Big Flower Reports 16 Cents Net Income per Share, 78% gain over 1998.NEW YORK--(BUSINESS WIRE)--April 27, 1999-- Big Flower Holdings, Inc. (NYSE NYSE See: New York Stock Exchange : BGF BGF Black Guerrilla Family (Afro-American prison gang symbol/tattoo) BGF Boursier du Gouvernement Français (French) BGF Black Guerilla Family (gang) BGF Best Guy Friend ) announced today that its first quarter 1999 net income grew to $2.8 million, a gain of 160% over net income of $1.1 million in the first quarter of 1998. Assuming the conversion of the Company's 6% Quarterly Income Preferred Securities (QUIPS QUIPS See Quarterly Income Preferred Securities (QUIPS). (TM)) and giving effect to stock options, net income per share rose to a record 16 cents, a gain of 78% over the prior year's earnings of 9 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. . Driven by a 9% increase in sales, both Big Flower's 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 EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become increased by 16% over the comparable 1998 period. The results reflect the 11 acquisitions made since March 1998 to expand and develop Big Flower's advertising solutions capabilities as well as increased demand for higher-margin advertising insert programs. The following table presents the results for the quarter.
Three Months Ended March 31,
1999 1998 % Change
(Dollars in thousands, except per share ---------------------------
data)
Net Sales $420,323 $383,902 9.5%
EBITDA(1) 46,871 40,277 16.4%
Operating Income 22,575 19,520 15.7%
Net Income 2,826 1,085 160.5%
Net Income Per Share (2) $0.16 $0.09 77.8%
Net Income Per Share before Amortization
of Intangibles (3) $0.34 $0.27 25.9%
After-Tax Cash Flow Per Share (4) $0.81 $0.63 28.6%
(1) "EBITDA" represents operating income plus depreciation and
amortization of intangibles.
(2) Assumes conversion of QUIPSTM and
dilutive effect of stock options.
(3) Represents net income per share
adjusted to exclude after-tax intangibles amortization per share.
(4) Represents net income per share plus after-tax depreciation and
intangibles amortization per share.
"Despite soft overseas sales conditions, we are pleased that we were able to produce solid results in the first quarter," said Edward Edward killed his father at his mother’s instigation. [Br. Balladry: Edward in Benét, 302] See : Patricide T. Reilly Reilly is a surname distinct from O'Reilly and Riley, and may refer to:
Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. factors experienced by several of our customers. We believe, however, that these factors will not affect the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. outlook for our direct marketing business and, as such, our expectations for the full year remain unchanged." "We have been developing Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and new media strategies for our primary operating companies operating company A business that engages in transactions with outsiders. by making strategic investments through XL Ventures, our venture capital subsidiary, and by extending our existing services in image management, data mining, response management, electronic commerce and conventional promotions to support marketing functions for the Internet. XL Ventures focuses on making minority investments in companies involved in providing advertising and marketing services and solutions through the Internet to both on-line and off-line customers. We believe that the strategic relationships we are developing through these investments in companies such as 24/7 Media (TFSM), MiningCo.com (MINE), WorldGate (WorldGate Communications, Inc., Trevose, PA, www.wgate.com) A company founded in 1995 to provide Internet access over your existing TV cable. The technology, which used an advanced cable set-top box and wireless keyboard, transmitted Web data via the vertical blanking interval between TV (WGAT WGAT is a Southern Gospel formatted broadcast radio station licensed to Gate City, Virginia, serving Gate City and Scott County, Virginia, also Kingsport, Tennessee. WGAT is owned and operated by Tri-Cities Broadcasting Corp. ), Andromedia and NuTel will give us an important platform for expanding our core services The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. to the Internet for our customers' benefit," Mr. Reilly added. Insert Advertising and Newspaper Services Insert advertising and circulation-building newspaper products such as Sunday comics Sunday comics or "Sunday funnies" is the American idiom for the full color comic strip section carried in most American newspapers. While there are earlier combinations of color, art, and story that historians of the comic strip point to as precussors of the comic strip, the Yellow , TV listing guides, Sunday Sunday: see Sabbath; week. magazine sections and special supplements produced at the TC Advertising unit. Declining paper prices, which are generally a pass-through pass-through n. 1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food. 2. A route through which something is permitted to pass. 3. cost for the Company, impacted revenue in this segment. Illustrating this point, net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight decreased 2%, while value-added val·ue-add·ed adj. Of or relating to the estimated value that is added to a product or material at each stage of its manufacture or distribution: revenue, which excludes the cost of paper as well as ink, increased 3% over the prior -year period. This increase was driven by demand for insert programs for grocery stores and services that include software-based newspaper targeting. Operating income was $15.2 million and EBITDA was $25.9 million, gains of 41% and 13%, respectively, over the results from the first quarter of 1998. The increase reflects continued improvement in productivity and the results of our continuing efforts to improve work mix. First quarter Insert Advertising and Newspaper Services highlights include: -- Under a multi-year agreement, TC Advertising has expanded its involvement in the weekly ad insert program for one of the nation's largest grocery retailers from 300,000 inserts to over 10 million pieces per week. In addition to