ADVO announces third quarter 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)--July 23, 1996--ADVO, Inc. (NYSE NYSE See: New York Stock Exchange :AD) announced the results of its third fiscal quarter ended June June: see month. 29, 1996, which are in line with current analyst expectations. 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. and income 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 were $11.7 million and $4.4 million (18 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ), respectively, vs. $15.4 million and $9.7 million (41 cents per share), respectively, during the prior year period. Fiscal year to date operating income and income from continuing operations, excluding non-recurring charges related to 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. in pursuit of strategic alternatives (the "Recapitalization Expenses") and before the cumulative effect of accounting change, were $23.9 million and $11.7 million (47 cents per share), respectively, versus $36.4 million and $23.2 million ($1 per share), respectively, during the prior year period. The year to year declines in income from continuing operations were also affected by third quarter and year to date interest expense of $4.3 million (10 cents per share) and $5.6 million (14 cents per share), respectively, related to the debt incurred in connection with the $10 per share special dividend paid on March 5, 1996. For the three month period ended June 29, 1996, net income was $4.4 million, or 18 cents per share, vs. $9.2 million, or 39 cents per share during the prior year period. For the fiscal year to date, net loss was $3.9 million, or 16 cents per share, vs. net income of $20.7 million, or 89 cents per share during the prior year period. Note that the second quarter included recapitalization expenses of $12.1 million on a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta basis and a $7.2 million non-cash after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. charge related to the sale of Marketing force. Revenues for the third quarter were $245.7 million, down 4% from the prior year period. This year to year decline was driven by decreased unit volume and declines in shared mail product weights which adversely affected revenue per piece. Pieces per package were 7.77, down 3%, packages mailed were 801.6 million, up 2%, and revenue per thousand pieces was $37.91, down 2% vs. the prior year, reflecting higher prices in the company's printed products offset by declines in product weights. The decline in product weights was caused primarily by a reduction in advertising pages and weight of pieces mailed by the company's important preprint pre·print n. Something printed and often distributed in partial or preliminary form in advance of official publication: a preprint of a scientific article. tr.v. customers. These customers have been faced with a 20%-plus increase in advertising costs since January January: see month. 1995 as a result of increased paper and postage POSTAGE. The money charged by law for carrying letters, packets and documents by mail. By act of congress of March 3, 1851, Minot's Statute at Large, U. S. 587, it is enacted as follows: 2.-Sec. 1. costs. For the quarter, gross margin was 22.6% vs. 24.8% in the prior year, reflecting the increased paper costs vs. the prior year and the decline in pricing and postage absorption described above. SG&A was $43.8 million, a decrease of $4.6 million, a 9.5% improvement vs. the prior year, reflecting the company's successful and ongoing efforts to streamline and reengineer its processes and systems. Since June of 1995, headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. has been reduced by 480 associates, as anticipated. Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. "Kam a. 1. Crooked; awry. " 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 disappointed with our first nine month's results. We are encouraged by some improvements in the tone of our business. However, in the third quarter, we continued to feel the effects of higher year on year paper costs and the significant internal distractions of the last twelve months. These included our exploration of strategic alternatives, the reengineering Using information technology to improve performance and cut costs. Its main premise, as popularized by the book "Reengineering the Corporation" by Michael Hammer and James Champy, is to examine the goals of an organization and to redesign work and business processes from the ground up of the company, and our new margin based sales compensation system. "We continue to believe that the year on year decline in revenues experienced in the first nine months of our fiscal year will reverse itself in the fourth quarter, after adjusting for the extra week in FY95. We are further encouraged looking into 1997 as we realize the full effect of our reengineering initiative (which to date has yielded $20MM in lower SG&A on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis and which is expected to produce significant productivity improvements, particularly in sales), 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. benefits, and the potential for lower paper costs. In short, we expect to see the gains in FY97 for the pains of FY96." The company stated that its current forecasts are based on the anticipated return of positive revenue growth, partially for the reasons given above, and that actual performance could vary depending on this assumptions. ADVO is the nation's largest full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. direct mail marketing services company with annual revenues in excess of $1 billion. ADVO specializes in shared and solo direct mail services, and provides customized Microtargeting Microtargeting is the use by political parties of direct marketing datamining techniques that involve predictive market segmentation (aka cluster analysis). It is used by United States Republican and Democratic political parties and candidates to track individual voters and (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. ADVO also offers limited transportation services. It has 20 mail processing facilities and 70 sales offices nationwide. ADVO's corporate headquarters are located at One Univac Lane, Windsor, CT 06095. -0-
ADVO Inc.
Results of Operations (Unaudited)
Three and nine months ended June 29, 1996
(in thousands, except per share data)
Three Months Ended
June 29, June 24,
1996 1995(a)
Revenues $245,698 $256,730 Cost of sales 190,246 192,935 Selling, general & administrative 43,798 48,379 Nonrecurring charges - - Gain on sale of business lines - - Operating Income 11,654 15,416 Interest expense (4,264) - Interest income/Other expense, net (28) 477 Income before income taxes 7,362 15,893 Provision for income taxes 2,971 6,207 Income from continuing operations before cumulative effect of accounting change 4,391 9,686 Cumulative effect of change in accounting for post-employment benefits, net of tax - - Income from continuing operations and after cumulative effect of accounting change 4,391 9,686 Loss from discontinued operations, net of taxes - (481) Loss on disposal of discontinued operations, net of tax - - Net income (loss) $4,391 $9,205 Earnings (loss) per share(a) Earnings from continuing operations and after cumulative effect of accounting change $0.18 $0.41 Loss on disposal of discontinued operations - (0.02) Net earnings (loss) per share (A) $0.18 $0.39 Cash dividends declared per share - $0.025 Average common and common equivalent shares: Primary 23,003 23,458 Fully diluted 25,010 23,466 -0-
Nine Months Ended
June 29, June 24,
1996 1995(a)
Revenues $734,221 $744,435 Cost of sales 575,562 559,120 Selling, general & administrative 137,462 151,132 Nonrecurring charges 12,082 - Gain on sale of business lines (2,687) (2,243) Operating Income 11,802 36,426 Interest expense (5,618) - Interest income/Other expense, net 743 1,644 Income before income taxes 6,927 38,070 Provision for income taxes 2,674 14,867 Income from continuing operations before cumulative effect of accounting change 4,253 23,203 Cumulative effect of change in accounting for post-employment benefits, net of tax - (1,545) Income from continuing operations and after cumulative effect of accounting change 4,253 21,658 Loss from discontinued operations, net of taxes - (975) Loss on disposal of discontinued operations, net of tax (8,199) - Net income (loss) ($3,946) $20,683 Earnings (loss) per share(a) Earnings from continuing operations and after cumulative effect of accounting change $0.17 $0.93 Loss on disposal of discontinued operations (0.33) (0.04) Net earnings (loss) per share (A) ($0.16) $0.89 Cash dividends declared per share $10.025 $0.075 Average common and common equivalent shares: Primary 24,642 23,281 Fully diluted 24,655 23,306
(a) Prior year financial results have been restated to reflect the
treatment of the Marketing Force segment as a discontinued
operation.
(A) Both primary and fully diluted CONTACT: ADVO Inc., Windsor Donald Donald (Domnall, Domhnall, Dumhnuil, Dónall) is an anglicized version of a Scottish or Irish Gaelic personal name, containing the elements dumno "world" and val "rule", viz. "ruler of the world". Compare Dumnorix. McCombs, 860/285-6391 |
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