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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(MARK ONE)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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.)
6620 WEST BROAD STREET, SUITE 500
RICHMOND, VIRGINIA 23230
(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
(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 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 (check mark) 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. (check mark)
As of July 29, 1994, 5,988,886 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 $97,488,804 based on the last sale
price on July 29, 1994.
DOCUMENTS INCORPORATED BY REFERENCE:
(1) Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended June 30, 1994 incorporated into Parts I and II
hereof; and (2) Portions of the Registrant's Proxy Statement for
Annual Meeting of Shareholders to be held November 9, 1994
incorporated into Part III hereof.
INDEX
PART I
Page
Item 1. Business
Introduction . . . . . . . . . . . . . . . . . 3
Printing and Marketing . . . . . . . . . . . . 3
Publishing . . . . . . . . . . . . . . . . . . 4
Other Factors Affecting the Business of Cadmus 4
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 . . . . . . . . . . 7
Item 6. Selected Financial Data . . . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations . 7
Item 8. Financial Statements and Supplementary Data . . 7
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . 7
PART III
Item 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . 8
Item 11. Executive Compensation . . . . . . . . . . . . 8
Item 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . 9
Item 13. Certain Relationships and Related Transactions 9
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K . . . . . . . . . . . . . . 9
PART I
ITEM 1. BUSINESS
Introduction
Cadmus Communications Corporation ("the Company" or "Cadmus") is a
graphic communications company which, through its subsidiaries, provides
printing, marketing, and publishing services. The Company is a Virginia
corporation headquartered at 6620 West Broad Street, Suite 500, Richmond,
Virginia 23230.
Cadmus was formed in 1984 when The William Byrd Press, Incorporated
("Byrd"), a leading regional publications printer, combined its operations
with Washburn Graphics, Inc. ("Washburn"), a vertically integrated graphic
arts firm. Byrd, in operation since 1904, is based in Richmond, Virginia
and Washburn, in operation since 1902, is based in Charlotte, North
Carolina.
Since its inception in 1984, Cadmus has grown primarily through
acquisitions of companies which either complement or expand the
capabilities the Company offers its customers. On June 30, 1986, Cadmus
acquired American Graphics, Inc. ("American"), a full-service graphic arts
firm specializing in promotional printing and the production of point-of-
sale advertising materials which is based in Atlanta, Georgia. Cadmus
Direct Marketing, Inc. ("CDMI"), formerly Washburn Direct Marketing, Inc.,
was incorporated on January 1, 1990, having previously operated as a
division of Washburn. CDMI provides direct marketing and database
management services.
During fiscal year 1988, Cadmus acquired three additional companies:
Three Score, Inc. ("3 Score"), an Atlanta, Georgia company engaged in
retail and other direct mail catalog production services;
Garamond/Pridemark Press, Inc. ("Garamond"), located in Baltimore,
Maryland; and Vaughan Printers, Incorporated ("Vaughan"), located in
Orlando, Florida. Both Garamond and Vaughan are smaller commercial
printing companies specializing in products similar to those at Washburn.
In fiscal year 1992, the Company acquired Tuff Stuff Publications,
Inc. ("Tuff Stuff") a Richmond, Virginia based publisher of pricing guide
magazines for various trading card collectors and other related products.
During fiscal year 1993, the Company completed a joint venture arrangement
with The Lanman Companies, Inc. ("Lanman") whereby the operations of
Vaughan were combined with those of Central Florida Press, a division of
Lanman. This new company, Central Florida Press, L.C. ("CFP"), located in
Orlando, Florida, has both sheetfed and half-web print capabilities. Also
during the year, the Company acquired Marblehead Communications, Inc.
("Marblehead"), based in Boston, Massachusetts, is a contract/custom
publisher that produces magazines and newsletters.
During fiscal year 1994, the Company acquired the net assets of
Waverly Press from Waverly, Inc. Waverly Press is a Maryland-based premier
printer of scientific, scholarly and medical journals and now operates
under the name Cadmus Journal Services, Inc ("Cadmus Journal Services").
