RNS Number:4605N
Applied Graphics Technologies Inc
20 November 2001
PART 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to_____
Commission File Number 1-16431
APPLIED GRAPHICS TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3864004
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
450 WEST 33RD STREET
NEW YORK, NY
(Address of principal executive offices)
10001
(Zip Code)
212-716-6600
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
N/A
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes(X) No( )
The number of shares of the registrant's common stock outstanding as of
October 31, 2001, was 9,067,565.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of dollars, except per-share amounts)
September December
30, 31,
2001 2000
ASSETS
Current assets:
Cash and cash equivalents $ 3,425 $ 6,406
Marketable securities 1,677
Trade accounts receivable (net of allowances of
$5,763 in 2001
and $5,100 in 2000) 92,897 100,394
Due from affiliates 3,927 5,084
Inventory 21,436 21,842
Prepaid expenses 4,578 7,248
Deferred income taxes 13,943 18,618
Other current assets 1,877 4,905
Net assets held for sale 40,875
Net assets of discontinued operations 44,790
Total current assets 182,958 210,964
Property, plant, and equipment - net 57,795 63,789
Goodwill and other intangible assets (net of
accumulated amortization
of $41,438 in 2001 and $31,325 in 2000) 415,112 424,031
Deferred income taxes 4,207
Other assets 22,150 23,449
Total assets $ 682,222 $ 722,233
Liabilities and STOCKholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 65,463 $ 87,344
Current portion of long-term debt and 7,857 18,204
obligations under capital leases
Due to affiliates 1,009 1,115
Other current liabilities 20,919 21,626
Total current liabilities 95,248 128,289
Long-term debt 223,533 204,080
Subordinated notes 27,298 27,745
Obligations under capital leases 955 1,540
Deferred income taxes 3,896
Other liabilities 13,979 11,395
Total liabilities 361,013 376,945
Commitments and contingencies
Minority interest - Redeemable Preference Shares 38,232 36,584
issued by subsidiary
Stockholders' Equity:
Preferred stock (no par value, 10,000,000 shares
authorized; no
shares outstanding)
Common stock ($0.01 par value, 150,000,000
shares authorized; shares
issued and outstanding: 9,067,565 in 2001 and 91 90
9,033,603 in 2000)
Additional paid-in capital 389,481 388,704
Accumulated other comprehensive income (loss) (759) 522
Retained deficit (105,836) (80,612)
Total stockholders' equity 282,977 308,704
Total liabilities and stockholders' $ 682,222 $ 722,233
equity
See Notes to Interim Consolidated Financial Statements
Applied Graphics Technologies, Inc.
CONSOLIDATED Statements of OPERATIONS
(Unaudited)
(In thousands, except per-share amounts)
For the Nine Months For the Three Months
Ended Ended
September 30, September 30,
2001 2000 2001 2000
Revenues $ 369,658 $ 431,385 $ 134,829 $ 140,043
Cost of revenues 250,965 285,365 87,003 91,471
Gross profit 118,693 146,020 47,826 48,572
Selling, general, and
administrative expenses 112,693 118,896 42,714 37,155
Amortization of intangibles 10,113 10,005 3,335 3,261
Loss (gain) on disposal of 2,242 (2,406) 266 (2,359)
property and equipment
Restructuring charges 1,167 487 (124)
Impairment charges 97,766 1,241
Total operating expenses 223,981 128,223 46,315 37,933
Operating income (loss) (105,288) 17,797 1,511 10,639
Interest expense (19,297) (20,521) (7,548) (7,327)
Interest income 513 633 176 200
Other income (expense) - 2,213 369 43 523
net
Income (loss) from (121,859) (1,722) (5,818) 4,035
continuing operations
before
provision for income
taxes and minority interest
Provision (benefit) for (3,097) 3,674 (617) 1,606
income taxes
Income (loss) from (118,762) (5,396) (5,201) 2,429
continuing operations
before
minority interest
Minority interest (1,778) (1,904) (592) (608)
Income (loss) from (120,540) (7,300) (5,793) 1,821
continuing operations
Income (loss) from 98,726 (98,383)
discontinued operations
Extraordinary item - Loss
