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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, 1998
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.)
6620 West Broad Street, Suite 240
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, 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, 1998, 7,921,251 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 $176,979,500 based on the last
sale price on July 31, 1998.
Documents Incorporated by Reference:
Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended June 30, 1998 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 12, 1998 are incorporated in Part III of
this report.
1
INDEX
PART I
Page
Item 1. Business.......................................................3
Item 2. Properties.....................................................6
Item 3. Legal Proceedings..............................................6
Item 4. Submission of Matters to a Vote of Security Holders............6
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters................................8
Item 6. Selected Financial Data........................................8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............8
Item 7A. Quantitative and Qualitative Disclosures about Market Risk..8
Item 8. Financial Statements and Supplementary Data....................8
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure........................8
PART III
Item 10. Directors and Executive Officers of the Registrant.........9
Item 11. Executive Compensation.....................................9
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, a Virginia corporation, ("Cadmus" or
the "Company"), provides customers with integrated, end-to-end information and
communications solutions. These end-to-end solutions involve a full range of
creative, production and distribution services. The Company is organized around
two business sectors: Professional Communications, serving customers who publish
information, and Marketing Communications, serving customers who convey
marketing messages. Headquartered in Richmond, Virginia, Cadmus is the 22nd
largest graphic communications company in North America.
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 6620 West Broad Street, Suite 240,
Richmond, Virginia 23230, 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 began as a printing organization that, through strategic mergers
and acquisitions, Cadmus has augmented this core printing competency with full
creative expertise, distribution, and fulfillment capabilities. The most
significant acquisitions to date include the following: in 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 1987, Three Score, Inc., an Atlanta-based company offering retail
and other direct mail catalog design and production services; in 1992,
Marblehead Communications, Inc., a Boston, Massachusetts, custom publisher of
newsletters and magazines; in 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 journals; in 1995, certain
assets of The Software Factory, Inc., an Atlanta-based provider of software
packaging and media duplication services; in 1996, Lancaster Press, Inc. and its
subsidiaries, a Pennsylvania-based producer of scientific, technical and medical
journals, and O'Keefe Marketing, a Richmond-based advertising and marketing
service provider; and in 1998, Germersheim, Inc., an Atlanta-based national
point of purchase marketing service provider.
Cadmus is organized today to provide customers with a full range of
communication alternatives. It offers end-to-end services by combining its core
competency of production with the ability to create and distribute products.
Organizational Structure
The Company's current organizational structure was effected during fiscal
1997, when it announced a major restructuring plan designed to exit or reshape
those businesses that were not performing or were not core to its strategy, and
to create a more efficient and cost effective organizational structure. In
conjunction with the restructuring, the Company reorganized its organizational
and operational structure to form Cadmus Marketing Communications and Cadmus
Professional Communications. The Company's previous organizational structure
consisted of the Periodicals, Graphic Communications, Marketing, and Publishing
groups.
Cadmus Marketing Communications provides commercial printing, graphic
solutions, print and broadcast advertising, direct marketing, catalog and
collateral design, publication development, financial communications, point of
purchase, specialty packaging and promotional printing, software duplication and
distribution, and interactive services to customers who convey marketing
messages. Cadmus Professional Communications provides a full range of
composition, editorial, production, distribution, and related services for
publishers of scientific, technical, and medical journals, magazines, trade
association publications and commercial publications.
3
Product Lines
Product offerings as of June 30, 1998 were organized around the sectors of
Marketing Communications and Professional Communications.
Cadmus Marketing Communications
Cadmus Marketing Communications includes end-to-end marketing services
under the following product lines: CadmusCom, Cadmus Financial Communications,
Cadmus Graphic Solutions, Cadmus Point of Purchase, Cadmus Specialty Packaging
and Promotional Printing, and Cadmus Technology Solutions. Marketing
Communications generated approximately 49% of the Company's net sales in fiscal
1998.