Printing and Marketing
Printing and marketing services account for approximately 92.5% of
Cadmus revenues. Printing operations provide a full range of services to
customers which include state-of-the-art data imaging, electronic prepress,
multicolor printing, custom binding and distribution services. The
following is a list of major printed materials produced with some examples
of each:
Research Journals Medical and Biomedical, Technical and Scientific,
Learned and Scholarly, and Mathematics Journals
Specialty Periodicals Professional, Trade, Corporate and Consumer
Magazines
Financial Documents Debt and Equity Offerings, Proxy Statements,
Annual Reports, and Quarterly Reports
Promotional Materials Catalogs, Directories, Brochures, Product
Literature, and Point-of-Sale Materials
Specialty Packaging Cartons, Portfolio Folders, 3-D Mailers and
Video Sleeves
Through our marketing services we provide our clients complete
creative, production, mailing, and fulfillment services for direct
marketing programs and marketing information systems. Cadmus integrates
direct marketing functions, ranging from consumer market research and
agency services to database management and marketing information analysis,
with the resulting ability to implement tactical direct response campaigns
and programs for our clients. Cadmus also provides turn-key catalog
services from original design conception through the final product for
retail department stores, direct marketing retailers, and industrial
customers.
Publishing
Publishing services account for approximately 7.5% of Cadmus revenues.
There are two major types published products:
Consumer Products Tuff Stuff publishes special interest magazines
which target specific consumers. Currently there
are four such Cadmus-owned publications:
Tuff Stuff
Tuff Stuff's Collect!
Kenner Guide
Mid-Atlantic Soccer
Contract Products Marblehead publishes magazines for clients under
contract whereby the client retains ownership of
the title. Cadmus contract services include
design, editorial, advertising sales, production,
and distribution of titles.
Other Factors Affecting the Business of Cadmus
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. However,
consumer publications tend to peak before Christmas and before Easter.
Printing of interim financial statements clusters around the end of the
first month in each calendar quarter and printing of annual reports tends
to fall into the first and second calendar quarters. All of these factors
combine to give Cadmus a modest seasonal pattern with the months October
through June producing volumes slightly greater than the months July
through September.
Raw Materials
The principal raw material used in Cadmus' business is paper.
Significant stock inventories are not maintained except at Byrd and Cadmus
Journal Services, where a supply of roll paper stock is required to operate
the web presses. The other companies generally purchase paper on a direct
order basis for specific jobs. 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 escalation so that, except in rare instances,
Cadmus does not have exposure to changes in the cost of paper.
All Cadmus subsidiaries use a variety of other raw materials including
ink, film, offset plates, chemicals and solvents, glue, wire, and
subcontracted components. In general, none of the subsidiaries have
experienced any significant difficulty in obtaining raw materials.
Competition
Cadmus is subject to competition from 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 which has increased
competition. Rapid technological change has brought new competitors to the
marketplace.
The markets served by Cadmus face competition based on a combination
of factors including quality, service levels and price.
Employees
As of June 30, 1994, Cadmus and its subsidiaries employed
approximately 2,400 persons. No employees are currently covered by a
collective bargaining agreement. Cadmus believes its relationship with
employees is excellent.
Regulation
The printing business uses or generates substantial quantities of
inks, solvents, and other waste products which require disposal. The
subsidiaries usually return salvageable waste ink to their suppliers, and
contract for the removal of other waste products.
Cadmus believes its subsidiaries are in substantial compliance with
all applicable air quality, waste disposal, and other environmental-related
rules and regulations, as well as with other general employee health and
safety laws and regulations.
