RNS Number:2876C
Applied Graphics Technologies Inc
19 April 2001
APPLIED GRAPHICS TECHNOLOGIES REPORTS FOURTH QUARTER AND YEAR END 2000 RESULTS
New York, March 2, 2001 - Applied Graphics Technologies, Inc. (NASDAQ: AGTX),
the country's largest provider of outsourced digital media asset management
services, today reported improved results for the three months and full year
ended December 31, 2000. Prior period share and per-share amounts have been
adjusted for the effects of the Company's two-for-five reverse stock split on
December 5, 2000.
"We were pleased to see the continued improvement in our core operations," said
Joe Vecchiolla, Chief Operating Officer and Chief Financial Officer of AGT. "The
fourth quarter results represent the second consecutive quarter in which our
gross profit margin and operating income margin have improved over the prior
year. Bolstered by the sale of non-core businesses and properties, cost
management, and the improved margins, we were able to reduce our borrowings by
over $95 million in 2000. We do, however, remain cautious about our operations
in future periods. Early indicators lead us to believe that the softening
economic climate and weakening advertising market will pose a significant
challenge, especially in the first quarter of 2001," said Mr. Vecchiolla.
The Company's revenues in the fourth quarter of 2000 decreased by 13.5% to
$135.2 million, as compared to revenue of $156.3 million in the same quarter of
1999. This decrease resulted primarily from the sale of the photographic
laboratory business in April 2000 and the closing of a prepress facility in
Atlanta in June 2000, both of which were acquired as part of the acquisition of
Wace Group Limited ("Wace") in May 1999, as well as from lower revenues at the
Company's Midwest prepress and creative services operations. Gross profit was
$44.9 million in the 2000 quarter, as compared to $46.7 million in the fourth
quarter of 1999. Gross profit as a percentage of revenue, however, increased to
33.2% in the 2000 quarter from 29.9% in the 1999 quarter as a result of an
overall improvement in operations at the Company's core content management
businesses, as well as from the aforementioned sale of the lower margin
photographic laboratory business. Operating income before amortization,
restructuring, and other credits and charges more than doubled in 2000 to $8.6
million, an increase of $4.4 million from the 1999 quarter. Income from
continuing operations in the fourth quarter of 2000 benefited from a gain of
$16.6 million on the sale of assets that were primarily dedicated to the
Company's digital portrait systems business and from an $11.0 million decrease
in impairments and other charges as compared to 1999, but was negatively
impacted compared to 1999 by an increase in interest expense of $1.1 million and
an additional $0.4 million of amortization of intangibles.
The Company had income from continuing operations of $5.2 million for the 2000
quarter, as compared to a loss of $13.8 million for the 1999 quarter. For the
fourth quarter of 2000, the Company had net income of $5.2 million as compared
to a net loss of $13.5 million for the same period of 1999.
"The completion of the sale of our digital portrait systems business in December
2000 for approximately $18 million in net pretax proceeds was another successful
step in our effort to streamline our core business and maximize the value of our
non-core businesses. We believe continued debt reductions can be achieved in
2001 through the planned sale of our remaining non-core businesses, including
the Devon Publishing Group, and continued focus on improving operating margins,"
Mr. Vecchiolla concluded.
For the year ended December 31, 2000, the Company's revenues rose 6.5% to $566.5
million, as compared to revenues of $532.1 million for the prior year. The
revenues from the former Wace operations are included for the full year in 2000.
Gross profit was $190.9 million (33.7%) for 2000 as compared to $168.5 million
(31.7%) for 1999. Operating income before amortization, restructuring, and other
credits and charges was $35.7 million in 2000, as compared to $34.1 million in
1999, and includes a charge of $2.1 million related to non-restructuring related
employee termination costs. For 2000, the Company incurred a loss from
continuing operations of $2.1 million, as compared to a loss from continuing
operations of $11.5 million for 1999. The loss from continuing operations for
2000 benefited from a gain of $18.9 million on the sale of businesses and
property, but was negatively impacted compared to 1999 by an increase in
interest expense of $9.3 million, an additional $2.0 million of amortization of
intangibles, and an increase in minority interest related to dividends on the
outstanding Wace preference shares of $0.4 million. The Company incurred a net
loss of $100.5 million in 2000, including a non-cash charge of $95.2 million
related to the estimated loss on disposal of the Devon Publishing Group, as
compared to a net loss of $12.0 million for 1999.
As previously announced, the Company's Board of Directors approved a plan to
sell its Devon Publishing Group. Therefore, the results of operations of this
business have been reflected as a discontinued operation for all periods
presented and the Company's operating results for the year ended December 31,
2000, include a non-cash charge of $95.2 million related to the estimated loss
on disposal.