CadmusCom. CadmusCom is an integrated marketing organization that
provides creative development and integrated marketing strategies for its
clients. Its tactical capabilities include branding research and implementation,
marketing strategy, print and broadcast advertising, direct marketing, catalog
and collateral design, communications design, custom publishing and new media.
CadmusCom is comprised of five divisions that provide these services: Cadmus
Custom Publishing (formerly Marblehead Communications), Cadmus Direct Marketing,
Cadmus Identity Marketing, CadmusCom Atlanta (formerly Cadmus 3-Score, catalog
production and design services), and CadmusCom Richmond (formerly O'Keefe
Marketing, advertising and new media).
Cadmus Financial Communications. Cadmus Financial Communications
specializes in the creation, production and distribution of documents
(electronic and traditional) to regulatory agencies and the investing community.
In addition to the private and public business sectors, Cadmus Financial
Communications primary markets include commercial and investment banking
institutions, mutual fund companies, legal firms and insurance companies. Its
products include corporate annual reports, securities offerings and corporate
restructuring materials, mutual fund materials, SEC-related documentation,
mutual fund reports, bank marketing materials, and other financially related
collateral, electronic data and software programs. The product line also
includes fulfillment and distribution services.
Cadmus Graphic Solutions. Cadmus Graphic Solutions integrates printing
solutions with a wide variety of graphic communications services and
consultation. Its target markets include Fortune 1000 companies, catalog
publishers, associations, advertising agencies and retail organizations. Its
primary products and services include catalogs, annual reports, promotional
literature and digital products. Cadmus Graphic Solutions offers
state-of-the-art commercial pre-press and printing, data archiving and
management for repurposing content for the Internet and other electronic
applications, finishing and binding, and a full array of mailing services.
Cadmus Point of Purchase. Cadmus Point of Purchase offers creative designs
and promotional concepts, a full range of production capabilities for
merchandising materials of all sizes and shapes, and distribution and
fulfillment services that include maintaining a database of point of purchase
requirements for each client's store locations. Its primary markets include the
fast food, beverage, retail, hospitality and travel, and motorsports industries.
This product line handles in-house design, print production and assembly,
on-demand production services, kit-packing, fulfillment and database management.
Cadmus Specialty Packaging and Promotional Printing. Cadmus Specialty
Packaging and Promotional Printing produces packages that serve as
distinguishable advertising copy and collateral materials that communicate
marketing messages. Its services include structural design, production and
distribution of high-quality, full-color external and internal packaging,
dimensional mailers, corporate identity materials, product literature, computer
documentation and catalogs. Its primary markets include the apparel, technology,
pharmaceutical, transportation, travel and furniture industries.
Cadmus Technology Solutions. Cadmus Technology Solutions is a turnkey
operation for software solutions. It handles CD and floppy disk duplication,
label printing, fulfillment and distribution, inventory and logistics
management. This product line provides auxiliary services for clients in the
high-tech industry and those who want to incorporate technology into customer
offerings.
4
Cadmus Professional Communications
Cadmus Professional Communications includes the Cadmus Journal Services
product line. Professional Communications generated approximately 51% of the
Company's net sales in fiscal 1998.
Cadmus Journal Services. Cadmus Journal Services ("CJS") is a producer of
scientific, technical and medical ("STM") journals. CJS forms partnerships with
publishers, and thoroughly understands the publishing process and how
information is used. CJS provides traditional composition, printing and
distribution services as well as a full complement of digital and ancillary
services. CJS offers customers Abstracts Online; CD-ROM services; CJSNet;
composition services; content management; Digital Direct; EdiTech Services;
Editorial Production Services; online publishing services; journal, magazine and
reprint services; mail lists and postal support; Virtual Journals and Reference
Books online; and World-Wide Destination Services.
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. 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 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. Significant
stock inventories are not maintained except at 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.
