Big Flower Reports Record Adjusted Net Income, EPS on 26% Revenue Growth.NEW YORK--(BUSINESS WIRE)--Feb. 16, 1999-- Record Results Driven by Increased Sales of Higher Margin Products and Services 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 1998 adjusted net income was $40.4 million, a gain of 44% over adjusted net income of $28.0 million in 1997, and adjusted earnings per 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. share rose to a record $1.80, a 28% gain over the prior year's earnings of $1.41 per share. Driven by a 26% increase in sales, primarily in higher-margin products and services, 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. increased 38% 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 34% over 1997. These results reflect the significant growth in the direct marketing services group, increased volume in the targeted advertising insert business, strong growth in the digital services businesses and the integration of acquisitions the Company has made since September September: see month. 1997 to expand and develop Big Flower's advertising solutions capabilities. The following table presents the adjusted results for the year. The 1998 and 1997 adjusted results exclude non-operational charges. -0-
Year Ended December 31,
--------------------------------------------------
--------------------------------------------------
(Dollars in thousands,
except per share
data) 1998 1997 % Change
------------ ------------------ --------
------------ ------------------ --------
Net Sales $ 1,739,715 $ 1,376,706 26.4%
EBITDA (1) 228,443 (2) 170,286 (2) 34.2%
Operating Income 142,057 (2) 102,964 (2) 38.0%
Net Income 40,383 (2)(3) 28,006 (2)(3) 44.2%
Net Income Per
Diluted Share $ 1.80 (2)(3) $ 1.41 (2)(3) 27.7%
Net Income Per
Diluted Share
before
Amortization of
Intangibles (4) $ 2.50 (2)(3) $ 2.07 (2)(3) 20.8%
After-Tax Cash
Flow Per Share (5) $ 4.11 (2)(3) $ 3.53 (2)(3) 16.4%
(1) "EBITDA" represents operating income plus depreciation and 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. . (2) Excludes (i) $4.6 million of termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. costs in 1998 related to elimination of executive positions, (ii) $5.7 million of costs in 1997 related to acquisitions and (iii) $0.6 million of costs in 1997 related to a secondary offering of common stock. Net income and net income per diluted share also exclude the tax benefits associated with these costs. (3) Excludes write-offs of in-process research and development costs of $0.2 million in 1998 related to the acquisition of 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 $58.2 million in 1997 related to the acquisition of 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. . The 1997 results also exclude extraordinary losses of $13.5 million (net of tax benefit) related to early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. (4) Represents net income per diluted share adjusted to exclude 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. intangibles amortization per share. (5) Represents net income per diluted share plus after-tax depreciation and intangibles amortization per share. "Our record results for the fourth quarter and all of 1998 were driven by our ability to deliver our customers' advertising and marketing messages with high impact in an efficient manner," 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:
For the fourth quarter of 1998, adjusted net income grew to $18.0 million, a gain of 33% over the corresponding period in 1997, and adjusted earnings per diluted share rose to a record 78 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. , compared with 61 cents per share in the fourth quarter of 1997. These results reflect the integration of the recent acquisitions, strong demand for higher-margin direct marketing services, substantial growth in the software media management business, aggressive growth in advertising insert sales and the continued development of the digital imaging business. The following table presents the adjusted results for the fourth quarter. The 1998 and 1997 adjusted results exclude non-operational charges related to the fourth quarter. -0-
Three Months Ended December 31,
------------------------------------------------
------------------------------------------------
(Dollars in thousands,
except per share
data) 1998 1997 % Change
----------- ----------- ---------
----------- ----------- ---------
Net Sales $ 502,836 $ 420,788 19.5%
EBITDA (1) 71,919 (2) 59,748 (2) 20.4%
Operating Income 50,121 (2) 39,658 (2) 26.4%
Net Income 17,987 (2)(3) 13,478 (2)(3) 33.5%
Net Income Per
Diluted Share $ 0.78 (2)(3) $ 0.61 (2)(3) 27.9%
