Cadmus Communications Corporation
Cadmus Communications Corporation
6620 W. Broad St., Ste. 240
Richmond, Virginia 23230
Fax: (804) 287-6267
Web site: http://www.cadmus.com
Sales: $385 million (1997)
Stock Exchanges: NASDAQ
SICs: 2721 Periodicals: Publishing & Printing; 2731 Books: Publishing & Printing; 2752 Commercial Printing, Lithographic; 2759 Commercial Printing, Not Elsewhere Classified; 2796 Platemaking & Related Services; 7311 Advertising Agencies; 7331 Direct Mail Advertising Services
Cadmus Communications Corporation was named after the Greek mythological figure who founded Thebes and introduced the alphabet to Greece. Through a series of acquisitions in the 1980s and 1990s, the company became the world’s number one publisher of scientific, technical, medical, and scholarly journals. This sector, Professional Communications, also provides its clients with a full range of production and distribution services, including composition, editing, printing, electronic services, and worldwide distribution. The Marketing Communications sector provides services including preparing financial documents; designing and marketing promotional materials, directories, and catalogs; providing production services to other periodical publishers; and designing and producing cartons, mailers, and other promotional packaging; direct-response marketing; marketing strategy development and execution; and interactive and electronic services.
Beginning in 1995, the company transformed itself from a holding company managing 15 independent companies to an integrated operating company focused on two broad market sectors: professional communications and marketing communications.
Formed by Merger in 1984
In 1984, with the merger of The William Byrd Press Inc. of Richmond, Virginia, and Washburn Graphics Inc. of Charlotte, North Carolina, Cadmus Communications was formed as a holding company. The William Byrd Press was founded in Richmond, Virginia, in 1913. It began with 18 employees and was a commercial printer that printed periodicals and other commercial jobs. At the time of the merger it was an established printer of scholarly journals employing web offset printing technology. Washburn was primarily a financial printer. After the merger, William Byrd and Washburn continued to operate under separate management.
Cadmus went through a period of external expansion and diversification in the late 1980s. At this time Cadmus operated under a decentralized management policy, allowing the companies it acquired to operate independently, with little interference. In 1986 Cadmus acquired American Graphics of Atlanta, Georgia, which specialized in printing point-of-purchase advertising materials. In 1987 it acquired Three Score, a catalog design and photography production firm, also based in Atlanta. Other acquisitions around this time included Dataset Communications Inc. of New York, a composition operation, Garamond Press of Baltimore, Maryland, and Vaughan Printers Inc. of Orlando, Florida.
In the early 1990s, the printing industry continued to change dramatically. One of the changes was a trend by print purchasers toward vendor consolidation and “one-stop shopping.” To respond to this trend, Cadmus began to integrate and package its services for its clients. The result, according to the Richmond Times-Dispatch, was that “instead of just printing Hardee’s signs touting a new product, Cadmus now creates the promotional campaign, prints the material, distributes it to restaurants and takes orders for the signs from the stores.” The goal was to make Cadmus “the one-stop shop in the communications world.” Company officials referred to it as “end-to-end” service or “seamless integration.”
28th Largest Graphic Communications Firm in North America, 1991
Industry data for 1991 indicated that Cadmus was the 28th largest graphic communications firm in North America. It was the 12th largest publicly held company in the United States in the field of graphic communications. As a result of its acquisitions, company sales had grown from $93 million in 1986 to $170.4 million in 1990. A similar pattern of growth would occur over the next five years.
At the beginning of the 1990s, Cadmus was focused on three market segments: periodical production services, promotional and financial printing, and direct marketing. It considered itself an integrator and innovator of new graphic communication technologies. From 1991 to 1995, Cadmus invested nearly $60 million in technology to improve productivity and quality and to develop new products and markets. Some of the funds were invested in new printing equipment, including two doubleround web presses at The William Byrd Press, one in 1991 and another in 1992. In the early 1990s, the most significant sources of printing business for Cadmus were scientific journals, magazines, retail catalogs, and promotional materials. Financial printing revenues came from registration statements, documents that accompanied securities sales, and annual reports.
