TSX: PGL
MARKHAM, ON, May 11 /CNW/ - PLM Group today reported its financial
results for the three months ended March 31, 2007.
First Quarter Financial Highlights- Net earnings were $1.0 million compared to $.9 million in 2006.
Earnings per share were 4 cents per share basic and 3 cents per
share diluted compared to 3 cents per share basic and diluted for
the same period in 2006.
- Consolidated sales declined by $4.2 million to $27.4 million
compared to $31.6 million a year ago, reflecting weak market
conditions.
- Gross margin was $8.5 million (31.15% margin), compared to
$9.7 million (30.62% margin) a year ago
- Selling, general and administrative expenses decreased to
$4.7 million from $5.2 million in the same period a year ago.
- During the quarter, the company recorded a gain of $.6 million on
the disposal of a capital asset.
- Pre tax earnings before interest expense were $2.1 million
unchanged from the same period in 2006.Share Buyback
During the quarter, the Company repurchased for cancellation 644,000
common shares at an average price of $1.11 under its normal course issuer bid.
The current bid expires on August 13, 2007.
Management Commentary
"First quarter sales for 2007 were disappointing and reflect an overall
weakness in print markets, particularly in January. Despite stronger sales in
February and March, the Company was not able to completely eliminate the sales
decline in January. Our focus is on sales growth and our Premedia and Digital
Large Format segment as we move to consolidate their operations to our main
facility in Markham." said Barry N. Pike, Chairman and CEO. "Reductions in
administrative and selling expenses and the gain on the disposition of a
capital asset, allowed us to maintain our net income on a consistent basis to
last year."
Conclusion
PLM expects the printing industry to remain intensely competitive in
2007, making it imperative for the Company to continue to focus on strategic
marketing and sales, expense management, operational efficiency gains and
maximization of the value of recent investments.
About PLM Group
PLM Group Ltd. (TSX: PGL) is one of Canada's largest commercial printers
providing single source web and sheet-fed print, visual, graphics and display
services to leading companies in a number of industries, including retail,
consumer products, financial services, automotive, pharmaceutical, healthcare
and communications. Visit the Company's web site at www.plmgroup.com
This document contains certain forward-looking statements that are
subject to known and unknown risks and uncertainties. PLM makes no assurance
that these forward-looking statements, denoted by words such as "expect",
"should" and other similar qualifiers, will prove to be accurate and cautions
readers to review the risks and uncertainties sections of its recent filings
with securities administrators. PLM disclaims any obligation to update these
forward-looking statements should the assumptions underlying them prove to be
inaccurate. This document also contains reference to gross margin, which does
not have standard meanings prescribed by GAAP and may, therefore, not be
comparable to similar measures presented by other issuers.PLM GROUP LTD.
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Statement of Earnings
---------------------
Unaudited ($000's)
Three Months
Ended March 31
--------------
2007 2006
---- ----
Sales $27,414 $31,621
Cost of Sales $18,874 $21,940
----------- -----------
Gross Margin $8,540 $9,681
31.15% 30.62%
Selling and Administrative Expenses $4,660 $5,206
----------- -----------
Net Margin $3,880 $4,475
14.15% 14.15%
Depreciation and Amortization $2,383 $2,419
----------- -----------
Pre-tax earnings before
interest, sale of capital
assets and foreign exchange gains $1,497 $2,056
(Gain) on sale of Capital Assets ($600) $0
Foreign Exchange Loss $12 $14
----------- -----------
Pre-tax earnings before interest expense $2,085 $2,042
Interest Expense $311 $319
----------- -----------
Earnings before income taxes $1,774 $1,723
Current Income Tax Expense $798 $776
----------- -----------
Net Earnings $976 $947
----------- -----------
----------- -----------
Earnings per share
Basic 4 cents 3 cents
Diluted 3 cents 3 cents
PLM GROUP LTD.
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Statement of Cash Flows
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Unaudited ($000's)
Three Months
Ended March 31
--------------
2007 2006
---- ----
Operating
Net earnings $976 $947
Items not affecting cash:
Depreciation $2,327 $2,363
(Gain) on disposal of capital assets ($600) $0
Amortization of deferred
charges and other intangibles $55 $56
Stock options expensed $0 $30
Other $13 $62
----------- -----------
$2,771 $3,458
Change in non-cash operating working capital ($3,721) $916
----------- -----------
Cash (used in)/ from operating activities ($950) $4,374
Investing
Purchase of capital assets ($799) ($317)
Proceeds on disposal of capital assets $801 $0
Increase in other assets $0 $16
----------- -----------
Cash used in investing activities $2 ($301)
Financing
Increase (decrease) in bank financing $2,783 ($2,777)
Purchase of shares for cancellation ($717) ($224)
Repayment of long term debt ($1,118) ($1,072)
----------- -----------
Cash provided (used) in financing activities $948 ($4,073)
Net change in cash and cash equivalents $0 $0
Cash and cash equivalents, beginning of period $0 $0
----------- -----------
Cash and cash equivalents, end of period $0 $0
----------- -----------
----------- -----------
PLM Group Ltd.
