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Friday, April 30, 2004
Merrill Corporation Announces Strong Fourth Quarter Results
Revenues increased 16 percent in the fourth quarter to $144.8 million compared to $124.5 million in the prior year’s fourth quarter.
St. Paul, Minn. - Merrill Corporation (www.merrillcorp.com), a global, diversified communications and document services provider, today announced increased earnings for the fiscal fourth quarter and year ended January 31, 2004. Revenues increased 16 percent in the fourth quarter to $144.8 million compared to $124.5 million in the prior year’s fourth quarter. Net income of $0.7 million represented an increase of $2.9 million compared to the prior year’s fourth quarter loss of $2.2 million.
For the full fiscal year ended January 31, 2004, revenue increased by 3 percent to $596.2 million compared to $581.6 million in fiscal year 2003, and net income increased by $7.0 million to $8.4 million for fiscal year 2004 compared to net income of $1.4 million in fiscal year 2003. Fiscal year 2003 net income included $3.7 million in after-tax charges related to the August 2002 debt restructuring and other restructuring costs.“
"Merrill’s revenue and earnings growth in the fourth quarter is a reflection of strengthening economic and financial market activity,” said John Castro, CEO of Merrill Corporation. “Financial market activities increased slightly in the third quarter of fiscal 2004 and continued in the fourth quarter. This acceleration gave our Financial Document Services business the largest year-over year revenue increase compared to our other businesses.”
Merrill’s next largest revenue increase year-over-year was in its Document Management Services business, which continues to show growth in providing services to the legal industry. Revenue also continues to grow in our marketing and communication services to the real estate industry. “We continue to make progress in our diversification of revenue which helps mitigate the effect of weaknesses in the financial markets when they exist,” Castro said.
Other notable accomplishments in fiscal 2004 included the doubling of revenue from the Merrill Datasite product that was launched in fiscal 2003. Merrill Datasite enables users to review large document volumes using Web-based search tools from any location. The company also realized a 26 percent increase in revenues from its Language Translation Services and continued its focus on cost control.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) for fiscal year ended January 31, 2004, was $67.3 million, representing a 14 percent increase over the $59.0 million EBITDA generated in the prior fiscal year. This represents a 3 percent increase when taking into account fiscal year 2003 EBITDA included $6.2 million in debt restructuring and other restructuring costs. EBITDA is a non-GAAP (Generally Accepted Accounting Principles) financial measure that is commonly used in the industry to assist investors in the understanding of operating performance.
Also, certain covenants of the Company’s debt agreements are based on calculations of EBITDA, as defined in the agreements. As such, EBITDA is of great interest to lenders and investors as a key performance measure. The following is a table reconciling EBITDA to net income:
Reconciliation of Net Income to EBITDA
| |
Year-ended January 31, |
| ($ 000s) |
2004 |
2003 |
| Net Income |
$8,403 |
$1,366 |
| Adjustments: |
| Income taxes |
10,402 |
3,400 |
| Interest expense, net |
33,403 |
39,242 |
| Depreciation and amortization |
15,089 |
15,038 |
| EBITDA |
$67,297 |
$59,046 |
About Merrill Corporation
Merrill Corporation (www.merrillcorp.com) is a diversified communications and document services company applying advanced information systems and intranet/Internet technology to provide a wide range of services to its financial, legal and corporate clients. Merrill’s services integrate traditional composition, imaging and printing services with online document management, distribution and collaborative solutions. This integrated approach helps streamline the preparation and distribution of business-to-business communication materials. Merrill Corporation serves its domestic clients through 45 offices in 33 cities throughout the United States. Its international clients are served through the client service centers in London, Paris and Frankfurt, as well as a joint venture with Quebecor World in Canada and other affiliate relationships in Europe, Asia, Latin America and Australia.
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Forward-Looking Statements
Merrill Corporation cautions investors that certain statements contained in this press release that state management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. Management wishes to caution the reader these forward-looking statements are not historical facts and are only estimates or predictions. Actual results may differ materially from those projected as a result of risks and uncertainties including, but not limited to, the competitive environment in our business, demand for our product and service offerings, projections of future sales, changes in technology, our ability to retain employees and other risks. Forward-looking statements can be identified through the use of words such as “may,” “will,” “intend,” “plan,” “expect,” “anticipate,” “could,” “should,” “would,” “believe,” “estimate,” “contemplate,” “potential,” “continue,” “possible” and “proposed.”
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