Advo announces second 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)--April 23, 1996--ADVO, Inc. (NYSE NYSE See: New York Stock Exchange :AD) announced the results of its second fiscal quarter ended March 30, 1996. 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 , excluding nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". 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. and pursuit of strategic alternatives (the "Recapitalization Expenses"), were $1.3 million and $0.2 million ($0.01 per share), respectively, versus $4.8 million and $3.3 million ($0.14 per share), respectively, during the prior year period. Year to date operating income and income from continuing operations, excluding the Recapitalization Expenses and cumulative effect of accounting change, were $12.2 million and $7.2 million ($0.33 per share), respectively, versus $21.0 million and $13.5 million ($0.58 per share), respectively, during the prior year period. Revenues for the quarter were $232.0 million, down 3% from the prior year period. For the quarter ended March 30, 1996, operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. and loss from continuing operations, including the Recapitalization Expenses, were $10.8 million and $7.2 million ($0.32 per share), respectively. Year to date operating income and loss from continuing operations, including the Recapitalization Expenses, were $0.1 million and $0.1 million ($0.01 per share), respectively. For the three and six month periods ended March 30, 1996, net loss, which included the Recapitalization Expenses and a $7.2 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the sale of Marketing Force was $14.4 million, or $0.64 per share, and $8.3 million, or $0.39 per share, respectively, versus net income of $2.8 million, or $0.12 per share, and $11.5 million, or $0.49 per share, respectively, during the prior year periods. The year to to year decline in revenue for the second quarter was driven by decreased unit volume and declines in shared mail product weights which adversely affected revenue per piece. Pieces per package were 7.58, down 2.7%, packages mailed were 803.0 million, up 0.2%, and revenue per thousand pieces was $36.50, essentially flat versus the prior year, reflecting higher prices in the company's printed products offset by declines in product weights. The year to year shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. in net income for the second quarter was also affected by interest expense of $1.4 million related to the debt incurred in connection with the $10 per share special dividend paid on March 5, 1996. The aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. decline in product weights, and the resulting negative impact on revenue per thousand pieces, 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 20.1% versus 23.3% in the prior year, reflecting the increased paper costs versus the prior year and the decline in pricing and postage absorption described above. SG&A was $45.4 million, a decrease of $5.6 million, or 11% versus the prior year, reflecting the company's successful and ongoing efforts to streamline and reengineer its processes and systems. Since June June: see month. 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 381 associates. 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 clearly disappointed with our second quarter results. The second quarter, in addition to being the Company's seasonally weakest quarter, was significantly affected by the continued impact of the postal and paper increases in 1995 and the continued sluggish retail environment. Although our revenues have clearly been impacted by these events, we are very encouraged by the fact that ADVO's readership read·er·ship n. 1. The readers of a publication considered as a group. 2. Chiefly British The office of a reader at a university. and response are at an all-time high. We believe our clients understand this performance advantage as we have not lost a significant client despite the significant price increases they have absorbed this past year. Looking forward, we still expect an improvement in the second half of FY1996 as the Company benefits from the impact of stabilized sta·bi·lize v. sta·bi·lized, sta·bi·liz·ing, sta·bi·liz·es v.tr. 1. To make stable or steadfast. 2. paper costs and postal savings as a result of the July 1, 1996 postal rate 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. . Despite these improvements, it will be difficult to overcome the weak results of the first half, and therefore, we believe our total year results from continuing operations will fall somewhat below our fiscal 1995 results. The disappointing projections for FY1996 notwithstanding, the bold and aggressive steps taken to reengineer ADVO in order to take advantage of our clear and compelling "Targeter of Choice" vision bodes well for financial performance for FY1997 and beyond." ADVO is the nation's largest full-service 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(R) solution 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, Conn 06095. -0-
ADVO, Inc.
Results of Operations (Unaudited)
Three and six months ended March 30, 1996
(in thousands, except per share data)
Three Months Ended Six Months Ended
March 30, March 25, March 30, March 25,
1996 1995(x) 1996 1995(x)
Revenues $232,010 $239,618 $488,523 $487,706 Cost of sales 185,358 183,774 385,317 366,185 Selling, general & administrative 45,392 51,038 93,663 102,754 Nonrecurring charges 12,082 - 12,082 - Gain on sale of business lines - - (2,687) (2,243) Operating (loss) income (10,822) 4,806 148 21,010 Interest expense (1,354) - (1,354) - Interest income/Other expense, net 363 590 771 1,168 (Loss) income before income taxes (11,813) 5,396 (435) 22,178 (Benefit) provision for income taxes (4,657) 2,114 (297) 8,659 (Loss) income from continuing operations before cumulative effect of accounting change (7,156) 3,282 (138) 13,519 Cumulative effect of change in accounting for post- employment benefits, net of tax - - - (1,545) (Loss) income from continuing operations and after cumulative effect of accounting change (7,156) 3,282 (138) 11,974 Loss from discontinued operations, net of taxes - (479) - (495) Loss on disposal of discontinued operations, net of tax (7,218) - (8,199) - Net (loss) income ($14,374) $2,803 ($8,337) $11,479 (Loss) Earnings per share - Primary (Loss) earnings from continuing operations and after cumulative effect of accounting change ($0.32) $0.14 ($0.01) $0.52 Loss on disposal of discontinued operations (0.32) (0.02) (0.38) (0.02) Net (loss) earnings per share - Primary ($0.64) $0.12 ($0.39) $0.50 (Loss) Earnings per share - Fully diluted (Loss) earnings from continuing operations and after cumulative effect of accounting change ($0.32) $0.14 ($0.01) $0.51 Loss on disposal of discontinued operations (0.32) (0.02) (0.38) (0.02) Net (loss) earnings per share - Fully diluted ($0.64) $0.12 ($0.39) $0.49 Cash dividends declared per share $10.000 $0.025 $10.025 $0.050 Average common and common equivalent shares (a): Primary 22,368 23,161 21,570 23,186 Fully diluted 22,368 23,269 21,570 23,327 (x) Prior year financial results have been restated to reflect the treatment of the Marketing Force segment as a discontinued operation. (a) Fiscal year 1996 shares exclude common stock equivalents because they are anti-dilutive. CONTACT: ADVO Inc., Windsor Donald McCombs, 860/285-6391 |
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