Became Magazine Publisher in 1992
Two acquisitions in 1992 marked Cadmus’s entry into publishing. First Cadmus acquired Tuff Stuff Publications, based in Richmond, which published a line of consumer specialty magazines. Later that year, Cadmus acquired Marblehead Communications, Inc., a Boston, Massachusetts-based publisher of newsletters and magazines. Marblehead’s clients included Continental Airlines, Johnson & Johnson, the League of American Theatres & Producers, the Massachusetts Office of Travel & Tourism, New England Telephone, and others.
Also that year Cadmus established the Cadmus Color Center to provide pre-press and color separation services for customers. The primary purpose of the Color Center was to provide those services to Cadmus’s two printing subsidiaries, Expert/ Brown and William Byrd Press.
Waverly Press Acquisition Propels Cadmus to the Top, 1993
It was in 1993 that the William Byrd Press, Cadmus’s periodical printing operation, decided to focus on printing journals. Previously, it had built its reputation on two major products, journals and magazines. In October 1993 Cadmus paid $20 million for Waverly Press, one of its biggest competitors. Waverly Press was the printing subsidiary of Waverly Inc., a publicly traded research journal publishing company. Based in Baltimore, Waverly Press had about $50 million in annual revenues. For fiscal 1993, Cadmus posted $198.1 million in revenues. Adding the Waverly Press operation more than doubled the company’s journal business and increased its revenues by 25 percent. It also made Cadmus the number one producer of scientific, medical, and technical journals in the world. For the fiscal year ending June 30, 1994, Cadmus’s sales jumped to $247.7 million as a result of the acquisition.
Cadmus combined Waverly with the research journal portion of its William Byrd Press subsidiary to form Cadmus Journal Services. Following the acquisition, Waverly Inc. (Waverly Press’s former parent company) became Cadmus Journal Services’s largest customer, accounting for some $12 million in annual sales. Other customers of the new subsidiary included The Lancet (a British medical journal) and the American Academy of Pediatrics.
In another development that year, Cadmus announced in March 1993 that it would merge its Orlando, Florida, printing subsidiary, Vaughan Printers, with Central Florida Press, owned by Washington, D.C.-based Lanman Companies, Inc., to form Central Florida Press L.C.
Entry into Multimedia Interactive Market, 1994
In the fall of 1994 Cadmus acquired ModelMation, Inc., an Atlanta-based multimedia company. With 1994 revenues of approximately $1 million, ModelMation provided high-quality interactive services to technology companies, including AT&T, Siemens, Sprint, and Scientific Atlanta. At the same time Cadmus established Cadmus Interactive, a new subsidiary focused on the development and marketing of multimedia and new media products and services. Based in Atlanta, Cadmus Interactive joined ModelMation with the executive leadership of Christian Holljes, a former multimedia engineer with Apple Computer Inc., and Dan Backus, a noted interactive media developer.
According to Cadmus’s Chairman, President, and CEO C. Stephenson Gillispie, Jr., “Cadmus is responding to the burgeoning demand by our customers for digital communication media products such as CD-ROM and on-line information services.” Jim Hernandez, the newly named president of Cadmus Interactive, added, “Cadmus Interactive is prepared to create digital communications products today and our sights are squarely set on prospects for digital delivery on the network of tomorrow.”
The Cadmus mission is to provide customers with integrated 21st century information and communications solutions. To achieve this mission, Cadmus is organized around two broad market sectors: Professional Communications which serves those who create and convey information, and Marketing Communications which serves those who create and convey marketing messages. Within these groups, the company offers end-to-end services including message creation, production, distribution, and fulfillment for well-defined niches. Our goal is to maximize the impact and effectiveness of our clients’ communications while reducing the cost, time, and complexity of creating them.
Subsequent acquisitions in this area included PeachWeb, an Atlanta-based Internet applications firm that developed web sites, and The Software Factory, an Atlanta-based provider of software packaging and media duplication services. Cadmus also acquired the Atlanta division of Encryption Technology Corporation, a provider of software packaging, media duplication, and documentation services.
Cadmus Direct, the company’s direct marketing subsidiary based in Charlotte, North Carolina, made two acquisitions in 1995: Ronald James Direct, a Los Angeles-based direct-response agency with $12 million in billings, and The Mowry Co., a Long Beach, California, direct marketing agency with nearly $16 million in annual billings. These acquisitions opened new markets on the West Coast and in Denver, Colorado.
