PLM Group reports profitable fourth quarter



    TSX: PGL

    MARKHAM, ON, March 26 /CNW/ - PLM Group today reported its financial
results for the three and 12 months ended December 31, 2006.

    
    Fourth Quarter Financial Highlights

    -   Net earnings were $1.9 million compared to $1.6 million in 2005.
        Earnings per share were 7 cents basic and diluted compared to 5 cents
        basic and diluted for the same period in 2005.
    -   Consolidated sales declined by $1.1 to $31.6 million compared to
        $32.7 million a year ago, reflecting weak market conditions in pre
        media and large format digital printing segment sales.
    -   Gross margin was $9.4 million (29.81% margin), compared to
        $9.6 million (29.42% margin) a year ago
    -   Selling, general and administrative expenses increased to
        $4.4 million from $4.0 million in the same period a year ago.
    -   Pre tax earnings before interest expense were $2.7 million down from
        $3.5 million as a result of lower sales and restructuring costs of
        $0.3 million provided for in the fourth quarter of 2006.

    2006 Financial Highlights

    -   Net income was $4.2 million (15 cents per share basic and 14 cents
        per share diluted) compared to a net loss of $0.9 million (-3 cents
        per share basic and diluted) in 2005.
    -   The $0.9 million loss for 2005 included a third quarter $2.9 million
        non cash operating charge resulting from the write down of goodwill
        related to the pre media and digital printing segment of the
        Company's operations.
    -   Consolidated sales were $125.5 million, an increase of 7.1% from
        2005. The 9.4% sales growth in print was partially offset by a 9.4%
        decline in sales in the pre media and digital large format print
        segment.
    -   Gross margin was $38.5 million (30.6% margin) compared to
        $34.6 million (29.6% margin) a year ago.
    -   Selling, general and administrative expenses were $20.8 million
        compared to $19.8 million for 2005.
    -   Pre tax earnings before interest expense were $6.4 million, compared
        to $0.9 million a year ago. 2005 results were impacted by a
        $2.9 million write off of goodwill.
    -   Long-term debt to equity ratio was 37:63 at December 31, 2006
        compared to 34:66 at December 31, 2005.
    

    Share Buyback

    During the year, the Company repurchased for cancellation 900,100 common
shares at an average price of $1.00 under 2 normal course issuer bids. The
first bid expired on June 26, 2006. Under its current bid which expires on
August 13, 2007 allowing total repurchases of 1,416,843 shares the Company has
the ability to repurchase an additional 1,089,943 shares for cancellation.

    Management Commentary

    "2006 proved to be a very good year for PLM overall," said Barry N. Pike,
Chairman and CEO. "We were able to grow our sales substantially, increasing
our market share, and providing significant cash which allowed us to pay our
first dividend to shareholders. The pre media and large format digital print
segment of our business continued to experience very soft market demand and,
as a result, its financial results were far below our expectations." "As we
look forward to 2007, we expect a significant challenge resulting from an
increase in new printing equipment in the market."
    "During the fourth quarter of 2006, the Board of Directors approved a
plan to restructure our operations. This will allow the Company to relocate
the pre media and digital large format print operations to our main production
facilities in Markham. This move will allow us to combine the pre media
operations with PLM's print based pre media as well as to combine the digital
large format printing with PLM's print on demand and specialty finishing
operations," said David Stuart, President and COO. "We will incur future costs
to complete this restructuring (some of which were reflected in the fourth
quarter results) the balance of which will be reflected as we go through 2007,
but that this restructuring will reduce future operating costs and provide new
opportunities to grow sales in these areas."
    Said Peter Bradley, Executive Vice President and CFO: "PLM's solid profit
performance in 2006 resulted in very strong cash flows for the Company and
puts us on a very firm financial footing as we go into 2007."

