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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, 1999
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, 1999, 9,014,188 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 $67,174,000 based on the
last sale price on July 31, 1999.
DOCUMENTS INCORPORATED BY REFERENCE:
Portions of the Registrant's Annual Report to Shareholders for
the fiscal year ended June 30, 1999 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 18, 1999 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................................9
Item 6. Selected Financial Data...........................................9
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............9
Item 7A. Quantitative and Qualitative Disclosures about Market Risk........9
Item 8. Financial Statements and Supplementary Data.......................9
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure........................9
PART III
Item 10. Directors and Executive Officers of the Registrant...............10
Item 11. Executive Compensation...........................................10
Item 12. Security Ownership of Certain Beneficial Owners
and Management............................................10
Item 13. Certain Relationships and Related Transactions...................10
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.......................................10
2
PART I
ITEM 1. BUSINESS
INTRODUCTION
Headquartered in Richmond, Virginia, Cadmus Communications Corporation
("Cadmus" or the "Company") provides customers with integrated, end-to-end
information, and communications solutions. The Company is organized around two
primary business sectors: Professional Communications serving customers who
publish information, and Marketing Communications serving customers who convey
marketing messages. Cadmus is the largest printer and producer of scientific,
technical, and medical ("STM") journals and publications in the United States,
and is a leading national printer and producer of special interest magazines,
point of purchase materials and specialty packaging materials. Additional Cadmus
services include commercial printing, advertising, direct marketing, software
duplication, catalog production, and interactive media.
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, has augmented its core printing competency with full creative
expertise, distribution, and fulfillment capabilities. The most significant
acquisitions to date include the following:
o 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;
o 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
STM journals;
o in fiscal 1996, Lancaster Press, Inc. and its subsidiaries, a Pennsylvania-
based producer of STM journals;
o in fiscal 1998, Germersheim, Inc., an Atlanta-based national point of purchase
marketing service provider;
o in fiscal 1999, Dynamic Diagrams, a web-site design and architecture firm
which specializes in helping organizations structure and design large web
sites; and
o 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.
ORGANIZATIONAL STRUCTURE AND PRODUCT LINES
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 connection with the restructuring, the Company reorganized its
organizational and operational structure into two business sectors: Professional
Communications and Marketing Communications.
CADMUS PROFESSIONAL COMMUNICATIONS
Cadmus Professional Communications provides a full range of
composition, editorial, prepress, printing, warehousing and distribution
services. In addition, this sector provides a full complement of digital
products and services, including website design and architecture, content
management, Internet and CD-ROM based electronic archiving, electronic peer
review, and online publishing. Cadmus Professional Communications includes
end-to-end services under the following divisions: Cadmus Journal Services,
Cadmus Mack and Cadmus Dynamic Diagrams. Cadmus Professional Communications
generated approximately 55% of the Company's net sales in fiscal 1999.
3
CADMUS JOURNAL SERVICES. Cadmus Journal Services ("CJS") is the
world's largest producer of STM journals. CJS provides a full range of solutions
for publishers of journals, magazines, and other professional and scholarly
information. Services include traditional copy editing, issue management,
composition, printing and distribution services, and a full complement of
digital and ancillary services such as content management, reprints and online
services for commercial, not-for-profit, associations, and special interest
publications.
CADMUS MACK. Purchased in April, 1999, Cadmus Mack is one of the
nation's largest producers of periodicals. Like CJS, this group also provides a
full range of solutions for publishers of journals, magazines, and other
periodicals. In addition, Cadmus Mack capabilities include "short-run" journal
printing, a full range of weekly and tabloid magazine production and
distribution capabilities, and books and directories production.
CADMUS DYNAMIC DIAGRAMS. Cadmus Dynamic Diagrams specializes in helping
organizations structure and design large web sites. Services include site
planning, architecture and design, user interface design, site mapping, print
design, and building information-rich sites for online publications and
reference books.
CADMUS MARKETING COMMUNICATIONS
Cadmus Marketing Communications provides a full range of services in
point of purchase marketing, specialty packaging and promotional printing,
graphic solutions, software duplication, catalog design and photography,
commercial printing, direct marketing, interactive media, and fulfillment and
distribution services. Cadmus Marketing Communications includes end-to-end
marketing services under the following product lines: CadmusCom, Cadmus Graphic
Solutions, Cadmus Point of Purchase, Cadmus Specialty Packaging and Promotional
Printing, and Cadmus Technology Solutions. Marketing Communications generated
approximately 45% of the Company's net sales in fiscal 1999.