The Virginia State Air Pollution Control Board (the "Board") has
expressed concern about excessive levels of certain air pollutant emissions
throughout the metropolitan Richmond area from a number of sources,
including automobiles and local industries, such as Byrd. The Board has
made no decision whether further emission reductions will be required by
automotive or industry emissions controls. Depending on any future action
by the Board and in conjunction with the Clean Air Act Amendments of 1990,
several industries, including Byrd, will be required to take further
actions to reduce emission levels, which may include the installation of
additional air pollution control equipment. The amount of the expenditures
necessitated by any such actions is not anticipated to be material.
________________
See pages 6 through 9 and 12 through 17 of the 1994 Annual Report to
Shareholders (the "Annual Report") for additional information on the
business of Cadmus and its subsidiaries, which information is incorporated
herein by reference.
ITEM 2. PROPERTIES
The following table contains information regarding the Company's
primary facilities as of June 30, 1994:
Square Own/
Facility Feet Lease* Use
Cadmus Communications Corporation 17,160 Lease Office
Richmond, VA (headquarters)
American Graphics, Inc. 120,000 Own Office, production, and storage
Atlanta, GA (A)
The William Byrd Press, Incorporated 268,000 Own Office, production, and storage
Richmond, VA (B)
The William Byrd Press, Incorporated 15,000 Own Office, production, and storage
Springfield, VA
The William Byrd Press, Incorporated 72,000 Lease Storage
Richmond, VA
Cadmus Color Center, Inc. 20,000 Lease Office, production, and storage
Richmond, VA
Cadmus Journal Services, Inc. 202,400 Own Office, production, and storage
Easton, MD
Cadmus Journal Services, Inc. 51,700 Lease Office
Linthicum, MD
Expert Graphics, Inc. 35,200 Lease Office, production, and storage
Richmond, VA (B)
Garamond Pridemark/Press, Inc. 43,000 Own Office, production, and storage
Baltimore, MD
Graftech Corporation 18,000 Own Office, production, and storage
Charlotte, NC
Three Score, Inc. 60,000 Own Office, production, and storage
Atlanta, GA (C)
Tuff Stuff Publications, Inc. 15,000 Lease Office and storage
Richmond, VA
Washburn Graphics, Inc. 100,000 Own Office, production, and storage
Charlotte, NC
Cadmus Direct Marketing, Inc. 30,000 Lease Office and storage
Charlotte, NC (B)
* Cadmus does not consider any of the leased premises material to the
overall business of its subsidiaries.
(A) Includes three facilities.
(B) Includes two facilities.
(C) The Company is negotiating a sale/leaseback of this building (See
Note 5 in the 1994 Annual Report).
ITEM 3. LEGAL PROCEEDINGS
Neither Cadmus nor any of its subsidiaries are party to any material
pending legal proceedings before any court, administrative agency or other
tribunal.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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 has
been quoted in the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ") under the symbol "CDMS" since
July 2, 1984 and in the NASDAQ National Market System since April 16,
1985. The stock of Byrd, the predecessor issuer to Cadmus, was also quoted
in NASDAQ from September 7, 1983, the date of Byrd's first public offering,
until June 29, 1984. Information with respect to market prices is
presented on page 23 of the Annual Report and is incorporated herein by
reference.
As of August 30, 1994, the approximate number of beneficial holders of
Cadmus common stock was 3,300, which includes stockholders recorded on
security position listings.
On August 10, 1994, Cadmus declared a regular quarterly cash dividend
of $.05 per share, payable on September 2, 1994, to shareholders of record
as of August 19, 1994. Information with respect to dividends declared is
presented on page 23 of the Annual Report and is incorporated herein by
reference.
Cadmus anticipates that it will continue its policy of paying regular
quarterly dividends. 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 8) referenced in Item 8 of this
report.
ITEM 6. SELECTED FINANCIAL DATA
The information presented under the caption "Selected Consolidated
Financial Data" on page 19 of the Annual Report 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 20 through 23 of the Annual Report is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the registrant and
subsidiaries contained on pages 24 through 34 of the Annual Report are
incorporated herein by reference.