    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.
                                                          --------------
    Consolidated Statement of Earnings
    ----------------------------------

    Audited ($000's)

                                                      Year Ended December 31
                                                      ----------------------

                                                        2006          2005
                                                        ----          ----

    Sales                                             $125,541      $117,186
    Cost of Sales                                      $87,078       $82,558
                                                  ------------- -------------
    Gross Margin                                       $38,463       $34,628
                                                        30.64%        29.55%
                                                  ------------- -------------
    Selling and Administrative Expenses                $20,754       $19,844
                                                  ------------- -------------
      Net Margin                                       $17,709       $14,784
                                                        14.11%        12.62%

    Goodwill Impairment Loss                                $0        $2,863
    Restructuring Costs (Note 5)                          $317            $0
    Depreciation and Amortization                       $9,515        $9,047
                                                  ------------- -------------
      Pre-tax earnings before interest, sale of
       capital assets and foreign exchange gains        $7,877        $2,874

    Loss on sale of Capital Assets                         $19          $188
    Foreign Exchange Loss                                  $82          $105
                                                  ------------- -------------
      Pre-tax earnings before interest expense          $7,776        $2,581

    Interest Expense                                    $1,336        $1,651
                                                  ------------- -------------
      Earnings before income taxes                      $6,440          $930

    Current Income Tax Expense                          $2,653        $2,386
    Future Income Tax Recovery - excluding impact
     of rate changes                                     ($224)        ($588)
    Future Income Tax Recovery - impact of rate
     changes                                             ($166)           $0
                                                  ------------- -------------
    Net Earnings/(Loss)                                 $4,177         ($868)
                                                  ------------- -------------
                                                  ------------- -------------


    Earnings/(Loss) per share
                                           Basic      15 cents      (3 cents)
                                         Diluted      14 cents      (3 cents)



                                                          PLM GROUP LTD.
                                                          --------------
    Consolidated Statement of Earnings
    ----------------------------------

    Unaudited ($000's)

                                              Three Months Ended December 31
                                              ------------------------------

                                                        2006          2005
                                                        ----          ----

    Sales                                              $31,595       $32,698
    Cost of Sales                                      $22,177       $23,077
                                                  ------------- -------------
    Gross Margin                                        $9,418        $9,621
                                                        29.81%        29.42%

    Selling and Administrative Expenses                 $4,425        $3,967
                                                  ------------- -------------
      Net Margin                                        $4,993        $5,654
                                                        15.80%        17.29%

    Restructuring Costs (Note 5)                          $317            $0
    Depreciation and Amortization                       $1,953        $2,070
                                                  ------------- -------------
      Pre-tax earnings before interest, sale of
       capital assets and foreign exchange gains        $2,723        $3,584

    (Gain)/Loss on sale of Capital Assets                  ($5)           $8
    Foreign Exchange (Gain)/Loss                           ($1)          $33
                                                  ------------- -------------
      Pre-tax earnings before interest expense          $2,729        $3,543

    Interest Expense                                      $274          $383
                                                  ------------- -------------
      Earnings before income taxes                      $2,455        $3,160

    Current Income Tax Expense                            $856        $2,321
    Future Income Tax Recovery - excluding impact
     of rate changes                                     ($224)        ($765)
    Future Income Tax Recovery - impact of rate
     changes                                             ($123)           $0
                                                  ------------- -------------
    Net Earnings                                        $1,946        $1,604
                                                  ------------- -------------
                                                  ------------- -------------


    Earnings per share
                               Basic and diluted      7  cents       5 cents



                                                          PLM GROUP LTD.
                                                          --------------
    Consolidated Statement of Cash Flows
    ------------------------------------

    Audited ($000's)

                                                      Year Ended December 31
                                                      ----------------------

                                                        2006          2005
                                                        ----          ----
    Operating Activities
    Net earnings/(loss)                                 $4,177         ($868)
    Items not affecting cash:
    Depreciation                                        $9,289        $8,824
    Loss on disposal of capital assets                     $19          $188
    Amortization of deferred charges and other
     intangibles                                          $226          $223
    Future income tax recovery                           ($390)        ($588)
    Goodwill impairment loss                                $0        $2,863
    Other                                                 $116          $437
                                                  ------------- -------------
                                                       $13,437       $11,079
    Change in non-cash operating working capital        $4,460         ($763)
                                                  ------------- -------------
    Cash from operating activities                     $17,897       $10,316