Net Income Per
Diluted Share
before
Amortization
of Intangibles (4) $ 0.94 (2)(3) $ 0.79 (2)(3) 19.0%
After-Tax Cash
Flow Per Share (5) $ 1.36 (2)(3) $ 1.16 (2)(3) 17.2%
(1) "EBITDA" represents operating income plus depreciation and amortization of intangibles. (2) Excludes $4.6 million of termination costs in 1998 related to elimination of executive positions and $2.5 million of costs in 1997 related to acquisitions. Net income and net income per diluted share also exclude the tax benefits associated with these costs. (3) Excludes write-offs of in-process research and development costs of $0.2 million in 1998 related to the acquisition of DSI Datatrak and $58.2 million in 1997 related to the acquisition of Columbine JDS. (4) Represents net income per diluted share adjusted to exclude after-tax intangibles amortization per share. (5) Represents net income per diluted share plus after-tax depreciation and intangibles amortization per share. Commenting on the fourth quarter, Mr. Reilly said, "We experienced very strong performances in each of our businesses and we believe 1999 will be another strong year. We will continue to expand our technology-driven products, provide clients with new value-added services A value-added service (VAS) is a telecommunications industry term for non-core services or, in short, all services beyond standard voice calls and fax transmissions. and seek acquisition opportunities, all of which should allow us once again to achieve our financial objectives." "In addition to record fourth quarter operational results from each of our businesses, we enjoyed great success with the implementation of our "advertising solutions" strategy that brings the products and services from all of Big Flower's companies together to provide complementary advertising services to our customers. For example, we combined the products and services of our insert business and our digital imaging group to provide a full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. solution for a significant national office supply retailer. In addition to producing their advertising inserts, we operate a photography studio inside their headquarters. Staffed by full time photographers from our premedia group, the studio provides all the imaging work for the 1.6 billion ad insert program which we produce for this customer in six production facilities in our nationwide network. We also do all of the photo work for the customer's extensive 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. advertising." Insert Advertising and Newspaper Services Advertising inserts 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. Sales rose to $311.3 million in the fourth quarter, a gain of 5% from the prior year period. Operating income was $34.2 million and EBITDA was $44.4 million, gains of 15% and 6%, respectively, over the adjusted results from the fourth quarter of 1997. The results reflect strong product mix, a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing environment and sales of higher margin software services that complement the core printing business. Fourth quarter Insert Advertising and Newspaper Services highlights include: -- TC Advertising's targeted insert programs continue to be a core component of retailers' holiday advertising mix. TC Advertising produced 7.8 billion inserts during the fourth quarter for our 700 retail customers. Our ad insert programs created an average of over 85 million visual impressions per day during the holiday season. -- TC Advertising extended its services and expanded its relationships with customers. TC Advertising approached a large home center retailer to assist the company in managing its three monthly insert programs, 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. and image content archives archives Repository for an organized body of records. Archives are produced or received by a public, semipublic, institutional, or business entity in the transaction of its affairs and are preserved by it or its successors. . TC Advertising performed a site study that resulted in TC Advertising being named as the single-source insert producer, displacing the second producer. In addition, the customer now utilizes a centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. high-resolution high-res·o·lu·tion adj. 1. Relating to an image that has fine detail. 