The supplementary data regarding quarterly results presented under the
caption "Selected Quarterly Data" on page 23 of the Annual Report is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On August 18, 1994, the Company engaged the firm of Arthur Andersen
LLP as the Company's independent accountants for fiscal year ending June
30, 1995. The firm of Coopers & Lybrand L.L.P. served as the Company's
independent accountants for the fiscal year ended June 30, 1994. The
change in accountants was recommended by the Audit Committee of the Company
and approved by the Company's Board of Directors.
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 September 23, 1994.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Information on the directors of the Registrant is contained on pages 5
through 8 and 19 of the Proxy Statement and is incorporated herein by
reference.
The executive officers of Cadmus are elected by the Board of
Directors of the Company to serve one-year terms. The following table
contains information about the executive officers of Cadmus as of June 30,
1994:
Position and Other Business Experience
Name (Age) Length of Service During Past Five Years
Wallace Chairman of the Board Chief Executive Officer,
Stettinius (61) and Officer, Cadmus Cadmus 1984-1992;
1984-present. President, Cadmus 1986-
1990.
C. Stephenson President and Chief President and Chief
Gillispie, Jr. (52) Executive Officer, Operating Officer, Cadmus
Cadmus 1992-present. 1990-1992; President and
Chief Executive Officer,
Byrd and Expert, 1989-1992.
Michael Dinkins (40) Vice President and Chief Manager Finance for
Financial Officer, Cadmus Marketing, GE Appliance
1993-present. 1993; Manager Finance for
Sales, GE Appliance 1992;
Manager of Commercial
Real Estate, GE Capital
1989-1992.
John H. Phillips (50) Vice President-Operations Executive Vice President
and Chief Operating and Chief Operating Officer,
Officer, Cadmus 1992-present. Byrd 1990-92; Senior Vice
President of Manufacturing
and Plant Operations, Byrd 1987-1990.
Bruce V. Thomas (37) Vice President, Secretary Partner, Mays & Valentine
and General Counsel, Cadmus 1989-1992.
1992-present.
David E. Bosher (41) Vice President and Treasurer, Chief Financial Officer,
Cadmus 1993-present. Cadmus 1990-1993;
Corporate Controller,
Cadmus 1988-1990.
ITEM 11. EXECUTIVE COMPENSATION
Information on Executive Compensation is contained on pages 10 through
18 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 page 10 of the Proxy Statement and is incorporated herein by
reference.
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 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 12
hereof.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the registrant during the last
quarter of the period covered by this report.
(c) Exhibits
The Exhibits listed in the accompanying "Index of Exhibits" on pages
20 through 21 hereof are filed as a part of this report.
Management Contracts of Compensatory Plans and Arrangements
Set forth below are the management contracts or compensatory plans and
arrangements required to be filed as Exhibits to this report pursuant to
Item 14(c) hereof including their location:
Cadmus Executive Incentive Plan dated July 30, 1985 - Form 10-K for fiscal
year ended June 30, 1985, Exhibit 10.1.
Cadmus Supplemental Executive Retirement Plan as restated effective July 1,
1992 - Form 10-K for fiscal year ended June 30, 1992, Exhibit 10.2 filed on
Form SE dated September 25, 1992.
Cadmus 1984 Stock Option Plan - Form 10-K for the fiscal year ended June
30, 1985, Exhibit 10.3.
Byrd 1983 Stock Option Plan - Registration Statement No. 2-90742, Exhibit
10.9.
1992 Non-Employee Director Stock Compensation Plan - Form 10-K for fiscal
year ended June 30, 1992, Exhibit 10.5 filed on Form SE dated September 25,
1992.
Cadmus 1990 Long-Term Incentive Stock Plan as amended effective August 10,
1994 - Form 10-K for fiscal year ended June 30, 1994, Exhibit 10.6.
Employee Retention Agreement dated as of September 1, 1991 between Cadmus
Communications Corporation and Wallace Stettinius - Form 10-K for fiscal
year ended June 30, 1991, Exhibit 10.8 filed on Form SE dated September 23,
1991.