    Investing
    Purchase of capital assets                         ($2,832)      ($3,675)
    Proceeds on disposal of capital assets                 $12          $247
    Increase in deferred charges                            $0          ($71)
    Increase in other assets                             ($796)           $0
                                                  ------------- -------------
    Cash used in investing activities                  ($3,616)      ($3,499)

    Financing
    Decrease in bank indebtedness                      ($8,234)        ($328)
    Proceeds from exercised stock options                  $23          $399
    Purchase of shares for cancellation                  ($606)        ($869)
    Dividends paid                                     ($1,417)           $0
    Proceeds from equipment refinancing                     $0          $660
    Repayment of long term debt                        ($4,047)      ($6,679)
                                                  ------------- -------------
    Cash used in financing activities                 ($14,281)      ($6,817)

    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.
                                                        --------------
    Consolidated Statement of Cash Flows
    ------------------------------------

    Unaudited ($000's)

                                              Three Months Ended December 31
                                              ------------------------------

                                                        2006          2005
                                                        ----          ----
    Operating
    Net earnings                                        $1,946        $1,604
    Items not affecting cash:
    Depreciation                                        $1,896        $2,013
    (Gain)/loss on disposal of capital assets              ($5)           $8
    Amortization of deferred charges and other
     intangibles                                           $56           $57
    Future income tax recovery                           ($347)        ($765)
    Stock options expensed                                ($90)         ($90)
    Other                                                  $10           $38
                                                  ------------- -------------
                                                        $3,466        $2,865
    Change in non-cash operating working capital        $4,707       ($2,438)
                                                  ------------- -------------
    Cash from operating activities                      $8,173          $427

    Investing
    Purchase of capital assets                           ($189)        ($269)
    Proceeds on disposal of capital assets                  $0           $32
    Increase in other assets                             ($214)           $0
                                                  ------------- -------------
    Cash used in investing activities                    ($403)        ($237)

    Financing
    Increase (decrease) in bank indebtedness           ($6,697)       $1,241
    Proceeds from exercised stock options                   $0          $386
    Purchase of shares for cancellation                   ($41)        ($136)
    Repayment of long term debt                        ($1,032)      ($1,681)
                                                  ------------- -------------
    Cash provided (used) in financing activities       ($7,770)        ($190)

    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.
                                                        --------------
    Consolidated Balance Sheet
    --------------------------

    Audited ($000's)

                                                   December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------

    CURRENT  ASSETS
    Receivables                                        $25,258       $29,112
    Inventories                                         $2,615        $3,920
    Prepaids                                              $485          $834
    Income taxes receivable                                 $0           $42
                                                  ------------- -------------
      Total Current Assets                             $28,358       $33,908

    CAPITAL  ASSETS (net)                              $45,593       $43,357

    OTHER ASSETS                                        $1,553          $248
    DEFERRED CHARGES AND OTHER INTANGIBLES                $335          $561
    GOODWILL                                              $737          $737
                                                  ------------- -------------
      Total Assets                                     $76,576       $78,811
                                                  ------------- -------------
                                                  ------------- -------------

    CURRENT LIABILITIES
    Bank Indebtedness                                   $1,232        $9,466
    Payables and accruals                              $16,023       $15,566
    Income taxes payable                                  $426          $221
    Deferred revenue                                      $587        $1,245
    Current  portion of long term debt                  $4,486        $3,676
                                                  ------------- -------------
      Total Current Liabilities                        $22,754       $30,174

    LONG TERM DEBT (Note 3)                            $17,390       $13,814
    DEFERRED PAYABLE                                      $815          $699
    FUTURE INCOME TAXES                                 $6,605        $6,995
                                                  ------------- -------------
      Total Long Term Liabilities                      $24,810       $21,508

    SHARE CAPITAL (Note 6)                              $4,527        $4,606
    CONTRIBUTED SURPLUS                                   $443          $443
    COMMON SHARES REPURCHASED (Note 11(c))               ($293)           $0
    RETAINED EARNINGS                                  $24,335       $22,080
                                                  ------------- -------------
      Total Liabilities and Shareholders' Equity       $76,576       $78,811
                                                  ------------- -------------
                                                  ------------- -------------



