RNS Number:0674Q
Applied Graphics Technologies Inc
29 August 2000
Contacts: David Lilly Joseph D. Vecchiolla, CFO
Jim Fingeroth Applied Graphics Technologies
Kekst and Company (212) 716-6730
(212) 521-4800
APPLIED GRAPHICS TECHNOLOGIES REPORTS
SECOND QUARTER 2000 RESULTS
New York, August 14,2000 -Applied Graphics Technologies, Inc. (NASDAQ:
AGTX), the country's largest provider of outsourced digital media asset
management services, today reported results for the three months and six
months ended June 30, 2000.
As previously announced, the Company's Board of Directors approved a plan
to sell its Devon Publishing Group. As a result, the results of
operations of this business have been reflected as a discontinued
operation for all periods presented and the Company's operating results
for the three and six month periods ended June 30, 2000 include a
non-cash charge of $95.2 million related to the estimated loss on
disposal. In addition, the results of Wace Group Limited ("Wace"), which
was consolidated with AGT effective May 21, 1999, are included for the
full periods in 2000.
The Company's revenues increased by 12.5% to approximately $147.0
million, as compared to $130.7 million in the second quarter of 1999.
Revenues for the 2000 quarter include approximately $45.5 million of
revenues related to former Wace operations, as compared to $27.3 million
for the 1999 quarter. Gross profit was $50.4 million in the 2000 quarter,
a 22.5% increase over the $41.2 million gross profit in the second
quarter of 1999. Gross profit as a percentage of sales was 34.3% in the
2000 quarter, a 2.8 percentage point increase over the 1999 quarter.
Operating income from continuing operations, before restructuring and
other charges totaling $1.6 million, was $6.2 million, a decrease of $2.0
million from the 1999 quarter. Operating income is net of amortization of
intangibles, including goodwill, of $3.4 million in the 2000 quarter and
$2.7 million in the 1999 quarter. Additionally, operating income for the
2000 quarter includes a charge of $0.8 million related to non-restructuring
related employee termination costs. Continuing operations in the second quarter
of 2000 were negatively impacted compared to the 1999 period by an increase in
interest expense of $2.4 million and restructuring and other charges totaling
$1.6 million.
The Company incurred a loss from continuing operations of $1.7 million
for the 2000 quarter, as compared to income from continuing operations of
$2.1 million for the 1999 quarter. For the second quarter of 2000, the Company
incurred a net loss of $98.6 million, including a non-cash charge of $95.2
million related to the reporting of the Devon Publishing Group as a discontinued
operation, as compared to net income of $1.9 million for the same period of
1999.
For the six months ended June 30, 2000, the Company's revenues rose
29.7% to $291.3 million, as compared to revenues of $224.7 million for the
six-month period last year. Revenues for the first six months of 2000 include
approximately $97.1 million related to former Wace operations, as compared to
$27.3 million for the same period of 1999. Gross profit was $97.4 million
(33.4%) for the first six months of 2000 as compared to $70.3 million (31.3%)
for the same period of 1999. Operating income from continuing operations for the
2000 period was $9.0 million, before restructuring and other charges totaling
$1.8 million, as compared to $12.9 million in the 1999 period. Operating income
for the 2000 period is net of $6.7 million of amortization of
intangibles, including goodwill. Such amortization was $5.0 million for
the 1999 period. Additionally, operating income for the first six months of
2000 includes a charge of $1.7 million related to non-restructuring related
employee termination costs. For the first six months of 2000, the Company
incurred a loss from continuing operations of $9.1 million, as compared to
income from continuing operations of $1.5 million for the first six months of
1999. Continuing operations for the first six months of 2000 were negatively
impacted compared to the same period of 1999 by an increase in interest expense
of $7.0 million, restructuring and other charges incurred totaling
$1.8 million and an increase in minority interest related to dividends on
the outstanding Wace preference shares of $0.7 million. For the first six months
of 2000, the Company incurred a net loss of $107.5 million, including a non-cash
charge of $95.2 million related to the disposal of the Devon Publishing Group,
as compared to net income of $2.3 million for the same period of 1999.
As previously announced, on April 21, 2000, the Company sold its photographic
laboratory business, the net proceeds of which (approximately $9.0 million) were
used to reduce long-term bank debt.
"The focus of our efforts will continue to be the improvement of
our core business through expanded sales, working capital management,
and further cost savings," said Derek Ashley, Vice Chairman, Chief
Executive Officer and Chief Operating Officer of AGT. "We are also
moving forward with our plan to sell non-core assets and operations. The
proceeds from these sales, if consummated, will allow us to pay down
additional bank debt and to concentrate on the integration and
performance of our core prepress and digital media businesses."
