Big Flower Reports Net Income of 38 Cents per Share.NEW YORK--(BUSINESS WIRE)--July 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 second quarter 1999 net income grew to $8.5 million, a gain of 2% over net income of $8.3 million in the second quarter of 1998. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were 38 cents, which was the same as the prior year's earnings per share. A 5% increase in sales led to 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 increases of 5% and 7%, respectively, over the comparable 1998 period. The results reflect the acquisitions made since 1998 to expand and develop Big Flower's advertising solutions capabilities as well as solid demand for advertising insert programs and domestic digital image management services. The following table presents the results for the quarter.
Three Months Ended June 30,
(Dollars in thousands, 1999 1998 % Change
except per share data)
Net sales $ 431,566 $ 412,870 4.5%
EBITDA (1) 57,359 53,441 7.3%
Operating Income 33,220 31,767 4.6%
Net Income 8,489 8,306 2.2%
Diluted Earnings Per Share $ 0.38 $ 0.38 -
Net Income Per Share before
Amortization of
Intangibles (2) $ 0.55 $ 0.57 -3.5%
After-Tax Cash Flow Per
Share (3) $ 1.03 $ 0.94 9.6%
(1) "EBITDA" represents operating income plus depreciation and
amortization of intangibles.
(2) Represents diluted earnings per share adjusted to exclude
after-tax intangibles amortization per share.
(3) Represents diluted earnings per share plus after-tax
depreciation and intangibles amortization per share.
"I am pleased with our results in the second quarter, despite the
softer U.K. business environment and the challenges we faced with
somewhat weaker direct marketing expenditures in our segment of the
business," said Edward T. Reilly, President and Chief Executive
Officer of Big Flower Holdings, Inc.
Insert Advertising and Newspaper Services
Insert advertising and circulation-building newspaper products
such as Sunday comics, TV listing guides, Sunday magazine sections and
special supplements produced at the TC Advertising unit.
Declining paper prices, which are generally a pass-through cost
for the Company, impacted revenue in this segment. Illustrating this
point, net sales decreased 4%, while value-added revenue, which
excludes the cost of paper as well as ink, increased 4% over the
prior-year period. This increase was driven by stronger demand for
insert programs for grocery stores and increased contract renewals for
newspaper TV magazines. Operating income was $25.3 million and EBITDA
was $35.9 million, gains of 17% and 9%, respectively, over the results
from the second quarter of 1998. The increases reflect continued
improvement in productivity, favorable materials costs and the results
of continuing efforts to improve work mix.
Insert Advertising and Newspaper Services highlights include:
-- Under a three-year agreement, TC Advertising has renewed a
multi-million dollar contract with one of the nation's largest drug
store chains to produce all national inserts for newspaper and direct
mail distribution. In addition to the insert program, TC Advertising
combined resources with Big Flower's premedia group, Laser Tech Color,
to provide this retailer with a comprehensive digital premedia
workflow, including digital photography and digital asset management.
Reach America Retail division is also providing software services,
offering this retailer a more efficient means for effectively
targeting customers.
-- During the second quarter, TC Advertising renewed a four-year
contract to produce TV magazines for a national newspaper chain. Under
this agreement, TC Advertising will continue to produce five weekly TV
magazines for this national chain, reaching a combined circulation of
more than 2.8 million.
Direct Marketing Services
Data-driven direct mail products and direct marketing services
such as database management and response fulfillment services provided
by Webcraft's group of companies.
Sales increased to $76.7 million, a gain of 16% over the same
period last year. EBITDA was $12.2 million, a decrease of 2% from the
1998 quarter, while operating income decreased to $7.0 million from
$8.7 million in the prior year period. Sales increased as a result of
the Colorgraphic acquisition completed in January 1999. The increase
was offset by smaller than expected direct marketing campaigns for
several customers, and by slower business in the U.K. related to
softer economic conditions.