increasing the insert program, Digital Services' premedia group provides digital photography services and ongoing digital asset management for the customer. By leveraging TC Advertising's customer relationship with Digital Services' premedia capabilities, TC Advertising also was able to transition the retailer to a full digital workflow In print publishing, using the computer to lay out text and illustrations prior to creating film negatives for every page or going directly to plate. Prior to digital workflow, the typesetting and pre-press stages were far more time consuming and labor-intensive. , improve quality, reduce cycle time, enhance flexibility and lower production costs. -- TC Advertising signed a multi-year agreement to produce the weekly TV Magazine for one of the country's leading newspapers. TC Advertising now provides TV Magazines for four of the country's top five Sunday newspapers and produces 20 million TV Magazines weekly for 50 newspapers. Key to acquiring this new customer was TC Advertising's ability to combine three unique marketing solutions to enhance the TV Magazine. TC Advertising integrated the customer's TV Magazine into our proprietary TV Magazine Marketing Program and provided Newspaper Market Reach software that enhances the customer's ability to sell highly targeted advertising. In addition, TC Advertising streamlined the customer's production time by converting their highly zoned, 800-page weekly workflow The automatic routing of documents to the users responsible for working on them. Workflow is concerned with providing the information required to support each step of the business cycle. into a digital environment. Direct Marketing Services Data-driven direct mail products and direct marketing services such as database management and response fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. services provided by Webcraft's group of companies. Sales increased to $72.7 million, a gain of 16% over the same period last year. EBITDA was $10.0 million, an increase of 4% over the 1998 quarter, while operating income decreased to $4.7 million from $6.1 million in the prior year period. Sales increased as a result of the Colorgraphic acquisition. The increase was partially offset by customers who moved direct mail programs from early 1999 into the fourth quarter of 1998 due to an anticipated January January: see month. 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. increase, by others who shifted the timing of their campaigns to later in 1999, and by slower than expected sales in the U.K. related to softer economic conditions. The decline in operating income is a result of the above-mentioned A`bove´-men`tioned a. 1. Mentioned or named before; aforesaid; mentioned or named earlier in the same text (in written documents). Adj. 1. factors and the effect of absorbing a quarterly average share of Colorgraphic fixed depreciation and acquisition expenses during the quarter in which we earn the smallest profits. "In the second half of 1999, we expect the combination of an improved economic outlook in the U.K., a substantial increase in capacity at Colorgraphic and the beginning of European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. business expected to be generated for Colorgraphic by our U.S. clients should produce improved overseas results, " Mr. Reilly said. First quarter Direct Marketing Services highlights include: -- Webcraft's digital print-on-demand fulfillment group developed and implemented a digital one-to-one one-to-one adj. 1. Allowing the pairing of each member of a class uniquely with a member of another class. 2. Mathematics consumer response fulfillment program for a leading consumer appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. manufacturer. Within 24 hours of the request, consumers who call for information about the client's appliance products are sent a fully customized, four-color four-col·or adj. Of or being an overprinting or photographic process in which three primary colors and black are transferred by four different plates or filters to a surface, reproducing the colors of the subject matter. mini-catalog based on the customer's specific interests. Our client chose this solution over the previous vendor's program which required two weeks to fulfill ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. requests with a generic 200-page catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. . -- In support of a national campaign launch for a leading consumer products company, Webcraft's database management group performed a custom list selection that enabled the client to target specific demographic segments for a mailing involving 250 different versions of the advertisement ADVERTISEMENT. A 'notice' published either in handbills or in a newspaper. 2. The law in many instances requires parties to advertise in order to give notice of acts which are to be done; in these cases, the advertisement is in general equivalent to notice. . Digital Services Digital image design and production services, and computer-based management services offered through Laser Tech Color and Columbine columbine, in botany columbine (kŏl`əmbīn), any plant of the genus Aquilegia, temperate-zone perennials of the family Ranunculaceae (buttercup family), popular both as wildflowers and as garden flowers. JDS See Java Desktop System. . Sales grew to $80.2 million from $47.6 million in the same period a year ago, an increase of 69%. Operating income rose 18% from $4.7 million to $5.6 million, and EBITDA increased from $8.7 million to $12.7 million, a gain of 46%. Sales growth in digital services resulted primarily from acquisitions including the Enteron en·ter·on n. The alimentary canal; the intestines. enteron the gut or alimentary canal; usually used in medicine with specific reference to the small intestine. Group, Adtraq Data Systems, Adserve, DSI (Dynamic Systems Initiative) An umbrella term for a suite of Microsoft products that help manage the Windows environment in large enterprises. DSI was introduced in 2003. Datatrak and U.K.