on debt extinguishment, (3,410) (3,410)
net of taxes of $2,451
Net income (loss) (25,224) (105,683) (9,203) 1,821
Other comprehensive loss (1,237) (2,223) (402) (271)
Comprehensive income (loss) $ (26,461) $ (107,906) $ (9,605) $ 1,550
Basic income (loss) per
common share:
Income (loss) from $ (13.29) $ (0.81) $ (0.63) $ 0.20
continuing operations
Income (loss) from 10.89 (10.88)
discontinued operations
Extraordinary loss (0.38) (0.38)
Total $ (2.78) $ (11.69) $ (1.01) $ 0.20
Diluted income (loss) per
common share:
Income (loss) from $ (13.29) $ (0.81) $ (0.63) $ 0.20
continuing operations
Income (loss) from 10.89 (10.88)
discontinued operations
Extraordinary loss (0.38) (0.38)
Total $ (2.78) $ (11.69) $ (1.01) $ 0.20
Weighted average number of
common shares:
Basic 9,068 9,042 9,068 9,034
Diluted 9,068 9,042 9,068 9,034
See Notes to Interim Consolidated Financial Statements
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands of dollars)
For the Nine Months
Ended
September 30,
2001 2000
Cash flows from operating activities:
Net loss $ (25,224) $ (105,683)
Adjustments to reconcile net loss to net cash from operating
activities:
Loss (income) from discontinued operations (98,726) 98,383
Depreciation and amortization 25,966 29,151
Deferred taxes (6,078) 191
Loss (gain) on disposal of property and 2,242 (2,406)
equipment
Provision for bad debts 4,105 2,340
Impairment charges 97,766 1,241
Extraordinary loss 5,861
Other 2,294 (107)
Changes in Operating Assets and Liabilities, net of
effects of acquisitions
and dispositions:
Trade accounts receivable 4,253 2,073
Due from/to affiliates 1,051 1,085
Inventory 337 (2,608)
Other assets 1,739 3,534
Accounts payable and accrued expenses (14,865) 637
Other liabilities 1,524 (3,998)
Net assets held for sale (4,816)
Net cash provided by operating activities of 6,425 7,642
discontinued operations
Net cash provided by operating activities 3,854 31,475
Cash flows from investing activities:
Property, plant, and equipment expenditures (10,882) (12,190)
Software expenditures (754) (1,226)
Proceeds from sale of available-for-sale 1,675
securities
Proceeds from sale of property and equipment 5,836
Proceeds from sale of a business 11,799
Other (2,967) (4,217)
Net cash used in investing activities of (351) (1,003)
discontinued operations
Net cash used in investing activities (13,279) (1,001)
Cash flows from financing activities:
Proceeds from sale/leaseback transactions 12,922
Repayments of notes and capital lease (1,035) (2,562)
obligations
Repayments of term loans (6,240) (37,027)
Borrowings (repayments) under revolving credit 15,795 (16,869)
line - net
Payment of debt extinguishment fees (2,000)
Net cash used in financing activities of (51) (448)
discontinued operations
Net cash provided by (used in) financing activities 6,469 (43,984)
Net decrease in cash and cash equivalents (2,956) (13,510)
Effect of exchange rate changes on cash and cash (25) (592)
equivalents
Cash and cash equivalents at beginning of period 6,406 23,218
Cash and cash equivalents at end of period $ 3,425 $ 9,116
See Notes to Interim Consolidated Financial Statements
APPLIED GRAPHICS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands of dollars)
For the nine months ended September 30, 2001
Common Additional Accumulated Retained
stock other deficit
paid-in comprehensive
capital income (loss)
Balance at January 1, $ 90 $ 388,704 $ 522 $ (80,612)
2001
Issuance of 33,962 1 719
common shares as
additional
consideration in
connection with prior
period acquisition
Compensation cost of 58
stock options issued to
non-employees
Cumulative effect of (15)
change in accounting
principle
Effective portion of (1,052)
change in fair value of
interest rate swap
agreements
Unrealized gain from (77)
foreign currency
translation
adjustments
Reclassification (137)
adjustment for losses
realized in net
income
Net loss (25,224)
Balance at September $ 91 $ 389,481 $ (759) $ (105,836)
30, 2001
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