VISANT CORPORATION today announced its results for the second quarter endedJuly 1, 2006, including consolidated net sales of $548.1 million for the quarter, compared toconsolidated net sales of $549.6 million in the second quarter of 2005. In addition, the companyreported consolidated net income for the second quarter of 2006 of $70.7 million compared toconsolidated net income of $57.0 million for the same period of 2005. Visant also reported consolidatedearnings before net interest expense, provision for income taxes and depreciation and amortizationexpense (EBITDA) of $170.4 million for the second quarter of 2006, an increase of 12.3%, over EBITDA of$151.7 million for the second quarter of 2005.
For the first six months of 2006, consolidated net sales were $853.2 million, versus $850.5 million forthe same 2005 period. Consolidated net income increased by 48.3% during the first six months of 2006 to$72.5 million from $48.9 million for the same prior year period. Consolidated EBITDA for the first sixmonths of 2006 totaled $225.7 million, an increase of 15.3%, versus $195.7 million for the first sixmonths of 2005.
Visant's consolidated Adjusted EBITDA (defined in the accompanying summary of financial data) of $172.2million for the second quarter of 2006 represents an increase of 4.1% compared to consolidated AdjustedEBITDA of $165.5 million during the second quarter of 2005. Consolidated Adjusted EBITDA totaled $231.0million for the first six months of 2006, an increase of 6.7%, compared to consolidated Adjusted EBITDAof $216.5 million for the same period of 2005.
Commenting on the second quarter performance, Marc Reisch, Chairman, President and Chief ExecutiveOfficer of Visant, said, "Strong performance by the Jostens Yearbook segment, as well as good growth byour Marketing Services business contributed to our solid second quarter results. During the quarter, wealso executed two important steps in our strategic growth plan by completing both the sale of theJostens Photo businesses and the acquisition of Dixon Direct. I am also pleased that in early July wemade an optional pre-payment of $100 million on our Term Loan C facility. The total pre-payments on ourterm loans since Visant was formed in October 2004 now total $303.5 million."
On June 30, 2006, the company completed the sale of its Jostens photography businesses in Canada and theUnited States. As a result, all amounts relating to Jostens photography business have been reclassifiedfrom the various lines on the consolidated statement of operations to a single caption titled "Loss fromdiscontinued operations, net". Previously this business was reported as a separate segment, whichincluded certain allocated corporate costs which have been reallocated to the remaining reportablesegments.
The net sales of the Jostens Scholastic segment decreased $9.8 million, or 7.0%, to $129.9 million forthe second quarter of 2006 from $139.6 million for the second quarter of 2005. The decrease wasprimarily attributable to timing, since 2005's second quarter recognized a shift of scholastic net salesfrom 2005's first quarter due to the production challenges last year. Such a shift did not occur in2006. Jostens Yearbook net sales increased $10.1 million, or 4.1%, to $254.3 million for the quarterended July 1, 2006 compared to $244.3 million in the second quarter of 2005.
The net sales of the Marketing and Publishing Services segment increased $9.0 million, or 8.1%, to$120.7 million during the second quarter of 2006 from $111.7 million in the second quarter of 2005. Thisincrease was attributable to higher sales of paper to our customers of approximately $5.2 million aswell as higher direct marketing sales. On June 16, 2006, the company acquired the assets of Dixon Web,(now known as Dixon Direct), which contributed slightly to the net sales of the Marketing and PublishingServices segment for the quarter. The net sales of the Educational Textbook business decreased $10.0million, or 17.8%, to $46.3 million for the second quarter of 2006 from $56.3 million for the secondquarter of 2005 due to lower sales of paper of approximately $4.4 million as well as lower volume fromcertain customers.
The Adjusted EBITDA of the Jostens Scholastic segment decreased $4.1 million, or 12.5%, to $28.6 millionduring the second quarter of 2006 from $32.7 million during the second quarter of 2005. The year-over-year decrease was primarily attributable to lower sales volume discussed above, as well as the impact of$1.5 million for higher gold costs in 2006. Jostens Yearbook Adjusted EBITDA improved $10.5 million, to$111.3 million for the second quarter of 2006 compared to $100.8 million for the same period in 2005.The increase related to higher sales and continued savings from operating synergies and other costreduction initiatives.
The Adjusted EBITDA of the Marketing and Publishing Services segment increased $1.8 million, or 8.9%, to$21.5 million for the second quarter of 2006 from $19.7 million in the second quarter of 2005. Thisincrease was primarily attributable to higher sales volume and savings from operating synergies. TheAdjusted EBITDA of the Educational Textbook segment decreased $1.5 million, or 12.1%, to $10.8 millionfor the second quarter of 2006 from $12.3 million in the second quarter of 2005 due to lower volume fromcertain customers, partially offset by cost reductions from operating synergies.
For the six-month period ended July 1, 2006, net sales for Jostens Scholastic segment were $264.2million, an increase of 0.4%, compared to $263.2 million in the prior year comparative period. JostensYearbook net sales were $262.6 million for the six-month period ended July 1, 2006, an increase of 4.1%,compared to $252.2 million of net sales in the same prior year period.
The net sales of the Marketing and Publishing Services segment increased $3.0 million, or 1.2%, to$242.4 million during the six-month period ended July 1, 2006 from $239.4 million for the comparableperiod in 2005. This increase was primarily attributable to higher sales of paper to customers ofapproximately $3.6 million, while higher sales of direct marketing materials were offset by lowersampling sales during the period. The net sales of the Educational Textbook business decreased $11.3million, or 11.2%, to $89.1 million for the first six months of 2006 from $100.4 million in 2005 due tolower sales of paper of approximately $3.9 million as well as lower sales volume to certain customers.