2. a. Of or relating to an output device that produces images that contain a large number of dots per unit of area and are therefore sharp and image archiving archiving Informatics The storage of data in archives. See Mirroring, Optical disk archiving. system managed by our premedia group. -- TC Advertising's Newspaper MarketReach continued to build sales momentum during the quarter. TC Advertising recently signed a leading Southeastern south·east n. 1. Abbr. SE The direction or point on the mariner's compass halfway between due south and due east, or 135° east of due north. 2. An area or region lying in the southeast. 3. newspaper network as a new customer of Newspaper MarketReach, a proprietary software that allows advertisers to identify, optimize optimize - optimisation and price, from their desktop computers, the efficient delivery of an advertising insert. The network, which sells advertising for more than 40 Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and newspapers, will use the software to offer more effective and targeted advertising to customers who want to advertise throughout Florida. 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 $85.1 million in the fourth quarter of 1998, a gain of 39% over the same period last year. Operating income was $11.8 million, and EBITDA rose to $15.7 million, increases of 53% and 39%, respectively, over the prior year period. The sales results reflect strong demand for data-driven direct mail products from the publishing, financial, automotive, record/video clubs and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. markets, excellent growth at IMPCO Enterprises, our New York-based database and response management provider and the acquisition of ColorStream ColorStream is Toshiba's trademark name for their component video interconnect. Colorstream is a video-display standard that rose into popularity with the advent of high-resolution applications such as DVD players and High-definition television. Technologies, our Chicago-based software-driven print-on-demand company. Fourth quarter Direct Marketing Services highlights include: -- New cross-selling revenues were produced by introducing Big Flower's premedia services to sophisticated direct mail customers. Webcraft introduced our premedia group and its expanded range of services to a substantial 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. consumer packaged goods Noun 1. packaged goods - groceries that are packaged for sale foodstuff, grocery - (usually plural) consumer goods sold by a grocer plural, plural form - the form of a word that is used to denote more than one customer. As a result, our premedia group secured a sizable siz·a·ble also size·a·ble adj. Of considerable size; fairly large. siz  a·ble·ness n. shareof the customer's direct marketing premedia expenditures and increased efficiencies in the job-flow process for the customer and Webcraft. -- Webcraft continued to acquire new customers by offering value-added services. Leveraging IMPCO's proprietary Consumer Data Warehouse, a system was developed to profile and model a leading computer manufacturer's "best customers" prospects. The modeled profiles are then used to identify "likely to buy" prospects from the Consumer Data Warehouse and target them with direct mail solicitations. Based on the proposal, Webcraft was awarded a significant test program from a new customer. Digital Services Digital image design and production services and broadcast management services. This group is comprised of the products and services offered through Laser Tech Color and Columbine JDS. Sales grew to $85.8 million in the fourth quarter of 1998 from $40.7 million in the same period a year ago. Operating income rose from $6.4 million to $7.8 million, an increase of 21%. EBITDA also increased from $9.6 million to $14.3 million, a gain of 49%. Sales growth in digital services resulted from the acquisitions of Columbine JDS, Gamma One, 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 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 as well as revenue gains in the commercial and retail markets at Laser Tech. Fourth quarter Digital Services highlights include: -- Laser Tech strengthened its U.K. presence with our November November: see month. 