Applied Graphics Technologies, Inc. is a major international
provider of outsourced advanced digital media asset management and
archiving services, through its proprietary Digital Link(R) system, to
magazine and newspaper publishers, advertisers and their agencies,
entertainment companies, catalogers and retailers, and consumer goods
and packaging companies. From locations across the United States, the United
Kingdom, and Australia, AGT supplies a complete range of digital and traditional
processes for images, including scanning, color enhancement, image
editing, archiving and electronic distribution. AGT tailors these
services to fit specific customer needs, from conventional project and
contract vendor relationships to today's more progressive arrangements,
consisting of outsourcing on-site facilities management and complete
turnkey operations. Additionally, AGT provides a wide range of
advertising and marketing-related creative services for customers
primarily in retailing. These services include assistance in creation of
newspaper advertising campaigns, development of in-store and collateral
media and photographic services. AGT also provides content management
and the volume reproduction and distribution of television and radio
commercials to broadcast and cable media for ad agencies and their
clients.
Certain statements in this press release may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are inherently subject to known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements of the Company to be materially different from those expected or
anticipated in the forward-looking statements. Such factors are described in the
Company's SEC filings, including its quarterly reports on Form 10-Q and its
annual reports on Form 10-K
Additional information about Applied Graphics Technologies can be obtained by
visiting the AGT website: http://www.agt.com.
(tables follow)
Applied Graphics Technologies, Inc..
Consolidated Statements of Operation Data
(Unaudited)
(in thousands, except per-share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
Revenues $147,023 $ 130,710 $ 291,342 $224,655
Cost of Revenues 96,607 89,538 193,894 154,389
Gross Profit 50,416 41,172 97,448 70,266
Gross Profit Percentage 34.3% 31.5% 33.4% 31.3%
Selling,General and
Administrative Expenses 40,855 30,340 81,741 52,391
Amortization of Intangibles 3,381 2,652 6,744 5,007
Operating Income from
Continuing Operations
Before Restructuring,
Impairments and Other Charges 6,180 8,180 8,963 12,868
Restructuring Charge 611 - 611 -
Gain on Disposal of Property and
Equipment (272) (18) (47) (34)
Impairment Charges 1,241 -- 1,241 -
Operating Income 4,600 8,198 7,158 12,902
Interest Expense (5,991) (3,558) (13,194) (6,158)
Interest Income 231 116 433 128
Other Income (Expense) - Net 48 70 (154) 114
Income (Loss) From Continuing
Operations Before Provision
for Income Taxes and
Minority Interest (1,112) 4,826 (5,757) 6,986
Provision (Benefit) for Income
Taxes (69) 2,202 2,068 4,927
Income (Loss) from Continuing
Operations Before Minority
Interest (1,043) 2,624 (7,825) 2,059
Minority Interest (633) (566) (1,296) (566)
Income (Loss) from Continuing
Operations (1,676) 2,058 (9,121) 1,493
Income (Loss) from Discontinued
Operations (96,909) (121) (98,383) 819
Net Income (Loss) $(98,585) $ 1,937 $(107,504) $ 2,312
Basic and Diluted Earnings (Loss)
Per Common Share:
Income (Loss) from Continuing
Operations $(0.07) $ 0.09 $ (0.40) 0.07
Income (Loss) from
Discontinued Operations (4.29) -- (4.35) 0.03
Total $(4.36) $ 0.09 $ (4.75) $0.10
Weighted Average Number of Common
Shares:
Basic 22,615 22,396 22,615 22,396
Diluted 22,615 22,400 22,615 22,397
Applied Graphics Technologies, Inc.
Consolidated Balance Sheet Data
(Unaudited)
(in thousands of dollars)
June 30, December 31,
ASSETS 2000 1999
Current assets:
Cash and cash equivalents $ 8,611 $23,218
Marketable securities 289 2,127
Trade accounts receivable
(net of allowances of $7,879 in
2000 and $7,732 in 1999) 107,551 119,997
Due from affiliates 6,654 6,615
Inventory 28,244 26,283
Prepaid expenses 8,882 12,095
Deferred income taxes 27,757 26,985
Other current assets 10,277 13,844
Net current assets of discontinued
operations 44,673 36,233
Total current assets 242,938 267,397
Property, plant and equipment - net 71,252 95,281
Goodwill and other intangible assets-net 427,058 437,674
Other assets 23,110 18,270
Net non-current assets of discontinued
operations - 112,388
Total assets $ 764,358 $ 931,010
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 79,929 $92,056
Current portion of long-term debt and
obligations under capital leases 17,943 19,024
Due to affiliates 1,466 1,909
Other current liabilities 23,750 33,477
Total current liabilities 123,088 146,466
Long-term debt 260,589 298,125
Subordinated notes 28,119 29,867
Obligations under capital leases 2,773 3,814
Deferred income taxes 3,413 2,975
Other liabilities 12,900 8,763
Total liabilities 430,882 490,010
Commitments and contingencies
Minority interest - Redeemable Preference Shares
issued by subsidiary 32,982 33,050
Stockholders' equity:
Common stock 226 225
Additional paid-in capital 388,547 386,548
Accumulated other comprehensive income (688) 1,264
Retained earnings (deficit) (87,591) 19,913
Total stockholders' equity 300,494 407,950
--------- -------
Total liabilities and stockholders' equity $ 764,358 $ 931,010
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