Employee Retention Agreement dated as of September 1, 1991 between Cadmus
Communications Corporation and C. Stephenson Gillispie, Jr. - Form 10-K for
fiscal year ended June 30, 1991, Exhibit 10.9 filed on Form SE dated
September 23, 1991.
Employee Retention Agreement dated as of September 1, 1991 between Cadmus
Communications and David E. Bosher - Form 10-K for fiscal year ended June
30, 1991, Exhibit 10.10 filed on Form SE dated September 23, 1991.
Employee Retention Agreement dated as of May 1, 1992 between Cadmus
Communications and Bruce V. Thomas - Form 10-K for fiscal year ended June
30, 1992, Exhibit 10.11 filed on Form SE dated September 25, 1992.
Employee Retention Agreement dated as of September 1, 1991 between Cadmus
Communications Corporation and John H. Phillips - Form 10-K for fiscal year
ended June 30, 1993, Exhibit 10.11.
Employee Retention Agreement dated as of September 21, 1993 between Cadmus
Communications Corporation and Michael Dinkins - Form 10-K for fiscal year
ended June 30, 1994, Exhibit 10.12.
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 27th day of September, 1994.
CADMUS COMMUNICATIONS CORPORATION
/s/ C. Stephenson Gillispie, Jr.
C. Stephenson Gillispie, Jr.
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 their capacities, as of the 27th day of September, 1994.
Signature Title
President, Chief Executive Officer
/s/ C. Stephenson Gillispie, Jr. and Director (Principal Executive
C. Stephenson Gillispie, Jr. Officer)
/s/ Michael Dinkins Vice President and Chief
Michael Dinkins Financial Officer
(Principal Financial and
Accounting Officer)
*/s/ Robert I. Dalton, Jr. Director
Robert I. Dalton, Jr.
*/s/ Lee P. Dudley Director
Lee P. Dudley
*/s/ Price H. Gwynn, III Director
Price H. Gwynn, III
*/s/ Frank G. Louthan, Jr. Director
Frank G. Louthan, Jr.
*/s/ John D. Munford, II Director
John D. Munford, II
*/s/ John C. Purnell, Jr. Director
John C. Purnell, Jr.
*/s/ Russell M. Robinson, II Director
Russell M. Robinson, II
*/s/ John W. Rosenblum Director
John W. Rosenblum
*/s/ Wallace Stettinius Chariman of the Board and
Wallace Stettinius Director
*/s/ Bruce A. Walker Director
Bruce A. Walker
*By /s/ C. Stephenson Gillispie, Jr.
C. Stephenson Gillispie, Jr.
Attorney-in-fact
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The Consolidated Balance Sheets of Cadmus Communications Corporation
and Subsidiaries as of June 30, 1994 and 1993, and the related Consolidated
Statements of Income and Cash Flows for each of the three years in the
period ended June 30, 1994, including the notes thereto, are included on
pages 24 through 34 in the Registrant's Annual Report and are incorporated
herein by reference. With the exception of the aforementioned information,
and the information incorporated by reference in numbered Items 1, 5, 6, 7
and 8, no other data appearing in the Annual Report is deemed to be "filed"
as part of this Form 10-K. The following additional financial data should
be read in conjunction with these consolidated financial statements.
Page
Report of Independent Accountants . . . . 13
Financial Statement Schedules: *
II - Amounts Receivable from Related Parties and
Underwriters, Promoters, and Employees Other
Than Related Parties . . . . . . . 14
V - Property, Plant and Equipment . . 15
VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment 16
VIII - Valuation and Qualifying Accounts 17
IX - Short-Term Borrowings . . . . . . 18
X - Supplementary Income Statement Information . 19
* 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.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
Cadmus Communications Corporation:
We have audited the consolidated financial statements of Cadmus
Communications Corporation and Subsidiaries as of June 30, 1994 and 1993,
and for each of the three years in the period ended June 30, 1994, which
financial statements are included on pages 24 through 34 of the 1994 Annual
Report to Shareholders of Cadmus Communications Corporation and
incorporated by reference herein. We have also audited the financial
statement schedules listed in the index on page 12 of this Form 10-K.