1998 acquisition of The Admagic Group, a London-based premedia services company with annual revenues of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $15 million. Admagic is among the U.K.'s most sophisticated providers of creative premedia services to advertising agencies, incorporating premedia production, digital image manipulation Manipulation Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal. and retouching, digital photography, digital asset management and digital artwork. -- Laser Tech continued to expand its Enterprise Digital Asset Management business. For a large international industrial machinery manufacturer, Laser Tech developed an integrated digital asset system that allows the customer to use its more than 50,000 marketing images and content on a consistent basis worldwide. Under the multi-year agreement, Laser Tech will manage, archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. and distribute all marketing materials for the company and continue to develop new applications for its worldwide imaging needs. -- Columbine JDS' advertising agency solutions group expanded in the fourth quarter with our November 1998 acquisition of DSI Datatrak, a provider of automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. software management systems for advertising agencies, media buying services and communications companies. Based in New Jersey, DSI Datatrak offers fully integrated advanced software systems that enable advertising agencies simultaneously si·mul·ta·ne·ous adj. 1. Happening, existing, or done at the same time. See Synonyms at contemporary. 2. Mathematics to service multiple aspects of advertising campaigns. -- Columbine JDS continued to extend contracts with large broadcasting groups. Recently, Columbine signed a new 5-year contract with a large multi-channel See multichannel. cable network operator who has been a Columbine customer since the mid- mid- pref. Middle: midbrain. 1980s. The new contract provides all of the customer's domestic TV networks with the BIAS computerized computerized adapted for analysis, storage and retrieval on a computer. computerized axial tomography see computed tomography. traffic system, the industry's premiere on-line service that integrates sales, management, trafficking and general accounting systems for all television applications. 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 and Commercial Printing Fragrance samplers, coatings and chemical production, and commercial printing produced by Webcraft's group of companies. Sales in the fourth quarter decreased from $25.3 million in 1997 to $23.0 million in 1998, a decline of 9%. This segment's operating income, however, increased from $0.4 million to $1.4 million and EBITDA increased to $2.3 million from $1.5 million for the same period last year. The year-over-year sales declines were a result of 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, which were partially offset by increased higher-margin revenues in the fragrance group. Net Income/ Earnings Per Share Actual net income for the 1998 fourth quarter was $15.3 million, or 67 cents per share. This compared to an actual net loss of $45.7 million, or $2.38 per share, in the 1997 fourth quarter, which included a $58.2 million write off of in-process research and development costs related to the Columbine acquisition. For the quarter ended December December: see month. 31, 1998, adjusted net income was $18.0 million, or 78 cents per share, as compared to $13.5 million in the 1997 fourth quarter, or 61 cents per share. Before amortization of intangibles, which amounted to 16 cents per share in the 1998 period, fourth quarter 1998 adjusted net income was 94 cents per share, an increase of 15 cents from the fourth quarter of 1997. For the year ended December 31, 1998, actual net income was $37.7 million, or $1.69 per share. This compared to a net loss of $47.0 million, or $2.51 per share, for the same period last year including the in-process research and development cost write off and extraordinary losses of $13.5 million on the early extinguishment of debt. For the full year period ended December 31, 1998, adjusted net income was $40.4 million, or $1.80 per share. For 1997, adjusted net income was $28.0 million, or $1.41 per share. Before amortization of intangibles of 70 cents per share, adjusted net income for 1998 was $2.50 per share, an increase of 43 cents from 1997. Big Flower Holdings, Inc. is a leading advertising, marketing and information products and services 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 digital image design and production and computer-based management. For the year ended December 31, 1998, 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 the 1998 acquisitions. 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. -0-
BIG FLOWER HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars and Shares in Thousands, Except Per Share Data)
Three Months Ended December 31,
------------------------------
1998 1998
--------------- --------------
Actual Adjusted
Net sales $ 502,836 $ 502,836
--------------- --------------
Operating expenses:
Costs of production 365,344 365,344
Selling, general and administrative 70,133 65,573 (a)
Depreciation 17,014 17,014
Amortization of intangibles 4,784 4,784