Began Major Restructuring, 1995
Prior to its 1995 reorganization (the first of three reorganizations) Cadmus was a collection of 15 independent companies. These companies were active in direct marketing, interactive publishing, promotional printing, packaging, software duplication, financial communications, and journal and magazine printing. In July 1995 the name Cadmus was attached to all of its divisions, and Cadmus changed from a holding company to an operating company. Rather than letting its subsidiaries stand alone, the company would attempt to integrate them. All of the subsidiaries were organized under three business units: printing, marketing, and publishing.
The purpose of the reorganization, said Chairman C. Stephenson Gillispie, was to shift the company’s focus from companies to products. He was quoted as saying, “Our intent is to leverage the knowledge and experience of our associates across the entire corporation, rather than segmenting our expertise by company or geographic location.”
At the time of the 1995 reorganization, Cadmus was the 22nd largest graphic communications company in North America, but it was facing increased competition in a rapidly changing industry. Gillispie outlined the challenge facing the company, “Our industry is changing as much as any industry in the nation. Today customers are looking for a company to do all its communications needs. We must get better on how we market and promote.” He also noted that Cadmus was facing “challenges from companies we never heard of or weren’t in existence two or three years ago. Who would have thought we’d be in competition with BellSouth?,” he told the Richmond Times-Dispatch. “We have to be aware of what we’re up against.”
That fall Cadmus made a public offering of 1.7 million shares of stock that raised $39 million in capital. It was the company’s first offering since it went public in 1984. Some of the proceeds would be used to fund Cadmus’s acquisitions strategy.
More Acquisitions, Divestitures, Restructuring, 1996
In 1996 Cadmus acquired Lancaster Press, based in Lancaster, Pennsylvania, which printed about 400 journals. Cadmus acquired it for approximately $58.7 million and further solidified its position as the industry leader. Overall, company sales jumped from $279.6 million in fiscal 1995 to $336.7 million in fiscal 1996.
In May 1996 Cadmus restructured for the second time by splitting its printing unit into a graphic communications group and a periodicals group. In September it sold Tuff Stuff, its consumer publishing division, for $6.5 million. The publishing group ceased to exist, and the company’s custom publishing was realigned into the marketing group.
In September 1996 Cadmus acquired O’Keefe Marketing, a Richmond-based ad agency. Kelly O’Keefe, the agency’s founder, would remain as its president. The name was changed to Cadmus/O’Keefe Marketing, Inc. O’Keefe Marketing was recognized as one of the first advertising agencies to have a division devoted to interactive work, such as creating World Wide Web pages and CD-ROMs for its clients. The acquisition was initiated by Steve Isaac, president of the Cadmus Marketing Group. At the time it was acquired, O’Keefe Marketing had 21 employees and annual billings of $22 million.
The O’Keefe acquisition signaled a move into marketing services. While some ad agencies perceived Cadmus as becoming a competitor, David Martin, founder of the Richmond ad agency The Martin Agency and head of Cadmus Identity Marketing, which was established in June 1997, told the Richmond Times-Dispatch, that he saw the company as a partner for advertising agencies rather than as a competitor. “This is a different kind of business: integrated marketing,” he told the newspaper. “We are not trying to replace the ad agency. We are building an orchestra by assembling the musicians. This is not just the strings or the percussion.”
Still, Cadmus Identity Marketing was creating advertising and marketing campaigns for its clients. Its goal was to help clients find their core identity, then develop communications for them. Another Cadmus unit, CadmusCom, produced advertising, direct-response marketing, publication development, catalog design and production, interactive production, trade show booths, package design, point-of-sale materials, billboards, custom publications, logos, and public relations. The unit was headed by Kelly O’Keefe. He told the Richmond Times-Dispatch, “Ad agencies are single solution providers.” These business units were part of Cadmus Marketing Communications, which was, in effect, a $180 million marketing agency. It was headed by Steve Isaac, who joined the company in 1996.
Third Major Reorganization, 1997
Cadmus Marketing Communications was formed as a result of the company’s third major restructuring, which took place in April 1997. At that time the company’s three business units were combined into two. Cadmus’s periodicals division became Cadmus Professional Communications, and its graphic communications and marketing units were combined into Cadmus Marketing Communications. Some 70 local jobs were cut and operations were closed in Long Beach, California (direct marketing), and Baltimore, Maryland (printing). The Atlanta and Richmond interactive divisions were consolidated.