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 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 that 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 July 31, 1998, Cadmus employed approximately 3,000 persons,
approximately 9% of which are currently covered by collective bargaining
agreements. Cadmus believes its relationship with its employees is excellent.
Regulation
The printing business uses or generates substantial quantities of inks,
solvents, and other waste products that require disposal. Cadmus usually returns
salvageable waste ink to its suppliers and contracts for the removal of other
waste products.
Cadmus believes it is in substantial compliance with all applicable air
quality, waste disposal, and other environment-related rules and regulations, as
well as with other general employee health and safety laws and regulations.
5
ITEM 2. PROPERTIES
The Company considers all of its properties, together with 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,
1998:
Location Cadmus Product Lines Served Building
-------- ---------------------------- ----------
Akron, Pennsylvania Cadmus Journal Services Owned; 46,000 sq. ft.
Atlanta, Georgia CadmusCom Leased; 60,000 sq. ft.
Atlanta, Georgia Cadmus Point of Purchase Owned; 198,000 sq. ft.
Atlanta, Georgia Cadmus Point of Purchase Leased;106,000 sq. ft.
Atlanta, Georgia Cadmus Technology Solutions Leased; 88,000 sq. ft.
Baltimore, Maryland Cadmus Journal Services Leased; 51,700 sq. ft.
Easton, Maryland Cadmus Journal Services Owned; 196,000 sq. ft.
Lancaster, Pennsylvania Cadmus Journal Services Owned; 176,000 sq. ft.
Richmond, Virginia Cadmus Graphic Solutions, Owned; 89,100 sq. ft.
Cadmus Financial
Communications
Richmond, Virginia Cadmus Journal Services Leased; 72,000 sq. ft.
Richmond, Virginia Cadmus Journal Services, Owned; 274,000 sq. ft.
Cadmus Graphic Solutions
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal actions that are ordinary and
incidental to its business. 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.
6
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:
Position and Length of Other Business Experience
Name (Age) Service During Past Five Years
- ---------- ---------------------- -------------------------
C. Stephenson Gillispie, Chairman of the Board, President and Chief Operating
Jr. (56) President, and Chief Officer, Cadmus, 1990-1992.
Executive Officer, Cadmus
1992- present.
David G. Wilson, Jr. (57) Chairman, Professional Executive Vice President,
Communications Sector, Professional Communications,
Cadmus, effective July, Cadmus, 1997-1998; President and
1998. CEO of Cadmus Journal Services,
Cadmus, 1994-1998;
Senior Vice President
& General Manager of
the Company's Byrd Journal
division, Cadmus, 1993-1994.
Steven R. Isaac (50) Executive Vice President Group President, Cadmus
Marketing Communications Marketing Group, Cadmus,
Sector, Cadmus, 1996 - 1997; Executive
1997-present. Vice President
and Chief Operating Officer,
The Martin Agency, 1996;
Chairman and CEO, Martin
Direct, 1979-1996.
Joseph J. Ward (51) Executive Vice President President, Direct Response for
Professional Communications Europe & North America,
Sector, Cadmus, effective Bertelsmann Book Group,
July, 1998. Group President Bertelsmann AG, 1996-1998;
and CEO of Cadmus Journal President & CEO, JWard
Services, Cadmus, effective Consulting, 1995-1996;
July, 1998. President, Meredith Book Group,
Meredith Corporation, 1991-1995.
Bruce V. Thomas (41) Senior Vice President and Vice President and Chief
Chief Financial Officer, Financial Officer, Cadmus,
Cadmus 1997- present. 1996-1997; Vice President, Law
and Development, Cadmus,
1992-1996.
David E. Bosher (45) Vice President and Vice President, Treasurer, and
Treasurer, Cadmus Chief Financial Officer, Cadmus,
1993-present. 1990-1993.
Edward B. Fernstrom (49) Vice President, Information Vice President, Chief
Technology, Cadmus Information Officer, Dyncorp,
1995-present. 1990-1995.