Direct Marketing Services highlights include:
-- IMPCO's database group completed a customer segmentation
analysis for a Northeast-based HMO. The analysis allowed the HMO to
segment its "seniors" customer base, identifying and profiling "high
value" segments. With this information, IMPCO and the HMO developed a
new customer acquisition program that targeted "like" segments of
prospects with direct mail communications, including customized
content based on the segment profiles. This new program improved
response by over 300% compared to previous acquisition programs, and
allowed the HMO to achieve its entire annual customer acquisition
target by April.
Digital Services
Digital image design and production services, and computer-based
management services offered through Laser Tech Color and Columbine
JDS.
Sales grew to $84.0 million from $65.2 million in the same period
a year ago, an increase of 29%. EBITDA increased from $11.8 million to
$13.7 million, a gain of 16%. Operating income, however, declined from
$6.4 million to $6.3 million. Sales growth resulted from increased
demand for software management systems and retail and packaging
premedia services, as well as from 1998 acquisitions including the
Enteron Group, Adtraq Data Systems, Adserve, DSI Datatrak and
U.K.-based Admagic.
Digital Services highlights include:
-- Laser Tech Color, with TC Advertising, signed a multi-million
dollar, multi-year agreement with a rapidly expanding Midwestern
sporting goods retailer to manage its premedia services and to produce
its entire advertising insert program. The premedia services covered
under this agreement include facilities management and design and
pre-press for ad inserts, ROP, direct mail and billboard programs.
Integral to the premedia services was the installation of Laser Tech's
Vision Bank Series 4, a powerful database publishing system, which was
customized to successfully integrate the retailer's marketing and
merchandising departments and to coordinate all file production.
Specialty Products and Commercial Printing
Fragrance samplers, coatings and chemical production, and
commercial printing produced by Webcraft's group of companies.
Sales increased from $17.3 million to $17.7 million. The
operating loss decreased from $1.0 million to $0.8 million and the
EBITDA loss was marginal, compared to a loss of $0.1 million for the
same period last year.
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
June 30, 1999, the Company's pro forma revenues were approximately
$1.8 billion, including all acquisitions. On July 16, 1999, the
Company filed with the Securities and Exchange Commission its
preliminary Form S-4 and Schedule 13E-3 in connection with a
re-capitalization of the Company.
When used in this discussion, the words "expects," "believes,"
and similar expressions are intended to identify forward-looking
statements 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 con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: STATEMENT OF OPERATIONS See Income statement. (Dollars and Shares in Thousands, Except Per Share Data) Three Months Ended June June: see month. 30, ----------------------------------- 1999 1998 -------------- -------------- 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 $ 431,566 $ 412,870 -------------- -------------- Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. : Costs of production 315,107 308,789 Selling, general and administrative 59,100 50,640 Depreciation 19,072 15,499 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. 5,067 6,175 -------------- -------------- 398,346 381,103 -------------- -------------- Operating income 33,220 31,767 -------------- -------------- Other expenses (income): Interest expense 17,059 13,518 Amortization of deferred financing costs 746 426 Interest income (140) (80) Preferred dividends preferred dividend n. a payment of a corporation's profits to holders of preferred shares of stock. (See: preferred stock) of a subsidiary trust 1,698 1,725 Other, net (1,863) 798 -------------- -------------- 17,500 16,387 -------------- -------------- Income before income tax expense 15,720 15,380 Income tax expense 7,231 7,074 -------------- -------------- Net income $ 8,489 $ 8,306 ============== ============== ============== ============== Earnings per share: Net income per basic share $ 0.43 $ 0.42 ============== ============== ============== ============== Weighted average basic shares