Cadmus Professional Communications included the company’s journal and magazine services for scientific, technical, and medical publishers, trade associations, and commercial publishers. Cadmus Marketing Communications included financial services, packaging, and promotional printing, point of purchase, direct marketing, catalogs, custom publishing, and interactive product lines. Gillispie noted in late 1997, “Since July 1995 we have been working to make this a new company with a new structure.”
Cadmus Professional Communications and its sub-unit, Cadmus Journal Services, was headed by David G. Wilson, whose grandfather founded the William Byrd Press in 1913. In 1997 the division had six locations and 1,900 employees. It accounted for about $210 million of Cadmus’s $385 million in sales in fiscal 1997. About $175 million of the journal revenues came from sales of scientific, technical, and medical journals. Magazines accounted for the other $35 million in revenue.
In addition to printing journals, Cadmus Journal Services helped design and edit them. It also was able to put them online or publish them on CD-ROM. It stored files and handled orders for back issues as well. Wilson described the outlook of the journal publishing operation to the Richmond Times-Dispatch in 1997, “Maybe through strategic partnerships and responsible acquisitions we’ll have more of a presence in Europe. Already more than 30 percent of everything we produce is distributed outside the U.S.”
The company’s restructuring did not come without cost. Although Cadmus reported record sales of $385 million in fiscal 1997, it showed a net loss of $5 million for the year. That was largely the result of a one-time $19.7 million restructuring charge. Management expected all actions related to the restructuring to be completed by the end of fiscal 1998.
Recognizing that its strengths lay in marketing and professional communications, Cadmus was poised to better compete in those areas with its streamlined organizational structure. It has added several talented individuals with advertising and marketing expertise to its marketing communications team—notably Steve Isaac, David Martin, and Kelly O’Keefe. On the professional communications side, it has strengthened its leadership position by acquiring some of its major competitors and selling off its consumer publishing division.
Principal Operating Units
Cadmus Journal Services; Cadmus Identity Marketing; Cadmus Financial Communications; Cadmus Specialty Packaging and Promotional Printing; Cadmus Point of Purchase Services; Cadmus Print Outsourcing Services; Cadmus Tactical Marketing Communications (includes Cadmus Custom Publishing, Cadmus Direct Marketing, Cadmus O’Keefe Marketing, Cadmus Interactive, and Cadmus Catalogs).
Bosher, David E., “Cadmus Communications Announces Formation of Cadmus Interactive and Acquisition of Atlanta-based Multimedia Company,” Business Wire, September 14, 1994.
——, “Cadmus Communications Corp. Acquires Marblehead Communications Inc.,” Business Wire, January 4, 1993.
——, “Cadmus Communications Corp. Announces CEO of the William Byrd Press Inc.,” Business Wire, May 15, 1992.
Gore, Mollie, “Cadmus Buys Assets of Rival,” Richmond Times-Dispatch, October 1, 1993.
——, “Washington-Based Company, Cadmus Plan Joint Venture,” Richmond Times-Dispatch, March 23, 1993.
Middleton, Otesa, “Cadmus Buys O’Keefe Marketing,” Richmond Times-Dispatch, September 21, 1996, p. C1.
——, “Cadmus Integration Proceeds, Chief Says at Annual Meeting,” Richmond Times-Dispatch, November 11, 1997, p. B15.
——, “A New Type Cadmus Communications Transforms the Role of Printers,” Richmond Times-Dispatch, November 24, 1997, p. E16.
Row, Steve, “Cadmus Communications Establishes Color Center,” Richmond News-Leader, March 9, 1992.
Royall, Roderick, “Cadmus Inks Out a Deal with Garamond,” Baltimore Business Journal, September 28, 1987.
Shean, Tom, “The Black Ink Flows Freely at Cadmus,” Virginian-Pilot, April 13, 1992.
Stanley, Bonnie Newman, “At Long Last, Cadmus Melded into One Firm,” Richmond Times-Dispatch, July 20, 1995, p. 7.
Suiter, Sarah, “Cadmus Stock Offering to Help Fund Acquisitions,” Business Journal-Charlotte, October 9, 1995, p. 5.