These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Cadmus Communications Corporation and Subsidiaries as of June 30, 1994 and
1993, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended June 30, 1994 in conformity
with generally accepted accounting principles. In addition, in our
opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
As discussed in Notes 9 and 11 to the consolidated financial
statements, effective as of the beginning of 1994, Cadmus changed its
method of accounting for income taxes to conform with Statement of
Financial Accounting Standards No. 109 and its method of accounting for
postretirement benefits other than pensions to conform with Statement of
Financial Accounting Standards No. 106.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Richmond, Virginia
August 2, 1994
SCHEDULE II
CADMUS COMMUNICATIONS CORPORATION
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS,
AND EMPLOYEES OTHER THAN RELATED PARTIES
(in thousands)
Balance at
Deductions End of Period
Balance at
Beginning Amounts Amounts Not
Name of Debtor of Period Additions Collected Written Off Current Current
June 30, 1992:
Stephen L. Johnson and
Patricia D. Johnson $ --- $ 483 $ --- $ --- $483 $ ---
June 30, 1993:
Stephen L. Johnson and
Patricia D. Johnson $ 483 $ --- $ --- $ --- $483 $---
June 30, 1994:
Stephen L. Johnson and
Patricia D. Johnson (A) $ 483 $ --- $156 $ --- $327 $---
James D. Causey (B) $ --- $ 389 $327 $ 62 $--- $ ---
John K. Hoey (C) $ --- $ 120 $--- $ --- $120 $---
(A) Principal and interest (accruing at a variable rate) are due in full
on the earlier of June 30, 1994, or upon the sale of certain property
serving as collateral for the loan.
(B) Principal and interest (accruing at 2.00%) were paid in full or
written off on June 30, 1994, upon the sale of the property serving as
collateral for the loan.
(C) Principal is due in full upon the sale of certain property serving as
collateral for the loan.
SCHEDULE V
CADMUS COMMUNICATIONS CORPORATION
PROPERTY, PLANT AND EQUIPMENT
(in thousands)
Balance at Other Changes Balance at
Beginning Additions Add (Deduct)- End of
Classification of Period at Cost Retirements Describe Period
Year Ended June 30, 1992:
Land $ 2,788 $ -- $ -- $ -- $ 2,788
Buildings and improvements 30,432 1,183 35 20 (A) 31,600
Machinery, equipment and
fixtures 79,131 11,416 (B) 2,902 260 (A) 87,905
Transportation equipment 227 29 22 13 (A) 247
$112,578 $12,628 $ 2,959 $ 293 $122,540
Year Ended June 30, 1993:
Land $ 2,788 $ -- $ -- $ (2)(C) $ 2,786
Buildings and improvements 31,600 331 6 61 (C) 31,986
Machinery, equipment and
fixtures 87,905 10,853 (B) 1,626 (3,025)(C) 94,107
Transportation equipment 247 19 19 (29) 218
$122,540 $11,203 $ 1,651 $(2,995) $129,097
Year Ended June 30, 1994:
Land $ 2,786 $ -- $ 228 $ 513 (D) $ 3,071
Buildings and improvements 31,986 1,090 704 2,124 (D) 34,496
Machinery, equipment and
fixtures 94,107 10,642 2,544 7,940 (D) 110,145
Transportation equipment 218 10 50 -- 178
$129,097 $11,742 $ 3,526 $10,577 $147,890
Depreciation is computed principally by the straight line method. The
range of lives used to compute depreciation follows:
Buildings and improvements 5 to 40 years
Machinery, equipment and fixtures 3 to 11 years
Transportation equipment 3 to 4 years
(A) Property, plant and equipment of Tuff Stuff
acquired in April 1992.