-based Production Response, Lifeboat Matey mat·ey adj. Chiefly British Sociable; friendly. matey Adjective Brit informal friendly or intimate Adj. 1. and Admagic. First quarter Digital Services highlights include: -- Laser Tech Color continued to expand its delivery of digital workflow solutions to clients with its recent agreement to provide a total digital workflow process to a large Miami-based, regional advertising agency. The implementation for this client will include high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. , video-conferencing and remote art direction, as well as agency wide asset management. Laser Tech Color has been named the primary provider of pre-media services as a result of the integrated digital workflow solution. -- Columbine JDS continued to sign advertising agencies to the Spotdata e-commerce e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. system that allows advertising invoices to be uploaded from television stations and made available via a web site to a participating advertising agency. This system is in addition to Columbine's EIX EIX Electrochemical Ion Exchange EIX European Internet Exchange product used by more than 160 agencies. Specialty Products and Commercial Printing Fragrance samplers, coatings and chemical production, and commercial printing produced by Webcraft's group of companies. Sales increased from $24.2 million to $24.6 million. Operating income, however, decreased from $1.8 million to $1.4 million and EBITDA decreased from $2.7 million to $2.1 million for the same period last year. The year-over-year sales increase was a result of increased revenues in the fragrance group partially offset by the April 1998 divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of a minority interest in a Midwest Midwest or Middle West, region of the United States centered on the western Great Lakes and the upper-middle Mississippi valley. It is a somewhat imprecise term that has been applied to the northern section of the land between the Appalachians printing venture. Net Income/Net Income Per Share Net income for the first quarter was $2.8 million, or 16 cents per share, assuming the conversion of QUIPSTM and giving effect to stock options. This compared to net income of $1.1 million, or 9 cents per share on the same basis, in the 1998 first quarter. Before amortization of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. , amounting to 18 cents per share in the 1999 period, first quarter 1999 net income was 34 cents per share, an increase of 7 cents over the first quarter of 1998. Big Flower Holdings, Inc. is a leading advertising and marketing services and solutions company which provides more than 3,000 retail, advertising agency, broadcasting, manufacturing and newspaper customers with highly-targeted, promotional advertising products, services and software. Big Flower specializes in targeted advertising inserts, circulation-building newspaper products, data-driven direct mail and direct marketing services and digital services, including commercial image design and production, and computer-based advertising management systems. Big Flower also owns XL Ventures, a venture capital subsidiary focused on making minority investments in companies involved in providing advertising and marketing services through the Internet to both on-line and off-line customers. For the year ended March 31, 1999, the Company's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma revenues were approximately $1.8 billion, including all acquisitions. Note: When used in this discussion, the words "expects," "believes," and similar expressions are intended to identify 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. that involve risks and uncertainties. Actual results in the future could differ materially from those described in the forward-looking statements as a result of fluctuations in the cost of paper and other raw materials used by the Company, changes in the advertising markets, the financial conditions of the Company's customers and the general condition of the domestic and international economies.
BIG FLOWER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars and Shares in Thousands, Except Per Share Data)
Three Months Ended March 31,
--------------------------
1999 1998
----------- ----------
Net sales $ 420,323 $ 383,902
----------- ----------
Operating expenses:
Costs of production 313,286 296,212
Selling, general and administrative 60,166 47,413
Depreciation 18,907 14,889
Amortization of intangibles 5,389 5,868
----------- ----------
397,748 364,382
----------- ----------
Operating income 22,575 19,520
----------- ----------
Other expenses (income):
Interest expense 17,215 13,029
Amortization of deferred
financing costs 716 429
Interest income (220) (120)
Preferred dividends of a
subsidiary trust 1,702 1,725
Other, net (2,071) 2,447
----------- ----------
17,342 17,510
----------- ----------
Income before income tax expense 5,233 2,010
Income tax expense 2,407 925
----------- ----------
Net income $ 2,826 $ 1,085
=========== ==========
Earnings per share:
Basic net income per share $ 0.14 $ 0.06
=========== ==========
Weighted average basic
shares outstanding 19,723 19,455
=========== ==========
Supplemental Information:
The following is presented to illustrate the effect of stock
options and the redeemable preferred securities as if conversion took
place on January 1 of the respective periods:
Net income per share (a) $ 0.16 $ 0.09
=========== ==========
Net income per share before
amortization of intangibles (b) $ 0.34 $ 0.27
=========== ==========
After-tax cash flow per share (c) $ 0.81 $ 0.63
=========== ==========
Weighted average shares
outstanding 24,524 24,552
=========== ==========
EBITDA (d) $ 46,871 $ 40,277
=========== ==========
NOTES TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 1999
(a) Under Generally Accepted Accounting Principles, "diluted"
earnings per share would reflect the impact of the exercise of
stock options outstanding and the potential conversion of
convertible securities only if they would dilute the per share
earnings. For the quarters ended March 31, 1999 and 1998,
including the combined effect of stock options and the assumed
conversion of the convertible securities is anti-dilutive and,
therefore, "diluted" earnings per share is not presented above.