Applied Graphics Technologies, Inc. is a major international provider of
outsourced advanced digital media asset management services to magazine and
newspaper publishers, advertisers and their agencies, entertainment companies,
catalogers and retailers, and consumer goods and packaging companies. From
locations across the United States, the United Kingdom, and Australia, AGT
supplies a complete range of digital and traditional processes for images,
including scanning, color enhancement, image editing, archiving and electronic
distribution. AGT tailors these services to fit specific customer needs, from
conventional project and contract vendor relationships to today's more
progressive arrangements, consisting of outsourcing on-site facilities
management and complete turnkey operations. Additionally, AGT provides a wide
range of advertising and marketing-related creative services for customers
primarily in retailing. These services include assistance in creation of
newspaper advertising campaigns, development of in-store and collateral media
and photographic services. AGT also provides content management and the volume
reproduction and distribution of television and radio commercials to broadcast
and cable media for ad agencies and their clients.
Certain statements in this press release may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of the Company to be materially different from those expected or
anticipated in the forward-looking statements. Such factors are described in the
Company's SEC filings, including its quarterly reports on Form 10-Q and its
annual reports on Form 10-K and Form 10-K/A.
Additional information about Applied Graphics Technologies can be obtained by
visiting the AGT website: http://www.agt.com.
Applied Graphics Technologies, Inc.
Consolidated Statements of Operations Data
(Unaudited)
(In thousands, except per-share amounts)
Three Months Twelve Months
Ended December 31, Ended December 31,
2000 1999 2000 1999
Revenues $ 135,155 $ 156,265 $ 566,540 $ 532,064
Cost of revenues 90,228 109,555 375,593 363,540
Gross profit 44,927 46,710 190,947 168,524
Gross profit percentage 33.2% 29.9% 33.7% 31.7%
Selling, general, and
administrative expenses 36,303 42,503 155,199 134,449
Operating income before
amortization, restructuring,
and other credits and charges 8,624 4,207 35,748 34,075
Amortization of intangibles 3,329 2,954 13,334 11,306
Loss (gain) on disposal of
property and equipment - net 79 2,368 (2,327) 2,402
Gain of sale of businesses (16,590) (16,590)
Restructuring charges (income) (689) 1,707 (202) 3,572
Impairment charges 6,302 1,241 6,302
Operating income 22,495 (9,124) 40,292 10,493
Interest expense (7,907) (6,828) (28,428) (19,146)
Interest income 161 178 794 475
Other income (loss) - net (215) (15) 154 908
Income (loss) from continuing
operations before provision
for income taxes and minority
interest 14,534 (15,789) 12,812 (7,270)
Provision (benefit) for
income taxes 8,780 (2,607) 12,454 2,166
Income (loss) from continuing
operations before minority
interest 5,754 (13,182) 358 (9,436)
Minority interest (596) (664) (2,500) (2,098)
Income (loss) from continuing
operations 5,158 (13,846) (2,142) (11,534)
Income (loss) from discontinued
operations 369 (98,383) (452)
Net income (loss) $ 5,158 $ (13,477) $ (100,525) $ (11,986)
Basic and Diluted earnings
(loss) per common share:
Income (loss) from continuing
operations $ 0.57 $ (1.53) $ (0.24) $ (1.28)
Income (loss) from
discontinued operations 0.04 (10.88) (0.05)
Total $ 0.57 (1.49) (11.12) (1.33)
Weighted Average Number
of Common Shares:
Basic 9,034 9,023 9,040 8,982
Diluted 9,034 9,023 9,040 8,982
Applied Graphics Technologies, Inc.
Consolidated Balance Sheet Data
(Unaudited)
(In thousands of dollars)
December 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and marketable securities $ 8,083 $ 19,769
Trade accounts receivable (net of allowances
of $5,100 in 2000 and $7,732 in 1999) 100,394 119,997
Due from affiliates 5,084 6,615
Inventory 21,842 26,283
Other current assets 31,274 52,924
Net current assets of discontinued operations 44,467 36,233
Total current assets 211,144 261,821
Property, plant and equipment - net 63,789 95,281
Goodwill and other intangible assets-net 424,031 437,674
Other assets 23,449 23,846
Net non-current assets of discontinued
operations 112,388
Total assets $ 722,413 $ 931,010
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 88,518 $ 90,954
Current portion of long-term debt and
obligations under capital leases 18,048 19,024
Due to affiliates 1,115 1,909
Other current liabilities 21,043 33,477
Total current liabilities 128,724 145,364
Long-term debt 204,080 298,125
Subordinated notes 27,745 29,867
Obligations under capital leases 1,695 3,814
Other liabilities 14,881 11,738
Total liabilities 377,125 488,908
Commitments and contingencies
Minority interest - Redeemable Preference Shares
issued by subsidiary 36,584 34,152
Total stockholders' equity 308,704 407,950
Total liabilities and stockholders' equity $ 722,413 $ 931,010
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