John H. Phillips (54) Vice President, Procurement Vice President, Support and
and Operations Finance, Development, Cadmus, 1996-1997;
Cadmus 1997-present. Vice President and Regional
Manufacturing Officer, Cadmus,
1994-1996; Vice President -
Operations, Cadmus, 1992-1994.
7
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 since April 16, 1985. Information with respect to
market prices is presented on page 27 of the Annual Report and is incorporated
herein by reference.
As of August 31, 1998, the approximate number of beneficial holders of
Cadmus common stock was 4,400, which includes stockholders recorded on security
position listings.
On August 12, 1998 Cadmus declared a regular quarterly cash dividend of
$.05 per share, payable on September 4, 1998, to shareholders of record as of
August 21, 1998. Additional information with respect to dividends declared is
presented on page 27 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 7) referenced in Item 8 of this report.
ITEM 6. SELECTED FINANCIAL DATA
The information presented under the caption "Selected Financial Data" on
page 21 of the 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 22 through 26 of the 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 24 and 25 of the 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 28 through 45 of the Annual Report to Shareholders is
incorporated herein by reference. The supplementary data regarding quarterly
results presented under the caption "Selected Quarterly Data" on page 27 of the
Annual Report to Shareholders is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
8
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 2, 1998.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors of the Registrant is contained on pages 5
through 9 and page 22 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 12 through 17
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 5 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 10 through 12 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 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 12 hereof.
(b) Reports on Form 8-K
On April 23, 1998, the Company filed a Form 8-K, which included the press
release regarding fiscal 1998 third quarter 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 15
through 16 hereof are filed as a part of this report.
9
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 25th day of
September, 1998.
CADMUS COMMUNICATIONS CORPORATION
/s/ C. Stephenson Gillispie, Jr.
---------------------------------------------
C. Stephenson Gillispie, Jr.
Chairman of the Board, 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 25th day of September
1998.
Signature Title
--------- -----
/s/ C. Stephenson Gillispie, Jr. Chairman of the Board, President, and
------------------------------- Chief Executive Officer
C. Stephenson Gillispie, Jr. (Principal Executive Officer)
/s/ Bruce V. Thomas Senior Vice President and Chief Financial
------------------------- Officer (Principal Financial and Accounting Officer)
Bruce V. Thomas
*/s/ Frank Daniels, III Director
-------------------------
Frank Daniels, III
*/s/ G. Waddy Garrett Director
-------------------------
G. Waddy Garrett
*/s/ Price H. Gwynn, III Director
-------------------------
Price H. Gwynn, III
*/s/ Jeanne M. Liedtka Director
-------------------------
Jeanne M. Liedtka
*/s/ John D. Munford, II Director
-------------------------
John D. Munford, II
*/s/ John C. Purnell, Jr. Director
-------------------------
John C. Purnell, Jr.
*/s/ Jerry I. Reitman Director
-------------------------
Jerry I. Reitman
*/s/ Russell M. Robinson, II Director
-------------------------
Russell M. Robinson, II
10
*/s/ John W. Rosenblum Director
-------------------------
John W. Rosenblum
*/s/ Wallace Stettinius Director
-------------------------
Wallace Stettinius
*/s/ Bruce A. Walker Director
-------------------------
Bruce A. Walker
______________________________ Director
David G. Wilson, Jr.
*By /s/ C. Stephenson Gillispie, Jr.
-----------------------------------------
C. Stephenson Gillispie, Jr.
Attorney-in-fact
11
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The Consolidated Balance Sheets of Cadmus Communications Corporation and
Subsidiaries as of June 30, 1998 and 1997, and the related Consolidated
Statements of Income and Cash Flows for each of the three years in the period
ended June 30, 1998, including the notes thereto, are included on pages 28
through 44 of the Registrant's 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 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...... 13
Financial Statement Schedules: *
II - Valuation and Qualifying Accounts .............. 14
* 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.
