RNS Number:7606E
Applied Graphics Technologies Inc
6 June 2001
Contacts: Joseph D. Vecchiolla, COO & CFO Applied Graphics Technologies
(212) 716-6730
FOR IMMEDIATE RELEASE
APPLIED GRAPHICS TECHNOLOGIES REPORTS
FIRST QUARTER 2001 RESULTS
New York, May 10, 2001 - Applied Graphics Technologies, Inc. (AMEX: AGD), the
country's largest provider of outsourced digital media asset management
services, today reported results for the three months ended March 31, 2001.
The Company's revenues in the first quarter of 2001 decreased by 19.1% to
$116.8 million, as compared to revenue of $144.3 million in the same quarter
of 2000. This decrease resulted primarily from the adverse impact the
softening advertising market had on the Company's Midwest prepress and
creative services operations. The Company also experienced an anticipated
reduction in revenues from the sale of its photographic laboratory and digital
portrait systems businesses and the closing of its Atlanta prepress facility,
all of which occurred subsequent to the 2000 period. Gross profit was $34.9
million in the 2001 quarter, as compared to $47.0 million in the first quarter
of 2000. Gross profit as a percentage of revenue decreased to 29.9% in the
2001 quarter from 32.6% in the 2000 quarter due primarily to lower margins at
the Company's Midwest operations resulting from the aforementioned decrease in
revenues. The Company had an operating loss of $4.0 million in the 2001
quarter, as compared to operating income of $2.6 million in the 2000 quarter.
The Company incurred a loss from continuing operations of $8.6 million in the
2001 quarter as compared to a loss of $7.4 million in the 2000 quarter. The
results from continuing operations in 2001 benefited, as compared to the 2000
period, from a reduction in interest expense of $1.2 million and an increase
in other income of $1.6 million, the majority of which represented a gain on
sale of marketable securities. For the first quarter of 2001, the Company had
a net loss of $8.6 million as compared to a net loss of $8.9 million for the
same period of 2000.
"We are obviously disappointed by the adverse impact the economy, and in
particular the softness experienced in the advertising market, had on our
operations in the first quarter of 2001," said Joe Vecchiolla, Chief Operating
Officer and Chief Financial Officer of AGT. "We continued to make strides in
our integration efforts and have reduced our headcount by more than 200
individuals since the beginning of the year, all of which we expect to result
in improved performance going forward. Having said that, however, the poor
results of the first quarter hindered our ability to continue the progress
previously made in reducing our debt. More importantly, although the Company
currently is in compliance with financial covenant requirements imposed by our
credit facilities, the first quarter results and anticipated weakness in the
second quarter will have an adverse impact on our ability to satisfy those
requirements in future periods. As we have previously disclosed, we
anticipated that we would have difficulty meeting our financial covenant
requirements in the third quarter of 2001 as a result of the financial
covenant requirements becoming more restrictive in that quarter. However, the
Company now believes that, as a result of the events of the first quarter and
the anticipated weakness in the second quarter, the Company may not be able to
satisfy the financial covenant requirements currently in effect for the second
quarter of 2001. We are continuing to manage this situation and are currently
engaged in discussions with our bank group regarding waivers and amendments
that would be required in the event of noncompliance, but there can be no
assurance that the Company will be successful in its efforts," Mr. Vecchiolla
concluded.
Prior period amounts have been restated to reflect the Company's publishing
business as a discontinued operation, and prior period share and per-share
amounts have been adjusted for the effects of the Company's two-for-five
reverse stock split on December 5, 2000.
Applied Graphics Technologies, Inc., provides digital media asset management
services across all forms of media, including print, broadcast, and the
Internet and is a leading application service provider for the on-line
management of brands. AGT offers a variety of digital imaging and related
services to major corporations, which include magazine and newspaper
publishers, advertisers and their agencies, entertainment companies,
catalogers, retailers, and consumer goods and packaging companies. From
locations across the United States, the United Kingdom, and Australia, AGT
supplies a complete range of services that are tailored to provide solutions
for specific customer needs, with a focus on improving and standardizing the
management and delivery of visual communications for clients on a local,
national, and international basis. 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. Finally, through its Devon
Publishing Group, AGT is a leading publisher of alternative greeting cards,
calendars, fine art and other prints, and wall decor items.
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 Report on Form 10-Q and its
Annual Report 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 Operations Data
(Unaudited)
(In thousands, except per-share amounts)
Three Months
Ended March 31,
2001 2000
Revenues $ 116,769 $ 144,319
Cost of revenues 81,836 97,287
Gross profit 34,933 47,032
Gross profit percentage 29.9% 32.6%
Selling, general, and administrative expenses 35,530 40,886
Amortization of intangibles 3,389 3,363
Loss on disposal of property and equipment - net 28 225
Operating income (loss) (4,014) 2,558
Interest expense (5,989) (7,203)
Interest income 203 202
Other income (expense) - net 1,402 (202)
Loss from continuing operations before provision
for income taxes and minority interest (8,398) (4,645)
Provision (benefit) for income taxes (357) 2,137
Loss from continuing operations before minority
interest (8,041) (6,782)
Minority interest (600) (663)
Loss from continuing operations (8,641) (7,445)
Loss from discontinued operations - (1,474)
Net Loss $ (8,641) $ (8,919)
Basic and Diluted loss per
common share:
Loss from continuing operations $ (0.95) $ (0.82)
Loss from discontinued operations - (0.17)
Total $ (0.95) $ (0.99)
Weighted Average Number of Common Shares:
Basic 9,068 9,046
Diluted 9,068 9,046
Applied Graphics Technologies, Inc.
Consolidated Balance Sheet Data
(Unaudited)
(In thousands of dollars)
March December
31, 31,
Assets 2001 2000
Current assets:
Cash and marketable securities $ 13,877 $ 8,083
Trade accounts receivable (net of allowances of
$5,622 in
2001 and $5,100 in 2000) 85,969 100,394
Due from affiliates 4,785 5,084
Inventory 22,226 21,842
Other current assets 31,723 30,771
Net current assets of discontinued operations 38,873 44,790
Total current assets 197,453 210,964
Property, plant and equipment - net 62,766 424,031
Other assets 22,542 23,449
Total assets $ 704,941 $ 722,233
Liabilities and STOCKHOLDERS' Equity
Current liabilities:
Accounts payable and accrued expenses $ 78,882 $ 87,344
Current portion of long-term debt and
obligations under
capital leases 23,366 18,204
Due to affiliates 837 1,115
Other current liabilities 20,994 21,626
Total current liabilities 124,079 128,289
Long-term debt 202,112 204,080
Subordinated notes 26,406 27,745
Obligations under capital leases 1,508 1,540
Other liabilities 14,401 15,291
Total liabilities 368,506 376,945
Commitments and contingencies
Minority interest - Redeemable Preference Shares
issued by subsidiary 37,186 36,584
Total stockholders' equity 299,249 308,704
Total liabilities and stockholders' equity $ 704,941 $ 722,233
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