CADMUSCOM. CadmusCom is comprised of two divisions: CadmusCom
Atlanta and Cadmus Direct Marketing. CadmusCom Atlanta offers full-scale
collateral and advertising design, catalog design and production, and
interactive media services. Cadmus Direct is a full-service direct marketing
agency providing database-driven marketing services to clients.
CADMUS GRAPHIC SOLUTIONS. Cadmus Graphic Solutions offers
state-of-the-art commercial pre-press and printing, finishing and binding,
graphic design services, mailing services, data archiving and content management
for electronic applications. This business conducts internal system and process
analysis for clients, that enables them to reduce overhead, streamline
procurement, and manage graphic communications programs.
CADMUS POINT OF PURCHASE. Cadmus Point of Purchase produces temporary
and semi-permanent marketing displays for retailers. It offers strategic
marketing plan development, in-house creative design and promotional concepts,
print production and assembly, kit packing, fulfillment, and database management
for multi-outlet locations. Products include unique table-top displays, tent
cards, banners, posters, shelf danglers, translites, motorized aisle displays,
retail spectaculars, and other point of purchase materials.
CADMUS SPECIALTY PACKAGING AND PROMOTIONAL PRINTING. Cadmus Specialty
Packaging and Promotional Printing produces packages that serve as point of sale
advertising, 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, annual reports, product literature, computer documentation,
and catalogs.
CADMUS TECHNOLOGY SOLUTIONS. Cadmus Technology Solutions is a turnkey
fulfillment and distribution operation that handles CD and floppy disk
duplication, label printing, packaging and other printing, inventory and
logistics management. This business has the capability of accepting customer
data daily, fulfilling requests within 24-hours, and capitalizing on the
delivery with pre-printed, distinguishable, brand advertising packaging.
4
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 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 within the Professional
Communications sector 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 sixmonth 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 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 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.
EMPLOYEES
Cadmus employs approximately 4,100 persons, approximately 22% 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, 1999:
- -----------------------------------------------------------------------------------------------------------------------
PRODUCT LINE LOCATION PRIMARY USE OWNED/ SIZE
LEASED (SQ. FT.)
- -----------------------------------------------------------------------------------------------------------------------
PROFESSIONAL COMMUNICATIONS SECTOR
Journal Services Akron, PA Manufacturing/Composition Owned 50,000
Directories, Books Baltimore, MD Manufacturing/Printing Leased 175,000
Journal Services Baltimore, MD Manufacturing/Composition Leased 51,700
Directories, Books Baltimore, MD Warehouse, Distribution Leased 40,000
Magazines East Stroudsburg, PA Manufacturing/Printing Owned 164,570
Journal Services Easton, MD Manufacturing/Printing Owned 196,800
Journal Services, Magazines Easton, PA Manufacturing, Warehouse, Offices Owned 252,320
Journal Services Ephrata, PA Manufacturing/Printing Owned 142,300
Journal Services, Magazines Ephrata, PA Warehouse Leased 24,840
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 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
MARKETING COMMUNICATIONS SECTOR
Specialty Packaging (Disk Atlanta, GA Manufacturing Leased 88,000
Duplication)
Point of Purchase Atlanta, GA Manufacturing Owned 80,000
Point of Purchase Atlanta, GA Manufacturing, Office Owned 65,300
Point of Purchase Atlanta, GA Warehouse Leased 61,175
Marketing Services (Catalogs) Atlanta, GA Catalog Services and Production Leased 60,000
Point of Purchase Atlanta, GA Offices Leased 38,000
Point of Purchase Atlanta, GA Warehouse Leased 19,000
Specialty Packaging and Promotional Charlotte, NC Manufacturing/Printing Owned 180,000
Printing
Specialty Packaging and Promotional Charlotte, NC Warehouse Leased 39,600
Printing
Marketing Services (Direct Charlotte, NC Direct Marketing Services Leased 19,000
Marketing)
Graphic Solutions Richmond, VA Manufacturing/Printing Owned 97,000
Marketing Services (Advertising,
Identity Marketing, New Media) Richmond, VA Advertising Services Leased 13,000
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. 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
- ---------- ------------------------------ -------------------------
C. Stephenson Gillispie, Jr. (57) Chairman of the Board, President, and President and Chief Operating Officer, Cadmus,
Chief Executive Officer, Cadmus 1992- 1990-1992.
present.