outstanding 19,705 19,643 ============== ============== ============== ============== Net income for diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per share $ 9,508 $ 9,341 ============== ============== ============== ============== Net income per diluted share $ 0.38 $ 0.38 ============== ============== ============== ============== Weighted average diluted shares outstanding 24,794 24,843 ============== ============== ============== ============== Supplemental Information: Net income per diluted share before amortization of intangibles (a) $ 0.55 $ 0.57 ============== ============== ============== ============== 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. cash flow per diluted share (b) $ 1.03 $ 0.94 ============== ============== ============== ============== EBITDA (c) $ 57,359 $ 53,441 ============== ============== ============== ============== NOTES TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1999 (a) Represents net income per share adjusted to exclude after-tax intangibles amortization per share. (b) Represents net income per share plus after-tax depreciation and intangibles amortization per share. (c) "EBITDA" represents operating income plus depreciation and amortization of intangibles. BIG FLOWER HOLDINGS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (Dollars and Shares in Thousands, Except Per Share Data) Six Months Ended June 30, ------------------------------ 1999 1998 ----------- ------------- Net sales $ 851,889 $ 796,772 ----------- ------------- Operating expenses: Costs of production 628,393 605,001 Selling, general and administrative 119,266 98,053 Depreciation 37,979 30,388 Amortization of intangibles 10,456 12,043 ----------- ------------- 796,094 745,485 ----------- ------------- Operating income 55,795 51,287 ----------- ------------- Other expenses (income): Interest expense 34,274 26,547 Amortization of deferred financing costs 1,462 855 Interest income (360) (200) Preferred dividends of a subsidiary trust 3,400 3,450 Other, net (3,934) 3,245 ----------- ------------- 34,842 33,897 ----------- ------------- Income before income tax expense 20,953 17,390 Income tax expense 9,638 7,999 ----------- ------------- Net income $ 11,315 $ 9,391 =========== ============= =========== ============= Earnings per share: Basic net income per share $ 0.57 $ 0.48 =========== ============= =========== ============= Weighted average basic shares outstanding 19,714 19,549 =========== ============= =========== ============= Net income for diluted earnings per share $ 13,355 $ 11,461 =========== ============= =========== ============= Net income per diluted share $ 0.54 $ 0.46 =========== ============= =========== ============= Weighted average diluted shares outstanding 24,659 24,698 =========== ============= =========== ============= Supplemental Information: Net income per diluted share before amortization of intangibles (a) $ 0.89 $ 0.83 =========== ============= =========== ============= After-tax cash flow per diluted share (b) $ 1.84 $ 1.57 =========== ============= =========== ============= EBITDA (c) $ 104,230 $ 93,718 =========== ============= =========== ============= NOTES TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 (a) Represents net income per share adjusted to exclude after-tax intangibles amortization per share. (b) Represents net income per share plus after-tax depreciation and intangibles amortization per share. (c) "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 June 30, --------------------------------- 1999 1998 % Change ---------- ----------- --------- NET SALES Insert Advertising & Newspaper Services $ 257,100 $ 266,610 -3.6% Direct Marketing Services 76,709 66,336 15.6% Digital Services 84,025 65,235 28.8% Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Products & Commercial Printing 17,661 17,330 1.9% Elimination of Intersegment Sales (3,929) (2,641) -48.8% ---------- ----------- Consolidated $ 431,566 $ 412,870 4.5% ========== =========== ========== =========== OPERATING INCOME Insert Advertising & Newspaper Services $ 25,343 $ 21,583 17.4% Direct Marketing Services 7,049 8,692 -18.9% Digital Services 6,297 6,434 -2.1% Specialty Products & Commercial Printing (800) (1,019) 21.5% General Corporate (4,669) (3,923) -19.0% ---------- ----------- Consolidated $ 33,220 $ 31,767 4.6% ========== =========== ========== =========== DEPRECIATION Insert Advertising & Newspaper Services $ 8,486 $ 7,591 11.8% Direct Marketing Services 4,246 3,181 33.5% Digital Services 5,517 3,852 43.2% Specialty Products & Commercial Printing 587 728 -19.4% General Corporate 236 147 60.5% ---------- ----------- Consolidated $ 19,072 $ 15,499 23.1% ========== =========== ========== =========== AMORTIZATION OF INTANGIBLES Insert Advertising & Newspaper Services $ 2,065 $ 3,888 -46.9% Direct Marketing Services 858 476 80.3% Digital Services 1,837 1,526 20.4% Specialty Products & Commercial Printing 165 160 3.1% General Corporate 142 125 13.6% ---------- ----------- Consolidated $ 5,067 $ 6,175 -17.9% ========== =========== ========== =========== EBITDA (a) Insert Advertising & Newspaper Services $ 35,894 $ 33,062 8.6% Direct Marketing Services 12,153 12,349 -1.6% Digital Services 13,651 11,812 15.6% Specialty Products & Commercial Printing (48) (131) 63.4% General Corporate (4,291) (3,651) -17.5% ---------- ----------- Consolidated $ 57,359 $ 53,441 7.3% ========== =========== ========== =========== Six Months Ended June 30, ----------------------------- 1999 1998 % Change --------- --------- --------- NET SALES Insert Advertising & Newspaper Services $502,965 $517,637 -2.8% Direct Marketing Services 149,429 129,130 15.7% Digital Services 164,243 112,836 45.6% Specialty Products & Commercial Printing 42,229 41,560 1.6% Elimination of Intersegment Sales (6,977) (4,391) -58.9% --------- --------- Consolidated $851,889 $796,772 6.9% ========= ========= ========= ========= OPERATING INCOME Insert Advertising & Newspaper Services $ 40,557 $ 32,406 25.2% Direct Marketing Services 11,735 14,796 -20.7% Digital Services 11,886 11,166 6.4% Specialty Products & Commercial Printing 597 769 -22.4% General Corporate (8,980) (7,850) -14.4% --------- --------- Consolidated $ 55,795 $ 51,287 8.8% ========= ========= ========= ========= DEPRECIATION Insert Advertising & Newspaper Services $ 16,770 $ 15,716 6.7% Direct Marketing Services 8,666 6,255 38.5% Digital Services 10,876 6,674 63.0% Specialty Products & Commercial Printing 1,163 1,453 -20.0% General Corporate 504 290 73.8% --------- --------- Consolidated $ 37,979 $ 30,388 25.0% ========= ========= ========= ========= AMORTIZATION OF INTANGIBLES Insert Advertising & Newspaper Services $ 4,453 $ 7,776 -42.7% Direct Marketing Services 1,776 977 81.8% Digital Services 3,630 2,695 34.7% Specialty Products & Commercial Printing 330 345 -4.3% General Corporate 267 250 6.8% --------- --------- Consolidated $ 10,456 $ 12,043 -13.2% ========= ========= ========= ========= EBITDA (a) Insert Advertising & Newspaper Services $ 61,780 $ 55,898 10.5% Direct Marketing Services 22,177 22,028 0.7% Digital Services 26,392 20,535 28.5% Specialty Products & Commercial Printing 2,090 2,567 -18.6% General Corporate (8,209) (7,310) -12.3% --------- --------- Consolidated $104,230 $ 93,718 11.2% ========= ========= ========= ========= (a) EBITDA represents operating income plus depreciation and amortization of intangibles. CONDENSED con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. BALANCE SHEET INFORMATION June 30, December December: see month. 31, 1999 1998 ---------- ----------- ASSETS Cash and cash equivalents $ 3,001 $ 8,504 Other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. 263,327 261,345 ---------- ----------- Total current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. 266,328 269,849 Non-current assets 1,228,627 1,058,333 ---------- ----------- Total Assets $ 1,494,955 $ 1,328,182 ========== =========== ========== =========== LIABILITIES AND EQUITY Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. $ 237,318 $ 275,630 Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. , net of current portion 856,230 731,080 Deferred income taxes and other long-term liabilities Other Long-Term Liabilities A balance sheet item that includes obligations that do not currently require interest payments. Notes: This would include items such as remaining leases, future employee benefits and deferred taxes. 123,550 79,262 ---------- ----------- 1,217,098 1,085,972 Redeemable Redeemable Eligible for redemption under the terms of an indenture. convertible preferred securities 114,070 115,000 Total stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. 163,787 127,210 ---------- ----------- Total Liabilities and Equity $ 1,494,955 $ 1,328,182 ========== =========== ========== =========== |
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