For the six months ended July 1, 2006, Jostens Scholastic reported Adjusted EBITDA of $58.8 million, anincrease of $1.7 million, compared to $57.1 million for the prior year comparative period. This increasewas due primarily to cost reduction initiatives and synergies offset by the impact of $2.7 million forhigher gold costs. Jostens Yearbook reported Adjusted EBITDA of $106.9 million for the first six monthsof 2006, an increase of $13.0 million, compared to $93.9 million for the same prior year period. Theincrease was related to higher sales volume and the impact of operating synergies and other costreduction initiatives.
The Marketing and Publishing services segment reported Adjusted EBITDA of $48.4 million, an increase of$2.5 million, compared to $45.9 million during the first six months of 2005. This increase was mainlythe result of higher earnings from direct marketing services and operating synergies, partially offsetby lower first half earnings from Visant's sampling business. The Adjusted EBITDA of the EducationalTextbook segment decreased by $2.7 million to $16.9 million for the six months ended July 1, 2006compared to $19.6 million for the same period in 2005 due to lower sales volume.
As of July 1, 2006, Visant Corporation's consolidated debt was $1,328.9 million, including $12.4 millionoutstanding under its Canadian revolving line of credit. Visant's cash position at July 1, 2006 totaled$136.8 million. Visant Corporation's parent, Visant Holding Corp. ("Holdings"), also had senior discountnotes with an accreted value of $194.2 million, senior notes of $350.0 million and cash of $1.7 millionas of July 1, 2006. As noted above, on July 7, 2006, Visant made an additional optional pre-payment of$100 million under its Term Loan C facility.
Visant has provided a reconciliation of net income to EBITDA and Adjusted EBITDA in the accompanyingsummary of financial data. It should be noted that Adjusted EBITDA as presented excludes certain non-recurring costs, including Jostens 2005 incremental diploma costs. These higher than planned diplomaproduction and delivery costs were incurred in connection with the manufacturing inefficienciesresulting from relocation of Jostens' diploma operations out of the Red Wing, Minnesota manufacturingfacility to certain other facilities in 2005.
Supplemental data has also been provided for Visant's four segments: Jostens Scholastic, JostensYearbook, Marketing and Publishing Services and Educational Textbook.
ABOUT OUR COMPANY
Visant Corporation is a leading marketing and publishing services enterprise servicingthe school affinity, direct marketing, fragrance and cosmetics and educational publishing markets.Jostens is a leading provider of school-related affinity products and services that help peoplecelebrate important moments, recognize achievements and build affiliation. Jostens' operations arereported in two segments: 1) Jostens Scholastic, which includes the production of class rings andgraduation products and 2) Jostens Yearbook.
Visant's Marketing and Publishing Services produces multi-sensory and interactive advertising samplingsystems, primarily for the fragrance, cosmetics and personal care markets, and innovative products andservices to the direct marketing sector. The group also produces testing and supplemental materials andrelated components for educational publishers. Visant's Educational Textbook business produces four-color case-bound educational textbooks.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This release may contain "forward-looking statements." Forward-looking statements are based on ourcurrent expectations or forecasts of future events. Forward-looking statements generally can beidentified by the use of forward-looking terminology such as "may", "might", "will", "should","estimate", "project", "plan", "anticipate", "expect", "intend", "outlook", "continue", "believe", orthe negative thereof or other similar expressions that are intended to identify forward-lookingstatements and information. Such forward-looking statements involve known and unknown risks,uncertainties and other important factors that could cause the actual results, performance orachievements of the company or industry results, to differ materially from historical results, anyfuture results, performance or achievements expressed or implied by such forward-looking statements.These forward-looking statements are based on estimates and assumptions by our management that, althoughwe believe are reasonable, are inherently uncertain and subject to a number of risks and uncertainties,and you should not place undue reliance on them. Such risks and uncertainties include, but are notlimited to, the following: our substantial indebtedness; our inability to implement our businessstrategy and achieve anticipated cost savings in a timely and effective manner; competition from othercompanies; the seasonality of our businesses; the loss of significant customers or customerrelationships; fluctuations in raw material prices; our reliance on a limited number of suppliers; ourreliance on numerous complex information systems; the reliance of our businesses on limited productionfacilities; the amount of capital expenditures required at our businesses; labor disturbances;environmental regulations; foreign currency fluctuations and foreign exchange rates; the outcome oflitigation; control by our stockholders; our dependency on the sale of school textbooks, the textbookadoption cycle and levels of government funding for education spending; Jostens' reliance on independentsales representatives; and the failure of our sampling systems to comply with U.S. postal regulations.These factors could cause actual results to differ materially from historical results or thoseanticipated or predicted by the forward-looking statements. We caution that the foregoing list ofimportant factors is not exclusive. Forwardlooking statements speak only as of the date they are madeand we undertake no obligation to update publicly or revise any of them in light of new information,future events or otherwise, except as required by law. The following information contains financialmeasures other than in accordance with generally accepted accounting principles and should not beconsidered in isolation from or as a substitute for the company's historical condensed consolidatedfinancial statements. The company presents this information because management uses it to monitor andevaluate the company's ongoing operating results and trends. The company believes this informationprovides investors with an understanding of the company's operating performance over comparative periodsand because the covenants in its debt agreements are tied to these measures.
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2006 Q2 Press Release (PDF)