    Consolidated Statement of Retained Earnings
    -------------------------------------------

    Audited ($000's)                               December 31,  December 31,
                                                          2006          2005
                                                  ------------- -------------

    Retained earnings, beginning of year               $22,080       $23,677

    Premium on the purchase of shares for
     cancellation                                        ($505)        ($729)
    Dividends paid                                     ($1,417)           $0
    Net earnings/(loss) for the year                    $4,177         ($868)
                                                  ------------- -------------
    Retained earnings, end of the year                 $24,335       $22,080
                                                  ------------- -------------
                                                  ------------- -------------



    PLM GROUP Ltd.
    Notes to the Interim Consolidated Financial Statements
    December 31, 2006

    1.  Basis of Presentation

    The unaudited interim consolidated 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 consolidated financial
    statements.

    Certain information and disclosures normally required to be included in
    notes to annual consolidated financial statements have been condensed or
    omitted. The unaudited interim consolidated financial statements should
    be read in conjunction with the consolidated 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 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 December 31, 2006
                                        ------------------------------------

                                                    Premedia &
                                                  Large Format
                                                       Digital
                                        Printing      Printing         Total

    Sales to external customers      $28,484,070    $3,110,549   $31,594,619

    Pre-tax earnings before interest  $2,911,835     ($183,140)   $2,728,695

    Depreciation of capital assets    $1,703,848      $248,761    $1,952,609

    Consideration paid for additions
     to capital assets:
      Cash                              $183,614        $5,099      $188,713
      Capital leases                  $5,897,000            $0    $5,897,000


                                        Three Months Ended December 31, 2005
                                        ------------------------------------

                                                    Premedia &
                                                  Large Format
                                                       Digital
                                        Printing      Printing         Total

    Sales to external customers      $28,443,343    $4,254,197   $32,697,540

    Pre-tax earnings before interest  $2,877,560      $665,623    $3,543,183

    Depreciation of capital assets    $1,804,005      $209,429    $2,013,434

    Consideration paid for additions
     to capital assets:
      Cash                              $198,015       $70,579      $268,594


                                          Year Ended December 31, 2006
                                          ----------------------------

                                                    Premedia &
                                                  Large Format
                                                       Digital
                                        Printing      Printing         Total

    Sales to external customers     $112,639,324   $12,901,844  $125,541,168

    Pre-tax earnings before interest  $8,085,064     ($309,586)   $7,775,478

    Depreciation of capital assets    $8,293,998      $994,986    $9,288,984

    Consideration paid for additions
     to capital assets:
      Cash                            $1,962,305      $869,902    $2,832,207
      Promissory notes                  $470,903      $505,679      $976,582
      Capital leases                  $7,456,961            $0    $7,456,961


                                          Year Ended December 31, 2005
                                          ----------------------------

                                                    Premedia &
                                                  Large Format
                                                       Digital
                                        Printing      Printing         Total

    Sales to external customers     $102,939,199   $14,246,951  $117,186,150

    Pre-tax earnings/(loss) before
     interest                         $4,313,705   ($1,733,745)   $2,579,960

    Depreciation of capital assets    $8,075,769      $748,681    $8,824,450

    Consideration paid for additions
     to capital assets:
      Cash                            $2,510,356    $1,164,421    $3,674,777



    The following table provides information about geographic sales:


                  Sales for the three months ended December 31
                                            2006          2005
                                            ----          ----

    Canada                           $31,112,446   $31,070,061
    United States                        482,173     1,627,479
                                   ----------------------------
                                     $31,594,619   $32,697,540
                                   ----------------------------

                          Sales for the year ended December 31
                                            2006          2005
                                            ----          ----

    Canada                          $122,780,121  $110,595,850
    United States                      2,761,047     6,590,300
                                   ----------------------------
                                    $125,541,168  $117,186,150
                                   ----------------------------

    All capital assets are located in Canada.