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Balance Sheet
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Unaudited ($000's)
March 31, December 31,
2007 2006
----------- -----------
CURRENT ASSETS
Receivables $25,786 $25,258
Inventories $3,828 $2,615
Prepaids $1,022 $485
----------- -----------
Total Current Assets $30,636 $28,358
CAPITAL ASSETS (net) $43,721 $45,593
OTHER ASSETS $1,709 $1,553
DEFERRED CHARGES AND OTHER INTANGIBLES $279 $335
GOODWILL $737 $737
----------- -----------
Total Assets $77,082 $76,576
----------- -----------
----------- -----------
CURRENT LIABILITIES
Bank Indebtedness $4,015 $1,232
Payables and accruals $13,708 $16,023
Income taxes payable $121 $426
Deferred revenue $1,470 $587
Current portion of long term debt $4,428 $4,486
----------- -----------
Total Current Liabilities $23,742 $22,754
LONG TERM DEBT (Note 3) $16,343 $17,390
DEFERRED PAYABLE $828 $815
FUTURE INCOME TAXES $6,605 $6,605
----------- -----------
Total Long Term Liabilities $23,776 $24,810
SHARE CAPITAL (Note 6) $4,425 $4,527
CONTRIBUTED SURPLUS $443 $443
COMMON SHARES REPURCHASED ($0) ($293)
RETAINED EARNINGS $24,696 $24,335
----------- -----------
Total Liabilities and
Shareholders' Equity $77,082 $76,576
----------- -----------
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Statement of Retained Earnings
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Unaudited ($000's)
March 31, December 31,
2007 2006
----------- -----------
Retained earnings, beginning of year $24,335 $22,080
Premium on the purchase
of shares for cancellation ($615) ($505)
Dividends paid $0 ($1,417)
Net earnings for the period $976 $4,177
----------- -----------
Retained earnings, end of period $24,696 $24,335
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----------- -----------PLM GROUP Ltd.
Notes to the Interim Financial Statements
March 31, 2007
1. Basis of Presentation
The unaudited interim financial statements have been prepared by the
Company in accordance with accounting principles generally accepted in
Canada. The preparation of the financial statements is based on
accounting policies and practices consistent with those used in the
preparation of the audited annual financial statements except as
follows:
Effective January 1, 2007, the Company adopted Canadian Institute of
Chartered Accountants' ("CICA") Handbook Section 1530 "Comprehensive
Income", CICA Handbook Section 3855 "Financial Instruments - Recognition
and Measurement", and CICA Handbook Section 3865 "Hedges". These new
Handbook Sections provide comprehensive requirements for the recognition
and measurement of financial instruments , as well as standards on when
and how hedge accounting may be applied. CICA Handbook Section 1530 also
introduces a new component of equity referred to as comprehensive income.
The Company has made the following classifications relative to Section
3855:- Receivables are classified as "loans and receivables" and are
presented at face value less an adjustment for bad debt that is
reviewed on a monthly basis.
- Share purchase loans receivable are classified as "loans and
receivables" and are presented at face value.
- Bank indebtedness is classified as "other financial liabilities"
and presented at face value.
- Payables and accruals are classified as "other financial
liabilities" and presented at face value.
- Long-term debt is classified as "other financial liabilities" and
presented at face value.The Company has determined that there are no derivatives, embedded
derivatives or hedges requiring fair value measurement.
The adoption of these sections is done retroactively without restatement
of the consolidated financial statements of prior periods. There was no
impact on the balance sheet or the income statement as a result of
application of these sections.
Certain information and disclosures normally required to be included in
notes to annual financial statements have been condensed or omitted. The
unaudited interim financial statements should be read in conjunction with
the financial statements and the notes thereto for the year ended
December 31, 2006.
2. Segmented Information
PLM is a provider of integrated print related communication solutions for
its customers. The Company has two reportable segments: commercial
printing, which includes prepress, print, bindery and digital services;
and Optium premedia and large format digital printing.
