Sitting at this video screen writing on a computer keyboard instead of an old Underwood typewriter is a continual reminder of the vast technological revolution that has taken place in the printing business.
In the space of a few years, the smoking pots of boiling lead, so integral a part of the old "hot type" world, have vanished from composing rooms and have been replaced with computer-driven "cold type" systems that have changed the lives of anyone involved in publishing anything.
Electronics and telecommunications have wrought extraordinary changes in writing, editing, photography, design, production, printing and distribution. Inevitably, those changes have had a major impact on the printing and publishing industry. Many companies have fallen by the wayside; others, better able to cope with the changing environment, have survived and even prospered.
One of the companies that has ridden the wave of technological change is Cadmus Communications Corp. of Richmond. Because the firm showed up in the stock tables only two years ago, one might think Cadmus is a new company.
In fact, Cadmus was created by the merger of two old companies, each formed shortly after the turn of the century. The merger partners were William Byrd Press Inc. of Richmond and Washburn Graphics Inc. of Charlotte, N.C.
The merger brought together two top printing-industry executives who had known each other for 15 years. They were Wallace Stettinius of Byrd and Don Davidson of Washburn. They promptly signaled the nature of their partnership by setting up an "office of the chairman," which they held jointly.
When Byrd and Washburn merged, a new name for the company was needed. They chose Cadmus, a name from Greek mythology. Cadmus, the legendary dragon slayer and founder of the city of Thebes, is credited with introducing the alphabet into Greece.
With a new name and a new mission, Stettinius and Davidson set off to develop a company that could lean on each partner's strengths to smooth the peaks and valleys of the cyclical printing business.
Cadmus is a company with four main market segments. As of June 30, 1985, according to a study by analyst John A. Baugh of Wheat, First Securities, the $85 million in company revenue came from these areas:
*Periodical and publishing, $48 million (56.5 percent).
*Promotional and commercial, $24 million (28.2 percent).
*Financial printing, $8 million (9.4 percent).
*Direct marketing, $5 million (5.9 percent).
Fiscal 1986 figures, due soon, are likely to show a small increase in financial printing and a small decrease in the periodical segment.
The largest share of Cadmus' business is the printing of magazines, including Washingtonian and various scientific periodicals. That is centered at William Byrd Press. While the periodical business is relatively solid, its potential for rapid growth seems limited, Baugh says. Much the same can be said for the promotional printing that is the heart of Washburn's sales.
Cadmus' major growth areas are Washburn's financial printing and its direct marketing services. Thanks to the bull market, a deluge of new stock issues and bank mergers, there is a booming business in the printing of prospectuses and other financial documents.
The direct marketing segment, while the smallest, is the "most exciting," says Baugh. Computer-based, it provides direct mail and customer communications to the financial, travel and insurance industries.
"A good example of Washburn's direct marketing skills," says Baugh, "is its project encompassing Piedmont Airlines Frequent Flyer Bonus Program, which started in November of 1984. Washburn . . . created a flexible data base program that linked Piedmont's reservation system to the Washburn data system.
"The data is arranged on the files providing instant on-line access of data including the name, address, destination, miles flown and awards earned. Washburn also worked on the marketing program . . . helping with the production of brochures and point-of-sale displays."
Baugh says direct marketing growth is somewhat limited by the difficulty of finding trained people in data-base management, marketing and creative design. But Baugh is optimistic. "We expect to see strong growth from this division as its customer base expands and existing customers grow," he says.
When Cadmus was created two years ago, Byrd brought $45 million in revenue to the table, and Washburn came in with $18 million. Cadmus now is a $95 million company, and securities analysts see more growth.
Joseph L. Antrim III of Davenport & Co. says, "The company can grow at 15 percent a year. But it won't be in a straight line. The business is both cyclical and seasonal."
Baugh also looks for a 15 percent compounded annual growth in earnings, and both analysts like the stock.
Baugh's view: "We are holding to our opinion that the stock is fairly valued on near-term earnings, but that the stock represents excellent value to long-term investors."
Antrim's thought: "We are very positive and consider it fairly valued, but we would be an aggressive buyer on any weakness."
What prompted Byrd and Washburn to merge?
"It was time to do something for the stockholders," says Davidson. Washburn was owned by 115 shareholders. There never had been a cash dividend, and there wasn't much liquidity in the stock. So Davidson started a search for a partner and, in time, Byrd and Washburn decided they were right for each other.
Davidson, at 67, is retiring July 1 from Washburn but will stay with Cadmus, working with the board part-time. Retirement leaves him with "mixed emotions," he said. "Washburn has been my baby for 18 years."
Stettinius, 53, is the son of Edward R. Stettinius, secretary of State in the administrations of former presidents Franklin D. Roosevelt and Harry S. Truman. A writer as well as a businessman, Stettinius has authored two books on the financial management of the printing industry.
Stettinius, chairman of Cadmus, says he is open to future mergers but that it isn't easy to find the right partner.
"You look at 100 girls to date 10 to marry one," is the way he puts it.
When Byrd and Washburn merged two years ago, Byrd shares were publicly traded. Washburn shares were not. Byrd shares were exchanged on a one-for-one basis for the new Cadmus shares. Washburn shareholders got 1.04 Cadmus shares for each Washburn share. Byrd stockholders wound up with 62 percent of the company, Washburn folks with 38 percent.
Jim Casteen, manager of investor relations at Cadmus, was asked how the stock has behaved since the merger. The answer works out this way:
If an investor bought 100 Byrd shares at the time of the merger, they would have cost $14.875 a share, or $1,487.50. Because of two stock dividends, the investor now would have 146 shares worth $27 a share at Friday's closing price. That's a total of $3,942, or a gain of 165 percent.
The shares of Biospherics Inc. of Rockville have been moving up in recent weeks. Selling at $5.25 on April 18, the stock closed Friday at $9, an increase of 71.4 percent in seven weeks. President Gilbert V. Levin said he doesn't know why the stock has been moving. However, there have been several favorable product developments in recent months, and 1986 first-quarter profits were up. . . . Another Rockville firm, Biotech Research Laboratories, plans to offer the public 1.2 million shares. The stock closed Friday at $7. Proceeds will be used to develop new products and commercialize existing products.
Perpetual American Bank has changed its name to Perpetual Savings Bank to help distinguish it from the many other banks that use the word "American" in their titles. The thrift will issue $65 million of 7.25 percent convertible subordinated debentures due in the year 2011. The bonds are convertible to Perpetual common shares at a price of $37.75, subject to adjustment. The securities will trade over-the-counter and are scheduled for Thursday, July 12.