--------------- --------------
457,275 452,715
--------------- --------------
Operating income 45,561 50,121
--------------- --------------
Other expenses (income):
Interest expense 14,853 14,853
Amortization of deferred
financing costs 521 521
Interest income (145) (145)
Preferred dividends of a
subsidiary trust 1,725 1,725
In process acquired technology
write off 245 (b)
Other, net (143) (143)
--------------- --------------
17,056 16,811
--------------- --------------
Income before income
tax expense 28,505 33,310
Income tax expense 13,225 15,323
--------------- --------------
Net income $ 15,280 $ 17,987
=============== ==============
=============== ==============
Earnings per share:
Net income per basic share $ 0.77 $ 0.91
=============== ==============
=============== ==============
Weighted average basic shares
outstanding 19,764 19,764
=============== ==============
=============== ==============
Net income for diluted
earnings per share $ 16,315 $ 19,022
=============== ==============
=============== ==============
Net income per diluted share $ 0.67 $ 0.78
=============== ==============
=============== ==============
Weighted average diluted shares
outstanding 24,508 24,508
=============== ==============
=============== ==============
Supplemental Information:
Net income per diluted share
before amortization of
intangibles (c) $ 0.82 $ 0.94
=============== ==============
=============== ==============
After-tax cash flow per
diluted share (d) $ 1.25 $ 1.36
=============== ==============
=============== ==============
EBITDA (e) $ 67,359 $ 71,919
=============== ==============
=============== ==============
Three Months Ended December 31,
------------------------------
1997 1997
-------------- -------------
Actual Adjusted
Net sales $ 420,788 $ 420,788
-------------- -------------
Operating expenses:
Costs of production 319,315 319,315
Selling, general and administrative 44,232 41,725(a)
Depreciation 14,875 14,875
Amortization of intangibles 5,215 5,215
-------------- -------------
383,637 381,130
-------------- -------------
Operating income 37,151 39,658
-------------- -------------
Other expenses (income):
Interest expense 10,991 10,991
Amortization of deferred
financing costs 419 419
Interest income (92) (92)
Preferred dividends of a
subsidiary trust 1,340 1,340
In process acquired technology
write off 58,192 (b)
Other, net 1,522 1,522
-------------- -------------
72,372 14,180
-------------- -------------
Income (loss) before income
tax expense (35,221) 25,478
Income tax expense 10,484 12,000
-------------- -------------
Net income (loss) $ (45,705) $ 13,478
============== =============
============== =============
Earnings per share:
Net income (loss) per basic share $ (2.38) $ 0.70
============== =============
============== =============
Weighted average basic shares
outstanding 19,186 19,186
============== =============
============== =============
Net income (loss) for diluted
earnings per share $ (45,705) $ 14,189
============== =============
============== =============
Net income (loss) per diluted share $ (2.38) $ 0.61
============== =============
============== =============
Weighted average diluted shares
outstanding 19,186 23,218
============== =============
============== =============
Supplemental Information:
Net income (loss) per diluted share
before amortization of
intangibles (c) $ (2.17) $ 0.79
============== =============
============== =============
After-tax cash flow per
diluted share (d) $ (1.71) $ 1.16
============== =============
============== =============
EBITDA (e) $ 57,241 $ 59,748
============== =============
============== =============
NOTES TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED DECEMBER 31, 1998
(a) Excludes $4.6 million of termination costs in 1998 related to
elimination of executive positions and $2.5 million of costs in
1997 related to acquisitions. Net income and net income per share
also exclude the tax benefits associated with these costs.
(b) Excludes write offs of in-process research and development costs
of $0.2 million in 1998 related to the acquisition of DSI Datatrak
and $58.2 million in 1997 related to the acquisition of Columbine
JDS.
(c) Represents net income per diluted share adjusted to exclude
after-tax intangibles amortization per share.
(d) Represents net income per diluted share plus after-tax
depreciation and intangibles amortization per share.
(e) "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)
Year Ended December 31,
---------------------------------
1998 1998
-------------- --------------
Actual Adjusted
Net sales $1,739,715 $1,739,715
-------------- --------------
Operating expenses:
Costs of production 1,296,336 1,296,336
Selling, general and administrative 219,496 214,936(a)
Depreciation 64,244 64,244
Amortization of intangibles 22,142 22,142
-------------- --------------
1,602,218 1,597,658
-------------- --------------
Operating income 137,497 142,057
-------------- --------------
Other expenses (income):
Interest expense 55,988 55,988
Amortization of deferred
financing costs 1,902 1,902
Interest income (498) (498)
Preferred dividends of a
subsidiary trust 6,900 6,900
In process acquired technology
write off 245 (b)
Other, net 2,982 2,982
-------------- --------------
67,519 67,274
-------------- --------------
Income before income
tax expense 69,978 74,783
Income tax expense 32,302 34,400
-------------- --------------
Net income $ 37,676 $ 40,383
============== ==============
============== ==============
Earnings per share:
Net income per basic share $ 1.92 $ 2.05
============== ==============
============== ==============
Weighted average basic shares
outstanding 19,660 19,660
============== ==============
============== ==============
Net income for diluted
earnings per share $ 41,816 $ 44,523
============== ==============
============== ==============
Net income per diluted share $ 1.69 $ 1.80
============== ==============
============== ==============
Weighted average diluted
shares outstanding 24,678 24,678
============== ==============
============== ==============
Supplemental Information:
Net income per diluted share
before amortization of
intangibles (c) $ 2.39 $ 2.50
============== ==============
============== ==============
After-tax cash flow per
diluted share (d) $ 4.00 $ 4.11
============== ==============
============== ==============
EBITDA (e) $ 223,883 $ 228,443
============== ==============
============== ==============
Year Ended December 31,
--------------------------------
1997 1997
-------------- ----------------
Actual Adjusted
Net sales $1,376,706 $ 1,376,706
-------------- ---------------
Operating expenses:
Costs of production 1,072,296 1,072,296
Selling, general and administrative 140,394 134,124 (a)
Depreciation 49,651 49,651
Amortization of intangibles 17,671 17,671
-------------- ---------------
1,280,012 1,273,742
-------------- ---------------
Operating income 96,694 102,964
-------------- ---------------
Other expenses (income):
Interest expense 40,300 40,300
Amortization of deferred
financing costs 1,696 1,696
Interest income (349) (349)
Preferred dividends of a
subsidiary trust 1,340 1,340
In process acquired technology
write off 58,192 (b)
Other, net 7,141 7,141
-------------- ---------------
108,320 50,128
-------------- ---------------
Income (loss) before income
tax expense (11,626) 52,836
Income tax expense 21,945 24,830
-------------- ---------------
Income (loss) before
extraordinary item (33,571) 28,006
Extraordinary item, net (13,463) (b)
-------------- ---------------
Net income (loss) $ (47,034) $ 28,006
============== ===============
============== ===============
Earnings per share:
Income (loss) per basic share before
extraordinary item $ (1.79) $ 1.50
Extraordinary item per basic share (0.72)
-------------- ---------------
Net income (loss) per basic share $ (2.51) $ 1.50
============== ===============
============== ===============
Weighted average basic shares
outstanding 18,704 18,704
============== ===============
Net income (loss) for diluted
earnings per share $ (47,034) $ 28,717
============== ===============
============== ===============
Income (loss) per diluted share
before extraordinary item $ (1.79) $ 1.41
Extraordinary item per diluted share (0.72)
-------------- ---------------
Net income (loss) per diluted share $ (2.51) $ 1.41
============== ===============
============== ===============
Weighted average diluted
shares outstanding 18,704 20,301
============== ===============
============== ===============
Supplemental Information:
Net income (loss) per diluted share
before amortization of
intangibles (c) $ (1.80) $ 2.07
============== ===============
============== ===============
After-tax cash flow per
diluted share (d) $ (0.22) $ 3.53
============== ===============
============== ===============
EBITDA (e) $ 164,016 $ 170,286
============== ===============
============== ===============
NOTES TO CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED
DECEMBER 31, 1998
(a) Excludes (i) $4.6 million of termination costs in 1998 related to
elimination of executive positions, (ii) $5.7 million of costs in
1997 related to acquisitions and (iii) $0.6 million of costs in
1997 related to a secondary offering of common stock. Net income
and net income per share also exclude the tax benefits associated