(B) Includes addition of double-round press at Byrd.
(C) Adjustments resulting from the formation of
CFP, the acquisition of Marblehead and the
sale of Washburn Distribution Services by
CDMI.
(D) Adjustments resulting from the acquisition
of Cadmus Journal Services.
SCHEDULE VI
CADMUS COMMUNICATIONS CORPORATION
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
(in thousands)
Balance at Provision Other Changes Balance at
Beginning Charged to Add (Deduct)- End of
Classification of Period Earnings Retirements Describe Period
Year Ended June 30, 1992:
Buildings and improvements $ 6,800 $ 1,197 $ 35 $ -- $ 7,962
Machinery, equipment and
fixtures 44,850 7,241 2,651 75 (A) 49,515
Transportation equipment 185 25 23 4 (A) 191
$51,835 $ 8,463 $ 2,709 $ 79 $57,668
Year Ended June 30, 1993:
Buildings and improvements $ 7,962 $ 1,360 $ 1 $ (40) (B) $ 9,281
Machinery, equipment and
fixtures 49,515 7,569 1,465 (1,964) (B) 53,655
Transportation equipment 191 29 12 (30) (B) 178
$57,668 $ 8,958 $ 1,478 $(2,034) $63,114
Year Ended June 30, 1994:
Buildings and improvements $ 9,281 $ 1,387 $ 266 $ -- $10,402
Machinery, equipment and
fixtures 53,655 9,226 2,615 -- 60,266
Transportation equipment 178 22 50 150
$63,114 $10,635 $ 2,931 $ -- $70,818
(A) Accumulated depreciation of property, plant and equipment of Tuff
Stuff, acquired in 1992.
(B) Adjustments resulting from the formation of CFP, the acquisition
of Marblehead and the sale of Washburn Distribution Services by
CDMI.
SCHEDULE VIII
CADMUS COMMUNICATIONS CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
Reserves and Allowances Charged to Charged
Deducted from Asset Balance at Costs and to Other Balance
Accounts: Allowance Beginning Other Accounts- Deductions- at End of
for Doubtful Accounts of Period Expenses Describe Describe Period
Years Ended:
June 30, 1992 $1,736 $1,243 $ 622(B) $ 1,703(A) $1,898
June 30, 1993 $1,898 $ 275 $ 59(C) $ 320(A) $1,912
June 30, 1994 $1,912 $ 535 $ 225(D) $ 1,158(A) $1,514
(A) Uncollectible accounts charged off, net of recoveries.
(B) Allowance for doubtful accounts of Tuff Stuff acquired in April 1992.
(C) Allowance for doubtful accounts of Marblehead acquired in December
1993.
(D) Adjustments resulting from acquisition of Cadmus Journal Services in
November 1993.
SCHEDULE IX
CADMUS COMMUNICATIONS CORPORATION
SHORT-TERM BORROWINGS
(in thousands)
Weighted Maximum Average Weighted
Average Amount Amount Average
Category of Aggregate Balance Interest Outstanding Outstanding Interest
Short-Term at End of Rate at End During the During the Rate During
Borrowings Period of Period Period Period(A) Period(B)
Year Ended June 30, 1992:
Banks $ 1,000 4.7% $ 2,692 $1,046 6%
Year Ended June 30, 1993:
Banks $ 4,000 3.8% $ 4,438 $2,784 4%
Year Ended June 30, 1994:
Banks $ -- --% $ 4,373 $1,750 3%
(A) The average amount outstanding during the period was computed by
dividing the sum of the amounts outstanding at the end of every month
in the period by the number of months in the period.
(B) The weighted average interest rate during the period was computed by
dividing actual interest expense in each period by the average
short-term borrowings in such period.
SCHEDULE X
CADMUS COMMUNICATIONS CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(in thousands)
Charged to
Costs and Expenses
Item 1992 1993 1994
Maintenance and repairs $2,887 $3,460 $4,436
Depreciation and amortization of
intangible assets, pre-operating
costs and similar deferrals * * *
Taxes, other than payroll and
income taxes * * *
Royalties * * *
Advertising costs * * *
* Less than 1% of total sales.