12
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 generally accepted auditing standards, 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 July 28, 1998. 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
July 28, 1998
13
SCHEDULE II
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 (A) Period
- ---------------------- --------- --------- --------- ------------- ----------
Years Ended:
June 30, 1996 $1,153 $ 963 $1,005(B) $ 811 $2,310
June 30, 1997 2,310 1,046 497(C) 1,603 2,250
June 30, 1998 2,250 1,299 307(D) 1,281 2,575
(A) Uncollectible accounts charged off, net of recoveries.
(B) Includes allowance for doubtful accounts purchase accounting adjustments for
fiscal 1996 acquisitions, which included Lancaster Press, Inc., and
Subsidiary.
(C) Includes allowance for doubtful accounts purchase accounting adjustments for
Lancaster Press, Inc., and Subsidiaries.
(D) Includes allowance for doubtful accounts purchase accounting adjustments
for Germersheim, Inc.
14
INDEX OF EXHIBITS
3.1 Restated Articles of Incorporation of Cadmus Communications Corporation,
as amended -- incorporated herein by reference from Exhibit 3.1 of the
Form 10-K for the fiscal year ended June 30, 1993.
3.2 Bylaws of Cadmus Communications Corporation, as amended - incorporated
herein by reference from Exhibit 3.2 of the Form 10-Q for the quarterly
period ended December 31, 1997.
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 $160,000,000 Revolving Credit/Term Loan Facility Agreement dated as of
October 15, 1996, incorporated herein by reference from Exhibit 4 of the
Form 10-Q for the fiscal quarter ended September 30, 1997.
10.1 Cadmus Executive Incentive Plan dated November 11, 1997, filed herewith.
10.2 Cadmus Supplemental Executive Retirement Plan, as restated effective July
1, 1992 -- incorporated herein by reference from Exhibit 10.2 of Form SE
dated September 25, 1992.
10.3 Cadmus 1984 Stock Option Plan -- incorporated herein by reference from
Exhibit 10.3 of the Form 10-K for the fiscal year ended June 30, 1985
(Commission File No. 0-12954).
10.4 Cadmus 1992 Non-Employee Director Stock Compensation Plan -- incorporated
herein by reference from Exhibit 10.5 of the Form SE dated September 25,
1992.
10.5 Cadmus 1997 Non-Employee Director Stock Compensation Plan, filed
herewith.
10.6 Cadmus 1990 Long Term Stock Incentive Plan, as amended effective August
12, 1998, filed herewith.
10.7 Cadmus Deferred Compensation Plan, as amended through February 16, 1996,
filed herewith.
10.8 Cadmus Non-Qualified Thrift Plan, as amended through March 26, 1997,
filed herewith.
10.9 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and C. Stephenson Gillispie, Jr., filed
herewith.
10.10 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and David E. Bosher, filed herewith.
10.11 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and Bruce V. Thomas, filed herewith.
10.12 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and John H. Phillips, filed herewith.
10.13 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and Edward B. Fernstrom, filed herewith.
10.14 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and Steven R. Isaac, filed herewith.
15
10.15 Employee Retention Agreement dated as of June 25, 1998, between Cadmus
Communications Corporation and David G. Wilson, Jr., filed herewith.
10.16 Employee Retention Agreement dated as of August 11, 1998, between Cadmus
Communications Corporation and Joseph J. Ward, filed herewith.
13. Portions of the Annual Report to Shareholders for the fiscal year ended
June 30, 1998 which are incorporated by reference in this report on Form
10K, filed herewith.
18. Letter re change in accounting principles, filed herewith.
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.
Note: Exhibits 10.1-10.16 are management contracts or compensatory plans
and arrangements
Copies of exhibits listed above may be obtained by writing to David E. Bosher,
Vice President and Treasurer, at P.O. Box 27367, Richmond, Virginia 23261-7367.
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