
Report of Independent Accountants on Schedule II......... 15
Financial Statement Schedules: *
II - Valuation and Qualifying Accounts.................. 16
* All other schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedules, or
because the information required is included in the consolidated financial
statements, including the notes thereto.
14
Report of Independent Public Accountants on Schedule II
To the Shareholders and Board of Directors of
Cadmus Communications Corporation
We have audited in accordance with auditing standards generally accepted in the
United States, the consolidated financial statements included in Cadmus
Communication Corporation's annual report to shareholders incorporated by
reference in this Form 10-K, and have issued our report thereon dated August 2,
2000. Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. The schedule listed in the accompanying index is
the responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. The schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Richmond, Virginia
August 2, 2000
15
SCHEDULE II
CADMUS COMMUNICATIONS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
(--------Additions---------)
Reserves and Allowances Charged to Charged to
Deducted from Asset Balance at Costs and Other Balance
Accounts: Allowance Beginning Other Accounts- Deductions- at End of
for Doubtful Accounts of Period Expenses Describe Describe (A) Period
- ------------------------- ---------- ---------- -------------- ------------- ---------
Years Ended:
June 30, 1998 $2,250 $1,299 307 (B) $1,281 $2,575
June 30, 1999 2,575 384 1,140 (C) 1,018 3,081
June 30, 2000 3,081 1,152 (629)(D) 1,257 2,347
(A) Uncollectible accounts charged off, net of recoveries.
(B) Includes allowance for doubtful accounts purchase accounting adjustments
for the fiscal 1998 acquisition of Germersheim, Inc.
(C) Includes allowance for doubtful accounts purchase accounting adjustments
for the fiscal 1999 acquisition of Mack Printing Company.
(D) Includes adjustments for the fiscal 2000 sale of Cadmus Direct Marketing
and the shutdown of Cadmus Point of Purchase operations.
(---------Additions----------)
Charged to Charged to
Balance at Costs and Other Balance
Beginning Other Accounts- Deductions- at End of
Restructuring Reserves of Period Expenses Describe Describe (A) Period
- ------------------------ --------- ---------- ----------- ------------ -------
Years Ended:
June 30, 1998 $7,612 $ 3,950 $ -- $ 7,184 $4,378
June 30, 1999 4,378 -- -- 4,378 --
June 30, 2000 -- 36,544 -- 33,840 2,704
- --------------------
(A) Restructuring related charges to the reserve.
16
INDEX OF EXHIBITS
2.1 Stock Purchase Agreement, dated as of April 1, 1999, by and among Cadmus
Communications Corporation, Melham U.S. Inc., Purico (IOM) Limited and
Paul F. Mack. (1)
2.2 Note Purchase Agreement, dated as of April 1, 1999, by and among Mack
Printing Company, Mack Printing Group, Inc., Science Craftsman
Incorporated, Port City Press, Inc., Melham, Inc. and G. S. Mezzanine
Partners, L.P., G. S. Mezzanine Partners Offshore, L.P., Stone Street
Fund 1997, L.P. and Bridge Street Fund 1997, L.P. (2)
2.3 Asset Purchase Agreement, dated as of February 20, 1999, by and among
Washburn Graphics, Inc., Washburn of New York, Inc., Cadmus
Communications Corporation and R. R. Donnelley & Sons Company. (3)
The Company agrees to furnish supplementally to the Securities and
Exchange Commission, upon request, copies of any schedules and exhibits
to the foregoing exhibits that are not filed herewith in accordance with
Item 601(b)(2) of Regulation S-K.
3.1 Restated Articles of Incorporation of Cadmus Communications Corporation,
as amended. (4)
3.2 Bylaws of Cadmus Communications Corporation, as amended. (5)
4.1 $200,000,000 Credit Agreement dated as of April 1, 1999 among Cadmus
Communications Corporation, the Banks listed therein, NationsBank, N.A.,
as Documentation Agent, First Union National Bank, as Syndication Agent
and Wachovia Bank, N.A., as Agent. (6)
4.2 Senior Subordinated Increasing Rate Notes, Series A Indenture dated
April 1, 1999, among Cadmus Communications Corporation, Cadmus Journal
Services, Inc., Washburn Graphics, Inc., American Graphics, Inc., Expert
Graphics, Inc., Cadmus Direct Marketing, Inc., Three Score, Inc., Mack
Printing Company, Port City Press, Inc., Mack Printing Group, Inc.,
Science Craftsman Incorporated, each of the Cadmus Communications
Corporation's Restricted Subsidiaries that in the future executes a
supplemental indenture in which such Restricted Subsidiary agrees to be
bound by the terms of this Indenture as a Guarantor and Wilmington Trust
Company. (7)
4.3 Senior Subordinated Increasing Rate Notes, Series B Indenture dated
April 1, 1999, among Cadmus Communications Corporation, Cadmus Journal
Services, Inc., Washburn Graphics, Inc., American Graphics, Inc., Expert
Graphics, Inc., Cadmus Direct Marketing, Inc., Three Score, Inc., Mack
Printing Company, Port City Press, Inc., Mack Printing Group, Inc.,
Science Craftsman Incorporated, each of the Cadmus Communications
Corporation's Restricted Subsidiaries that in the future executes a
supplemental indenture in which such Restricted Subsidiary agrees to be
bound by the terms of this Indenture as a Guarantor and Wilmington Trust
Company. (8)
4.4 Senior Subordinated Increasing Rate Notes, Series C Indenture dated
April 1, 1999, among Cadmus Communications Corporation, Cadmus Journal
Services, Inc., Washburn Graphics, Inc., American Graphics, Inc., Expert
Graphics, Inc., Cadmus Direct Marketing, Inc., Three Score, Inc., Mack
Printing Company, Port City Press, Inc., Mack Printing Group, Inc.,
Science Craftsman Incorporated, each of the Cadmus Communications
Corporation's Restricted Subsidiaries that in the future executes a
supplemental indenture in which such Restricted Subsidiary agrees to be
bound by the terms of this Indenture as a Guarantor and Wilmington Trust
Company. (9)
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4.5 Senior Subordinated Notes due 2009, Series A and Series B Indenture dated
June 1, 1999, among Cadmus Communications Corporation, Cadmus Journal
Services, Inc., Washburn Graphics, Inc., American Graphics, Inc., Expert
Graphics, Inc., Cadmus Direct Marketing, Inc., Three Score, Inc., Mack
Printing Company, Port City Press, Inc., Mack Printing Group, Inc.,
Science Craftsman Incorporated, each of the Cadmus Communications
Corporation's Restricted Subsidiaries that in the future executes a
supplemental indenture in which such Restricted Subsidiary agrees to be
bound by the terms of this Indenture as a Guarantor and First Union
National Bank. (10)
The Company agrees to furnish supplementally to the Securities and
Exchange Commission, upon request, copies of those agreements defining
the rights of holders of long-term debt of the Company that are not filed
herewith pursuant to Item 601(b)(4)(iii) of Regulation S-K.