David G. Wilson, Jr. (58) Chairman, Professional Communications Executive Vice President,
Sector, Cadmus, 1998-present. Professional Communications, Cadmus, 1997-1998;
President,Cadmus Journal Services, Cadmus,
1994-1998; Senior Vice President & General
Manager of the Byrd Journal division, Cadmus,
1993-1994.
Steven R. Isaac (51) Executive Vice President Group President, Cadmus Marketing Group,
Marketing Communications Sector, Cadmus, Cadmus, 1996 - 1997; Executive Vice President
1997-present. and Chief Operating Officer, The Martin Agency,
1996; Chairman and CEO, Martin Direct, 1979-1996.
Joseph J. Ward (52) Executive Vice President of Sales & Group President and CEO of Cadmus Journal
Marketing, Professional Communications Services, Cadmus, 1998-1999;
Sector, Cadmus, 1999-present President, Direct Response for Europe & North
Executive Vice President, Cadmus America, Bertelsmann Book Group, Bertelsmann
Professional Communications, Cadmus, AG, 1996-1998; President & CEO, JWard
1998-present. Consulting, 1995-1996; President, Meredith Book
Group, Meredith Corporation, 1991-1995.
Bruce V. Thomas (42) Senior Vice President and Chief Vice President and Chief Financial Officer,
Financial Officer, Cadmus 1997-present. Cadmus, 1996-1997; Vice President, Law and
Development, Cadmus, 1992-1996.
David E. Bosher (46) Vice President and Treasurer, Cadmus Vice President, Treasurer, and Chief Financial
1993-present. Officer, Cadmus, 1990-1993.
Edward B. Fernstrom (50) Vice President, Information Vice President, Chief Information Officer,
Technology, Cadmus 1995-present. Dyncorp, 1990-1995.
John H. Phillips (55) Vice President, Special Projects, Vice President, Procurement and Operations
Cadmus, July 1999-present. Finance, Cadmus, 1997-present; Vice President,
Support and Development, Cadmus, 1996-1997;
Vice President and Regional Manufacturing Officer,
Cadmus, 1994-1996; Vice President Operations,
Cadmus, 1992-1994.
Bruce G. Willis (38) Vice President and Controller, Cadmus, Vice President of Finance, Marketing
July 1999-present. Communications Sector, Cadmus, 1997 to 1999;
Director, Financial Planning and Analysis, Cadmus,
1996-1997; Director of Finance, Sales and
Marketing Group, Cadmus, 1995-1996; Controller
of the Byrd Journal division, Cadmus, 1992 to
1995.
D. Raymond Fisher (43) Vice President, Strategy & Business Vice President and Controller, Cadmus,
Development, Cadmus, July 1999-present. 1998-1999; Director Corporate Strategy, CSX
Corporation, 1994-1998.
8
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 33 of the Annual Report and is incorporated
herein by reference.
As of August 31, 1999, the approximate number of beneficial holders of
Cadmus common stock was 2,000, which includes stockholders recorded on security
position listings.
On August 12, 1999 Cadmus declared a regular quarterly cash dividend of
$.05 per share, payable on September 3, 1999, to shareholders of record as of
August 23, 1999. Additional information with respect to dividends declared is
presented on page 33 of the 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 25 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 26 through 32 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 29 through 31 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 34 through 54 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 33 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.
9
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 8, 1999.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information on the directors of the Registrant is contained on
pages 6 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
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 3 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 11 and 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 14 hereof.
(b) REPORTS ON FORM 8-K
On April 6, 1999, the Company filed a Form 8-K, that included the press
release announcing the April 1, 1999, acquisition of Mack Printing Company
(Mack). The filing also included the press release announcing that, in
conjunction with its acquisition of Mack, the Company entered into a new $200
million revolving credit/term facility.
On April 15, 1999, the Company filed a Form 8-K to report the April 1,
1999, acquisition of Melham Holdings Inc., the principal operating subsidiary of
which was Mack Printing Company, a full-service producer of magazines, journals
directories and soft-cover books.