    3.  Long Term Debt

    Long term debt at January 1, 2006:                          $ 17,490,005

    Long term debt contracts entered into during 2006:

        Capital lease repayable in blended monthly
         instalments of principal and interest at 5.43%,
         secured by a direct charge on specific equipment,
         maturing December 2013.                                   2,995,000

        Capital lease repayable in blended monthly
         instalments of principal and interest at 5.43%,
         secured by a direct charge on specific equipment,
         maturing November 2013.                                   2,902,000

        Promissory note repayable in blended monthly
         instalments of principal and interest at 5.69%,
         secured by a direct charge on specific equipment,
         maturing September 2011.                                    505,679

        Promissory note repayable in equal monthly
         instalments consisting entirely of principal,
         secured by a direct charge on specific equipment,
         maturing August 2007.                                        50,903

        Capital lease repayable in blended monthly
         instalments of principal and interest at 6.52%,
         secured by a direct charge on specific equipment,
         maturing June 2011.                                         151,961

        Promissory note repayable in blended monthly
         instalments of principal and interest at 6.28%,
         secured by a direct charge on specific equipment,
         maturing June 2011.                                         420,000

        Capital lease, repayable in blended monthly
         instalments of principal and interest at 6.07%,
         secured by a direct charge on specific equipment,
         maturing March 2011.                                        755,000

        Capital lease, repayable in blended monthly
         instalments of principal and interest at 6.03%,
         secured by a direct charge on specific equipment,
         maturing March 2010.                                        653,000

    Principal repayments made during 2006:                        (4,047,268)
                                                               --------------

    Total long term debt                                          21,876,280
    Less current portion                                        $  4,486,008
                                                               --------------
        Long Term Debt at December 31, 2006                     $ 17,390,272
                                                               --------------
                                                               --------------


    4.  Commitments

    The Company has committed to the acquisition of certain capital assets in
    the amount of $906,000. An amount of $531,108 is included in deposits
    at December 31, 2006 relating to the purchase of this equipment.
    Completion of the transactions is expected to take place in the first
    quarter of 2007 and the capital acquisitions will be financed from cash
    flows.

    5.  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.

                                                         Total
    Costs Incurred to Date:                 2006       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
                                       ----------    ----------

                                        $316,818      $316,818(1)
                                       ----------    ----------
    (1) costs incurred to date are included in payables and accruals at
        December 31, 2006

    6. Capital Stock

    (a) Common Shares:
                                          Shares        Amount
                                          ------        ------

    Balance, beginning of year        28,880,070    $4,606,358
    Re-purchase of shares for
     cancellation                       (634,600)    ($101,536)
    Stock options exercised               50,000       $23,100

                                   ----------------------------
    Balance December 31, 2006         28,295,470    $4,527,922
                                   ----------------------------
                                   ----------------------------

    (b) Common Shares Reserved for Stock Options:

                                   Stock Options         Price
                                   -------------         -----

    Balance, beginning of year         2,790,140         $0.75
    Issued January to December 2006            -         $0.00
    Exercised January to
     December 2006                       (50,000)        $0.46
    Expired January to
     December 2006                      (743,080)        $1.25

                                   --------------
    Balance December 31, 2006          1,997,060         $0.58
                                   --------------
                                   --------------


    (c) Common Shares Repurchased:

    During 2006 under 2 normal course issuer bids, the Company purchased
    900,100 (2005 - 899,700) common shares for cancellation at an average
    price of $1.00 (2005 - $0.97) per share for a total consideration of
    $899,679 (2005 - $869,397) as follows:

                    Shares Purchased    Shares Purchased
                       and Cancelled   and not Cancelled     Total
                    ----------------   -----------------     -----

                            Purchase            Purchase
                    Number     Price    Number     Price    Number    Amount

                   634,600  $606,504   265,500  $293,175   900,100  $899,679

    The Company cancelled 634,600 of the shares (2005 - 899,700) and charged
    $504,968 (2005 - $728,733) to retained earnings for the cost of the
    shares in excess of their stated value.

    The purchase price of the shares not cancelled at December 31, 2006
    ($293,175) has been shown as a reduction of shareholder's equity. These
    shares were cancelled in January, 2007.

    The company's current normal course issuer bid expires on August 13,
    2007.
    

    %SEDAR: 00003930E




For further information:

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

Organization Profile

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