with these costs.
(b) Excludes write offs of in-process research and development costs
of $0.2 million in 1998 related to the acquisition of DSI Datatrak
and $58.2 million in 1997 related to the acquisition of Columbine
JDS. The 1997 results also exclude extraordinary losses of $13.5
million (net of tax benefit) related to early extinguishment of
debt.
(c) Represents net income per diluted share adjusted to exclude
after-tax intangibles amortization per share.
(d) Represents net income per diluted share plus after-tax
depreciation and intangibles amortization per share.
(e) "EBITDA" represents operating income plus depreciation and
amortization of intangibles.
BIG FLOWER HOLDINGS, INC.
BUSINESS SEGMENT INFORMATION
(in thousands) Three Months Ended
December 31,
-------------------------------------------
1998 1997 % Change
----------- ------------- ----------
Actual
--------------------------------------------
NET SALES
Insert Advertising &
Newspaper Services $ 311,301 $ 295,351 5.4%
Direct Marketing Services 85,117 61,127 39.2%
Digital Services 85,755 40,701 110.7%
Specialty Products &
Commercial Printing 23,039 25,277 -8.9%
Elimination of
Intersegment Sales (2,376) (1,668) -42.4%
------------ ------------
Consolidated $ 502,836 $ 420,788 19.5%
============ ============
============ ============
OPERATING INCOME
Insert Advertising &
Newspaper Services $ 34,176 $ 27,578 23.9%
Direct Marketing Services 11,779 7,689 53.2%
Digital Services 7,828 6,447 21.4%
Specialty Products &
Commercial Printing 1,422 381 273.2%
General Corporate (9,644) (4,944) -95.1%
------------ ------------
Consolidated $ 45,561 $ 37,151 22.6%
============ ============
============ ============
DEPRECIATION
Insert Advertising &
Newspaper Services $ 7,795 $ 8,174 -4.6%
Direct Marketing Services 3,412 3,145 8.5%
Digital Services 4,900 2,373 106.5%
Specialty Products &
Commercial Printing 728 960 -24.2%
General Corporate 179 223 -19.7%
------------ ------------
Consolidated $ 17,014 $ 14,875 14.4%
============ ============
============ ============
AMORTIZATION
OF INTANGIBLES
Insert Advertising &
Newspaper Services $ 2,387 $ 3,752 -36.4%
Direct Marketing Services 500 484 3.3%
Digital Services 1,586 815 94.6%
Specialty Products &
Commercial Printing 186 164 13.4%
General Corporate 125 --
------------ ------------
Consolidated $ 4,784 $ 5,215 -8.3%
============ ============
============ ============
EBITDA (a)
Insert Advertising &
Newspaper Services $ 44,358 $ 39,504 12.3%
Direct Marketing Services 15,691 11,318 38.6%
Digital Services 14,314 9,635 48.6%
Specialty Products &
Commercial Printing 2,336 1,505 55.2%
General Corporate (9,340) (4,721) -97.8%
------------ ------------
Consolidated $ 67,359 $ 57,241 17.7%
============ ============
============ ============
Adjusted
-------------------------------------------
NET SALES
Insert Advertising &
Newspaper Services $ 311,301 $ 295,351 5.4%
Direct Marketing Services 85,117 61,127 39.2%
Digital Services 85,755 40,701 110.7%
Specialty Products &
Commercial Printing 23,039 25,277 -8.9%
Elimination of
Intersegment Sales (2,376) (1,668) -42.4%
------------ ------------
Consolidated $ 502,836 $ 420,788 19.5%
============ ============
============ ============
OPERATING INCOME
Insert Advertising &
Newspaper Services $ 34,176 $ 29,778 (c) 14.8%
Direct Marketing Services 11,779 7,689 53.2%
Digital Services 7,828 6,447 21.4%
Specialty Products &
Commercial Printing 1,422 381 273.2%
General Corporate (5,084) (b) (4,637) (e) -9.6%
------------ ------------
Consolidated $ 50,121 $ 39,658 26.4%
============ ============
============ ============
DEPRECIATION
Insert Advertising &
Newspaper Services $ 7,795 $ 8,174 -4.6%
Direct Marketing Services 3,412 3,145 8.5%
Digital Services 4,900 2,373 106.5%
Specialty Products &
Commercial Printing 728 960 -24.2%
General Corporate 179 223 -19.7%
------------ ------------
Consolidated $ 17,014 $ 14,875 14.4%
============ ============
============ ============
AMORTIZATION
OF INTANGIBLES
Insert Advertising &
Newspaper Services $ 2,387 $ 3,752 -36.4%
Direct Marketing Services 500 484 3.3%
Digital Services 1,586 815 94.6%
Specialty Products &
Commercial Printing 186 164 13.4%
General Corporate 125 --
------------ ------------
Consolidated $ 4,784 $ 5,215 -8.3%
============ ============
============ ============
EBITDA (a)
Insert Advertising &
Newspaper Services $ 44,358 $ 41,704 (c) 6.4%
Direct Marketing Services 15,691 11,318 38.6%
Digital Services 14,314 9,635 48.6%
Specialty Products &
Commercial Printing 2,336 1,505 55.2%
General Corporate (4,780) (b) (4,414) (e) -8.3%
------------ ------------
Consolidated $ 71,919 $ 59,748 20.4%
