ADVO Announces Record Fourth Quarter and 1997 Fiscal Year Results.WINDSOR Windsor, British royal family Windsor (wĭn`zər), family name of the royal house of Great Britain. The name Wettin, family name of Albert of Saxe-Coburg-Gotha, consort of Queen Victoria, was changed to Windsor by George V in 1917. , Conn.--(BUSINESS WIRE)--Oct. 21, 1997--ADVO, Inc. (NYSE NYSE See: New York Stock Exchange :AD) reported record results for its fourth quarter and fiscal year ended September September: see month. 27, 1997. Earnings per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the year were $1.09 versus $0.78 for the prior fiscal year, after excluding non-recurring charges in fiscal 1996 relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Company's recapitalization Recapitalization Restructuring a company's debt and equity mixture often with the aim of making a company's capital structure more stable. Notes: Companies often want to diversify their debt-to-equity ratio to improve liquidity. and pursuit of strategic alternatives (the "Recapitalization Expenses"). FY97 results include $0.13 per share incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. interest expense compared to FY96. Full year operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $58.5 million exceeded prior year by $19.0 million, or 48%. Prior year operating income excludes Recapitalization Expenses of $12.1 million. Revenues for the year were $1,016.5 million, versus $986.2 million in fiscal 1996. The year to year increase in revenue was driven by significantly increased unit volumes (pieces per package), partially offset by declines in revenue per piece as well as a strategically-driven reduction in shared mail packages distributed. Pieces per package were 8.53, up 8.9%, packages mailed were 3,111 million, down 2.7%, and revenue per thousand pieces was $36.41, down 3.2%. The decline in revenue per piece was the result of volume driven price declines, and product mix. Fiscal 1997 gross margin was 25.5% versus 22.8% in the prior year, due in part to a decline in paper costs and benefits from the July July: see month. , 1996 postal reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. . SG&A was $200.6 million, up $12.8 million (6.8%) from fiscal 1996. Continued cost savings from the Company's re-engineering re-engineering - The examination and modification of a system to reconstitute it in a new form and the subsequent implementation of the new form. http://erg.abdn.ac.uk/users/brant/sre. efforts were offset by increases in compensation, cost of living increases, higher bad debt expense and planned investments in technology and infrastructure. Fourth quarter operating income and earnings per share were $17.4 million and $0.35, respectively, versus $15.7 million and $0.29, respectively, during the prior year fourth quarter. Revenues of $260.6 million were up $8.7 million, or 3.4%, from the fourth quarter of FY96. For the fourth quarter, pieces per package were 8.68, up 5.5% over the prior year period. Packages mailed were 781.7 million, down 1.4%, strategically driven by the Company ending its "second in-home date" programs in Texas, and closing down several unprofitable markets. Revenue per thousand pieces was $36.35, down 1.7%. For the quarter, gross margin was 26.4%, versus 26.2% in the prior year, mainly due to lower paper prices. SG&A was $51.3 million, up $1.0 million from the fourth quarter of fiscal 1996. The increase in SG&A was driven by higher bad debt expense. Robert "Kam" Kamerschen, ADVO's Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. said, "We are extremely pleased with our strong fiscal 1997 results, and the continuation of the re-engineering results we have seen over the last five quarters. Operating income of $58.5 million is a record for the Company in both dollar amount as well as a percentage of net revenues. Moreover, it is over 20% above the last record in fiscal 1995. It is particularly pleasing to me to see how our associates have worked to overcome the extraordinary confluence confluence /con·flu·ence/ (kon´floo-ins) 1. a running together; a meeting of streams.con´fluent 2. in embryology, the flowing of cells, a component process of gastrulation. of factors that led to a difficult fiscal 1996. "Looking forward to FY98, we believe that our commitment to reinventing our company will continue to be productive and that positive revenue growth, combined with improved operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. will yield improved results. This, together with the Company's recently announced reduction in its borrowing rate and repurchased shares should allow strong earnings and earnings per share growth. Furthermore, we are driven by our clear and compelling `Targeter of Choice' vision, which will provide differentiated value to our customers." The Company stated that its current forecasts are based on a continuing growth in unit volumes, and that actual performance could vary depending on these assumptions. Forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. in this report are subject to many uncertainties in the Company's operations and business environment. Examples of such uncertainties include changes in customer demand, postal and paper expenditures, and the realization of expected benefits associated with the Company's re-engineering initiative. ADVO is the nation's largest full-service targeted direct mail marketing services company with annual revenues of over $1 billion. ADVO specializes in shared and solo direct mail services and provides customized Microtargeting(R) solutions for its clients' needs. The Company's Mailbox A simulated mailbox in the computer that holds e-mail messages. Mailboxes are stored on disk as a file of messages, a database of messages or as an individual file for each message. The standard mailboxes are usually In, Out, Trash and Junk (Spam). Values(R) branded shared mail program is distributed nationally to over 61 million households weekly. An additional 16 million households can be reached on a shared mail basis through ADVO's National Network Extension (ANNE). ADVO also offers transportation services. It has 19 mail processing facilities and 70 sales offices nationwide. ADVO's corporate headquarters are located at One Univac Lane, Windsor, CT 06095. ADVO can now be visited at its web site @ www.advo.com. -0-
ADVO, Inc.
Results of Operations (Unaudited)
Quarter and Year Ended September 27, 1997
(In thousands, except per share data)
Quarter Ended Year Ended
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
1997 1996 1997 1996
Revenues $260,624 $251,941 $1,016,492 $986,162
Cost of sales 191,872 185,944 757,413 761,506
Selling, general &
administrative 51,335 50,323 200,570 187,785
Nonrecurring charges - - - 12,082
Gain on sale of business
line - - - (2,687)
Operating income 17,417 15,674 58,509 27,476
Interest expense 3,609 4,052 14,820 9,669
Interest Income \ Other
(expense), net 31 (13) 27 729
Income before income
taxes 13,839 11,609 43,716 18,536
Provision for income
taxes 5,266 4,555 16,918 7,229
Income from continuing
operations 8,573 7,054 26,798 11,307
Discontinued Operations:
Loss on disposal of
discontinued operations,
net of tax - - - (8,199)
Net Income $8,573 $7,054 $26,798 $3,108
Earnings Per Share
Earnings from
continuing operations $0.35 $0.29 $1.09 $0.47
Loss on disposal of
discontinued
operations, net of tax - - - (0.34)
Net earnings per share $0.35 $0.29 $1.09 $0.13
Cash dividends declared
per share - - - $10.025
Weighted average common
and common equivalent
shares 24,823 24,259 24,688 24,126
CONTACT: ADVO, Inc. Donald McCombs Vice President - Financial Planning Financial planning Evaluating the investing and financing options available to a firm. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the firm in the form of a financial plan, and then comparing future performance against (860) 285-6391 |
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