10.1 Cadmus Executive Incentive Plan dated November 11, 1997. (11)
10.2 Cadmus Supplemental Executive Retirement Plan, as restated effective July
1, 1992. (12)
10.3 Cadmus 1984 Stock Option Plan. (13)
10.4 Cadmus 1992 Non-Employee Director Stock Compensation Plan. (14)
10.5 Cadmus 1997 Non-Employee Director Stock Compensation Plan. (15)
10.6 Cadmus 1990 Long Term Stock Incentive Plan, as amended effective June 7,
2000, filed herewith.
10.7 Cadmus Deferred Compensation Plan, as amended through February 16, 1996.
(16)
10.8 Cadmus Non-Qualified Thrift Plan, as amended through March 26, 1997. (17)
10.10 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and David E. Bosher, filed herewith.
10.11 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and Bruce V. Thomas, filed herewith.
10.15 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and David G. Wilson, Jr., filed herewith.
10.17 Purchase and Sale Agreement dated as of October 26, 1999 between the
Sellers (named herein), Cadmus Receviables Corp., and Cadmus
Communications Corporation. (18)
10.18 Receivables Purchase Agreement dated as of October 26, 1999 among
Cadmus Receivables Corp. (as seller), Cadmus Communications Corporation
(as Master Servicer), Blue Ridge Asset Funding Corporation (as
Purchaser), and Wachovia Bank N.A. (as the Agent). (19)
10.19 Retirement Agreement dated as of May 10, 2000 between Cadmus
Communications Corporation and C. Stephenson Gillispie, filed herewith.
10.20 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and Wayne B. Luck, filed herewith.
10.21 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and Wayne T. Tennent, filed herewith.
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10.22 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and Bruce G. Willis, filed herewith.
10.23 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and Robert A. Sadler, filed herewith.
10.24 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and David J. Hajek, filed herewith.
10.25 Employee Retention Agreement dated as of June 27, 2000 between Cadmus
Communications Corporation and Gerald P. Lux, Jr., filed herewith.
10.26 Amendment to Cadmus Supplemental Executive Retirement Plan, as restated,
effective March 1, 1999, filed herewith.
10.27 Cadmus 1997 Non-Employee Director Stock Compensation Plan amendment,
effective February 17, 2000, filed herewith.
13. Portions of the Annual Report to Shareholders for the fiscal year ended
June 30, 2000 which are incorporated by reference in this report on Form
10K.
21. Subsidiaries of the Registrant, filed herewith.
23. Consent of Arthur Andersen LLP, filed herewith.
24. Powers of Attorney, filed herewith.
27. Financial Data Schedule, filed herewith.
________________________________
1. Incorporated by reference to the Company's Current Report on Form 8-K dated
April 1, 1999 (Commission File No. 0-12954).
2. Incorporated by reference to the Company's Current Report on Form 8-K dated
April 1, 1999 (Commission File No. 0-12954.)
3. Incorporated by reference to the Company's Current Report on Form 8-K dated
April 1, 1999 (Commission File No. 0-12954.)
4. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1993 (Commission File No. 0-12954).
5. Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended December 31, 1997 (Commission File No. 0-
12954).
6. Incorporated by reference to the Company's Current Report on Form 8-K dated
May 13, 1999 (Commission File No. 0-12954).
7. Incorporated by reference to the Company's Current Report on Form 8-K dated
May 13, 1999 (Commission File No. 0-12954).
8. Incorporated by reference to the Company's Current Report on Form 8-K dated
May 13, 1999 (Commission File No. 0-12954).
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9. Incorporated by reference to the Company's Current Report on Form 8-K dated
May 13, 1999 (Commission File No. 0-12954).
10. Incorporated by reference to the Company's Registration Statement on Form
S-4 (Commission File No. 333-83121).
11. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998 (Commission File No. 0-12954).
12. Incorporated by reference to the Company's Form SE dated September 25,
1992.
13. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1985 (Commission File No. 0-12954).
14. Incorporated by reference to the Company's Form SE dated September 25,
1992.
15. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998 (Commission File No. 0-12954).
16. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998 (Commission File No. 0-12954).
17. Incorporated by reference to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1998 (Commission File No. 0-12954).
18. Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 31, 1999 (Commission File No. 0-
12954).
19. Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended September 31, 1999 (Commission File No.
0-12954).
Copies of exhibits listed above may be obtained by writing to David E. Bosher,
Senior Vice President and Chief Financial Officer, at 1801 Bayberry Court, Suite
200, Richmond, Virginia 23226.
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