============ ============
============ ============
Year Ended
December 31,
-------------------------------------------
1998 1997 % Change
--------------- ------------- ---------
Actual
-------------------------------------------
NET SALES
Insert Advertising &
Newspaper Services $1,101,875 $ 961,577 14.6%
Direct Marketing Services 282,431 202,197 39.7%
Digital Services 272,995 108,608 151.4%
Specialty Products &
Commercial Printing 91,122 109,852 -17.1%
Elimination of
Intersegment Sales (8,708) (5,528) -57.5%
------------ ------------
Consolidated $1,739,715 $1,376,706 26.4%
============ ============
============ ============
OPERATING INCOME
Insert Advertising &
Newspaper Services $ 90,568 $ 72,025 25.7%
Direct Marketing Services 34,159 21,035 62.4%
Digital Services 27,641 13,493 104.9%
Specialty Products &
Commercial Printing 5,451 4,856 12.3%
General Corporate (20,322) (14,715) -38.1%
------------ ------------
Consolidated $ 137,497 $ 96,694 42.2%
============ ============
============ ============
DEPRECIATION
Insert Advertising &
Newspaper Services $ 31,526 $ 27,225 15.8%
Direct Marketing Services 13,134 11,120 18.1%
Digital Services 16,048 6,796 136.1%
Specialty Products &
Commercial Printing 2,910 3,800 -23.4%
General Corporate 626 710 -11.8%
------------ ------------
Consolidated $ 64,244 $ 49,651 29.4%
============ ============
============ ============
AMORTIZATION
OF INTANGIBLES
Insert Advertising &
Newspaper Services $ 13,209 $ 14,128 -6.5%
Direct Marketing Services 1,996 1,116 78.9%
Digital Services 5,741 1,771 224.2%
Specialty Products &
Commercial Printing 696 656 6.1%
General Corporate 500 --
------------ ------------
Consolidated $ 22,142 $ 17,671 25.3%
============ ============
============ ============
EBITDA (a)
Insert Advertising &
Newspaper Services $ 135,303 $ 113,378 19.3%
Direct Marketing Services 49,289 33,271 48.1%
Digital Services 49,430 22,060 124.1%
Specialty Products &
Commercial Printing 9,057 9,312 -2.7%
General Corporate (19,196) (14,005) -37.1%
------------ ------------
Consolidated $ 223,883 $ 164,016 36.5%
============ ============
============ ============
Adjusted
-------------------------------------------
NET SALES
Insert Advertising &
Newspaper Services $1,101,875 $ 961,577 14.6%
Direct Marketing Services 282,431 202,197 39.7%
Digital Services 272,995 108,608 151.4%
Specialty Products &
Commercial Printing 91,122 109,852 -17.1%
Elimination of
Intersegment Sales (8,708) (5,528) -57.5%
------------ ------------
Consolidated $1,739,715 $1,376,706 26.4%
============ ============
============ ============
OPERATING INCOME
Insert Advertising &
Newspaper Services $ 90,568 $ 74,225 (c) 22.0%
Direct Marketing Services 34,159 24,218 (d) 41.0%
Digital Services 27,641 13,493 104.9%
Specialty Products &
Commercial Printing 5,451 4,856 12.3%
General Corporate (15,762) (b) (13,828) (e) -14.0%
------------ ------------
Consolidated $ 142,057 $ 102,964 38.0%
============ ============
============ ============
DEPRECIATION
Insert Advertising &
Newspaper Services $ 31,526 $ 27,225 15.8%
Direct Marketing Services 13,134 11,120 18.1%
Digital Services 16,048 6,796 136.1%
Specialty Products &
Commercial Printing 2,910 3,800 -23.4%
General Corporate 626 710 -11.8%
------------ ------------
Consolidated $ 64,244 $ 49,651 29.4%
============ ============
============ ============
AMORTIZATION
OF INTANGIBLES
Insert Advertising &
Newspaper Services $ 13,209 $ 14,128 -6.5%
Direct Marketing Services 1,996 1,116 78.9%
Digital Services 5,741 1,771 224.2%
Specialty Products &
Commercial Printing 696 656 6.1%
General Corporate 500 --
------------ ------------
Consolidated $ 22,142 $ 17,671 25.3%
============ ============
============ ============
EBITDA (a)
Insert Advertising &
Newspaper Services $ 135,303 $ 115,578 (c) 17.1%
Direct Marketing Services 49,289 36,454 (d) 35.2%
Digital Services 49,430 22,060 124.1%
Specialty Products &
Commercial Printing 9,057 9,312 -2.7%
General Corporate (14,636) (b) (13,118) (e) -11.6%
------------ ------------
Consolidated $ 228,443 $ 170,286 34.2%
============ ============
============ ============
(a) EBITDA represents operating income plus depreciation and
amortization of intangibles.
(b) Excludes $4.6 million of termination costs related to elimination
of executive positions.
(c) Excludes $2.2 million of costs related to the acquisitions of
RCPC.
(d) Excludes $3.2 million of costs related to the acquisition of Olwen
Direct Mail, Ltd.
(e) Excludes $0.3 million of costs related to 1997 acquisitions; full
year also excludes $0.6 million of costs related to a secondary
offering of common stock.
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