Cadmus Launches Plan For Major Restructuring

RICHMOND, VA.—Cadmus Communications Corporation, a provider of graphic communications services that posted sales of $496 million last year, has announced a restructuring plan.

The company, which serves professional publishers, not-for-profit societies, and corporations, will:

• Close its Atlanta logistics center and move those activities to its facility in Charlotte, N.C.
• Consolidate its two Richmond-based commercial and magazine printing operations and reconfigure equipment. This move, say company officials, is in response to declines in print demand for commercial products and magazines. Specifically, the company plans to consolidate its sheetfed printing capacity and reconfigure web presses to provide eight-unit capacity to better serve the special-interest magazine market.
• Reduce its work force by about 8%, or 3,500 employees (this number includes the plant consolidations).

Cadmus expects these actions to result in annualized cost savings of approximately $7 million to $7.5 million before taxes and generate about $13 million from the sale of assets, tax benefits, and reduced working capital requirements.

Also, company officials anticipate the loss of about $20 million to $25 million in annual net sales, principally related to a reduction in sheetfed commercial printing volume and smaller, less profitable logistics accounts.

Bruce V. Thomas, Cadmus's president and chief executive, notes that demand remained solid for the firm's core scientific, technical, and medical (STM) journal, books, and directories products. However, he admits, some consolidation among publishers led to some pricing pressures.

"Still, the fundamentals in these core businesses remain sound and offer us attractive growth potential," says Thomas. "Our other operating units, however, have not been immune from much lower demand and increased competition."