INDEX OF EXHIBITS
3.1 Restated Articles of Incorporation of Cadmus Communications
Corporation, as amended, incorporated herein by reference to
Exhibit 3.1 included in Cadmus' Annual Report on Form 10-K for the
year ended June 30, 1993.
3.2 Bylaws of Cadmus Communications Corporation, as amended, filed
herewith.
4.1 Cadmus agrees to furnish to the Commission upon request any
instrument with respect to long-term debt as to which the total
amount of securities authorized thereunder does not exceed 10% of
Cadmus' total consolidated assets.
4.2 Note Agreement dated as of June 15, 1988 providing for the
issuance of Cadmus' $20,000,000 9.76% Senior Notes due June 30,
2000, incorporated herein by reference to Form SE dated September
27, 1988.
4.3 Note Purchase Agreement dated as of December 15, 1993 providing
for the issuance of Cadmus' $40,000,000 6.74% guaranteed senior
notes due 2003, filed herewith.
10.1 Cadmus Executive Incentive Plan dated July 30, 1985, incorporated
herein by reference to Exhibit 10.1 included in Cadmus' Annual
Report on Form 10-K for the fiscal year ended June 30, 1985
(Commission File No. 0-12954).
10.2 Cadmus Supplemental Executive Retirement Plan as restated
effective July 1, 1992 incorporated herein by reference to Form SE
dated September 25, 1992.
10.3 Cadmus 1984 Stock Option Plan, incorporated herein by reference to
Exhibit 10.3 included in Cadmus' Annual Report on Form 10-K for
the fiscal year ended June 30, 1985 (Commission File No. 0-12954).
10.4 Byrd 1983 Stock Option Plan, incorporated herein by reference to
Exhibit 10.9 to Cadmus' Registration Statement on Form S-14
(Registration No. 2-90742).
10.5 1992 Non-Employee Director Stock Compensation Plan, incorporated
herein by reference to Form SE dated September 25, 1992.
10.6 Cadmus 1990 Long-Term Stock Incentive Plan, as amended effective
August 10, 1994, filed herewith.
10.7 Employee Retention Agreement dated as of September 1, 1991 between
Cadmus Communications Corporation and Wallace Stettinius,
incorporated by reference to Form SE dated September 23, 1991.
10.8 Employee Retention Agreement dated as of September 1, 1991 between
Cadmus Communications Corporation and C. Stephenson Gillispie,
Jr., incorporated by reference to Form SE dated September 23,
1991.
10.9 Employee Retention Agreement dated as of September 1, 1991 between
Cadmus Communications Corporation and David E. Bosher,
incorporated herein by reference to Form SE dated September 23,
1991.
10.10 Employee Retention Agreement dated as of May 1, 1992 between
Cadmus Communications Corporation and Bruce V. Thomas,
incorporated herein by reference to Form SE dated September 25,
1992.
10.11 Employee Retention Agreement dated as of September 1, 1991 between
Cadmus Communications Corporation and John H. Phillips,
incorporated herein by reference to Exhibit 10.12 included in
Cadmus Annual Report on Form 10-K for the year ended June 30,
1993.
10.12 Employee Retention Agreement dated as of September 21, 1993
between Cadmus Communications Corporation and Michael Dinkins,
filed herewith.
11. Statement Regarding Computation of Net Income Per Share, filed
herewith.
13. Portions of the Annual Report to Shareholders for Fiscal Year
Ended June 30, 1994 which are incorporated by reference in this
Report on Form 10-K, filed herewith.
22. Subsidiaries of the Registrant, filed herewith.
23. Consent of Coopers & Lybrand L.L.P., filed herewith.
24. Powers of Attorney, filed herewith.
27. Financial Data Schedules, filed herewith.