This supplemental calculation will not be used for reporting
purposes.
(b) Represents net income per share adjusted to exclude after-tax
intangibles amortization per share.
(c) Represents net income per share plus after-tax depreciation and
intangibles amortization per share.
(d) "EBITDA" represents operating income plus depreciation and
amortization of intangibles.
BIG FLOWER HOLDINGS, INC.
BUSINESS SEGMENT AND BALANCE SHEET INFORMATION
(in thousands)
BUSINESS SEGMENT INFORMATION Three Months Ended March 31,
1999 1998 % Change
---- ----
NET SALES
Insert Advertising & Newspaper
Services $ 245,865 $ 251,027 -2.1%
Direct Marketing Services 72,720 62,794 15.8%
Digital Services 80,218 47,601 68.5%
Specialty Products & Commercial
Printing 24,568 24,230 1.4%
Elimination of Intersegment Sales (3,048) (1,750) -74.2%
--------- ---------
Consolidated $ 420,323 $ 383,902 9.5%
========= =========
OPERATING INCOME
Insert Advertising &
Newspaper Services $ 15,214 $ 10,823 40.6%
Direct Marketing Services 4,686 6,104 -23.2%
Digital Services 5,589 4,732 18.1%
Specialty Products &
Commercial Printing 1,397 1,788 -21.9%
General Corporate (4,311) (3,927) -9.8%
--------- ---------
Consolidated $ 22,575 $ 19,520 15.7%
========= =========
DEPRECIATION
Insert Advertising &
Newspaper Services $ 8,284 $ 8,125 2.0%
Direct Marketing Services 4,420 3,074 43.8%
Digital Services 5,359 2,822 89.9%
Specialty Products &
Commercial Printing 576 725 -20.6%
General Corporate 268 143 87.4%
-------- --------
Consolidated $ 18,907 $ 14,889 27.0%
======== ========
AMORTIZATION
OF INTANGIBLES
Insert Advertising &
Newspaper Services $ 2,388 $ 3,888 -38.6%
Direct Marketing Services 918 501 83.2%
Digital Services 1,793 1,169 53.4%
Specialty Products &
Commercial Printing 165 185 -10.8%
General Corporate 125 125 0.0%
------- -------
Consolidated $ 5,389 $ 5,868 -8.2%
======= =======
EBITDA (a)
Insert Advertising &
Newspaper Services $ 25,886 $ 22,836 13.4%
Direct Marketing Services 10,024 9,679 3.6%
Digital Services 12,741 8,723 46.1%
Specialty Products &
Commercial Printing 2,138 2,698 -20.8%
General Corporate (3,918) (3,659) -7.1%
------- -------
Consolidated $ 46,871 $ 40,277 16.4%
======= =======
(a) EBITDA represents operating income plus depreciation and
amortization of intangibles.
CONDENSED BALANCE SHEET INFORMATION
March 31, December 31,
1999 1998
--------- ------------
ASSETS
Cash and cash equivalents $ 9,864 $ 8,504
Other current assets 260,050 261,345
------- -------
Total current assets 269,914 269,849
Non-current assets 1,236,769 1,058,333
------- -------
Total Assets $ 1,506,683 $ 1,328,182
======= =======
LIABILITIES AND EQUITY
Current liabilities $ 236,663 $ 275,630
Long-term debt, net of
current portion 857,324 731,080
Deferred income taxes and other
long-term liabilities 123,726 79,262
--------- --------
1,217,713 1,085,972
Redeemable convertible
preferred securities 114,075 115,000
Total stockholders' equity 174,895 127,210
--------- --------
Total Liabilities and Equity $ 1,506,683 $ 1,328,182
========= ========
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