The accounting policies of the segments are the same as those described
in the summary of accounting policies in the annual financial statements.
The Company evaluates performance based on pre-tax earnings from
operations before interest.
Transactions between reportable segments are minimal.
The Company's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and marketing strategies.
The following tables present information about reportable segment profit
and segment assets:Three Months Ended March 31, 2007
---------------------------------
Optium Premedia
& Large Format
Commercial Digital
Printing Printing Total
Sales to
external customers $24,894,772 $2,518,742 $27,413,514
Pre-tax earnings
before interest $2,597,023 ($511,308) $2,085,715
Depreciation of
capital assets $2,097,657 $229,484 $2,327,141
Additions to
capital assets:
Cash $718,454 $80,350 $798,804
Capital leases $12,450 $0 $12,450
Three Months Ended March 31, 2006
---------------------------------
Optium Premedia
& Large Format
Commercial Digital
Printing Printing Total
Sales to
external customers $28,173,924 $3,447,099 $31,621,023
Pre-tax earnings
before interest $2,003,312 $38,849 $2,042,161
Depreciation of
capital assets $2,105,296 $257,432 $2,362,728
Additions to
capital assets:
Cash $242,448 $74,787 $317,235
Capital Leases $1,408,000 $0 $1,408,000
The following table provides information about geographic sales:
Sales for the three months
ended March 31st
2007 2006
---- ----
Canada $26,075,501 $30,401,405
United States 1,338,013 1,219,618
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$27,413,514 $31,621,023
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All capital assets are located in Canada.
3. Long Term Debt
Long term debt at January 1, 2007: $21,876,280
Long term debt contracts entered into during 2007:
Capital lease repayable in blended monthly
instalments of principal and interest at 7.90%,
secured by a direct charge on specific equipment,
maturing January 2008. 12,450
Principal repayments made during 2007: (1,117,911)
Total long term debt 20,770,819
Less current portion $4,428,246
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Long Term Debt at March 31, 2007 $16,342,573
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4. Restructuring Costs
During the fourth quarter of 2006 the Company's Board of Directors
approved a restructuring plan to close the Optium location and relocate
and consolidate its operations with other operations at the head office
location in Markham, Ontario.
The relocation will require moving Optium's prepress and packaging
operations into PLM's existing prepress facility and moving Optium's
digital large format operations, as well as certain operations related to
PLM's digital services operations, into a new building. These moves will
require construction at two of the Company's facilities in Markham which
will commence in the first quarter of 2007. The Company expects the total
relocation to be completed by the third quarter of 2007.
Expected Costs of Relocation:
Based on information currently available, the Company estimates the total
relocation costs to be $398,000 for employee related costs and $700,000
for consolidation and closure of facilities. These projected costs will
be updated on a quarterly basis.
An amount of $304,000 is included in consolidation and closure costs of
facilities relating to a lease obligation on the Company's facility. The
lease expires in December 2008. As a result of the relocation, the
Company will be seeking a tenant for this location which will mitigate
some of the ongoing lease liability.
Capital and other expenditures relating to the ongoing and new facilities
are estimated to be $2,400,000 and these amounts will be depreciated over
the term of the leases related to the relevant properties.
Costs Incurred to Date: 2006 Total to Date
The relocation costs incurred to date are: ---- -------------
Employee Related Costs $274,000 $274,000
Consolidation and closure costs:
Cost of space plans and
engineering drawings 42,818 42,818
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$316,818 $316,818(1)
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(1) costs incurred to date are included in payables and accruals at
December 31, 2006
5. Capital Stock
(a) Common Shares:
Shares Amount
------ ------
Balance, beginning of year 28,295,470 $4,527,922
Re-purchase of shares for
cancellation (644,000) ($103,040)
Stock options exercised - $0
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Balance March 31, 2007 27,651,470 $4,424,882
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(b) Common Shares Reserved for Stock Options:
Stock Options Price
------------- -----
Balance, beginning of year 1,997,060 $0.58
Issued January to March 2007 - $0.00
Exercised January to March 2007 - $0.00
Expired January to March 2007 - $0.00
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Balance March 31, 2007 1,997,060 $0.58
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-----------------------%SEDAR: 00003930E
For further information: Barry N. Pike, Chairman and Chief Executive
Officer, (416) 848 8510; Peter Bradley, C.A., Executive Vice President and
Chief Financial Officer, (416) 848 8530, Email: pbradley@plmgroup.com