10
On April 29, 1999, the Company filed a Form 8-K, that included
the press release regarding fiscal 1999 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 13, 1999, the Company filed a Form 8-K/A, that amended Item 7 in
the Current Report on the Form 8-K filed March 12, 1999, to provide the
financial data required by Item 7(b) regarding the sale of certain assets and
liabilities related to the Company's Financial Communications division.
On May 13, 1999, the Company filed a Form 8-K/A, that amended Item 2 and
Item 7 in the Current Report on Form 8-K filed on April 15, 1999, to provide the
financial statements required by Item 7 and to provide other disclosures
regarding the acquisition of Melham Holdings, Inc. and its principal operating
subsidiary, Mack Printing Company.
On June 9, 1999, the Company filed a Form 8-K, that included the press
release announcing that the Company completed its offering pursuant to Rule 144A
under the Securities Act of 1933 of $125 million aggregate principal amount
Senior Subordinated Notes.
On August 10, 1999, the Company filed a Form 8-K, that included the press
release regarding fiscal 1999 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.
11
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, 1999.
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 27th day of September
1999.
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/ John D. Munford, II Director
- --------------------------------------
John D. Munford, II
*/s/ 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 Director
- --------------------------------------
Russell M. Robinson, II
12
*/s/ 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/ C. Stephenson Gillispie, Jr.
- ---------------------------------------
C. Stephenson Gillispie, Jr.
Attorney-in-fact
13
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The Consolidated Balance Sheets of Cadmus Communications Corporation
and Subsidiaries as of June 30, 1999 and 1998, and the related Consolidated
Statements of Income, Cash Flows, and Shareholders' Equity for each of the three
years in the period ended June 30, 1999, including the notes thereto, are
included on pages 34 through 54 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................... 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 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 August 9, 1999. 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 9, 1999
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, 1997 $ 2,310 $ 1,046 $ 497(B) $ 1,603 $2,250
June 30, 1998 2,250 1,299 307(C) 1,281 2,575
June 30, 1999 2,575 384 1,140(D) 1,018 3,081
(A) Uncollectible accounts charged off, net of recoveries.
(B) Includes allowance for doubtful accounts purchase accounting adjustments for
Lancaster Press, Inc., and Subsidiaries, purchased in fiscal 1996.
(C) Includes allowance for doubtful accounts purchase accounting adjustments for
the fiscal 1998 acquisition of Germersheim, Inc.
(D) Includes allowance for doubtful accounts purchase accounting adjustments for
the fiscal 1999 acquisition of Mack Printing Company.
(---------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, 1997 $ -- $ 19,699 $ -- $ 12,087 $7,612
June 30, 1998 7,612 3,950 -- 7,184 4,378
June 30, 1999 4,378 -- -- 4,378 --
(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)
17
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
August 12, 1998. (16)
10.7 Cadmus Deferred Compensation Plan, as amended through February 16,
1996. (17)
10.8 Cadmus Non-Qualified Thrift Plan, as amended through March 26,
1997. (18)
10.9 Employee Retention Agreement dated as of June 25, 1998 between Cadmus
Communications Corporation and C. Stephenson Gillispie, Jr. (19)
10.10 Employee Retention Agreement dated as of June 25, 1998 between
Cadmus Communications Corporation and David E. Bosher. (20)
10.11 Employee Retention Agreement dated as of June 25, 1998 between
Cadmus Communications Corporation and Bruce V. Thomas. (21)
10.12 Employee Retention Agreement dated as of June 25, 1998 between
Cadmus Communications Corporation and John H. Phillips. (22)
10.13 Employee Retention Agreement dated as of June 25, 1998 between
Cadmus Communications Corporation and Edward B. Fernstrom. (23)
10.14 Employee Retention Agreement dated as of June 25, 1998 between Cadmus
Communications Corporation and Steven R. Isaac. (24)
10.15 Employee Retention Agreement dated as of June 25, 1998 between
Cadmus Communications Corporation and David G. Wilson, Jr. (25)
10.16 Employee Retention Agreement dated as of August 11, 1998 between
Cadmus Communications Corporation and Joseph J. Ward. (26)
18
13. Portions of the Annual Report to Shareholders for the fiscal year
ended June 30, 1999 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).
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).
19
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 Annual Report on Form 10-K
for the fiscal year ended June 30, 1998 (Commission File No. 0-12954).
19. 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).
20. 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).
21. 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).
22. 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).
23. 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).
24. 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).
25. 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).
26. 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).
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.
20