Printer Goes Public

Phillips Litho Co. — a Springdale printing company owned for years by Phil Phillips Jr. — is part of one of the nation’s newest public companies, and a public securities filing sheds some light on the operation’s financial picture.

Phillips Litho was acquired in May by Memphis-based Master Graphics Inc., which is a roll-up of 11 commercial printing companies across the South. Master Graphics paid $8.1 million in cash for Phillips Litho and more than 71,000 shares in the new public company, which were worth $710,000 at the initial public offering price of $10 a share.

Phillips Litho’s revenues were fairly flat for the past three years with revenue of $12.2 million in 1995, $11.7 million in 1996 and $12.7 million in 1997. Phillips’ net income was $520,000 in 1995 and $863,000 in 1997.

In 1996 the firm had a $77,000 net loss, which could have been attributed in part to “severe operating problems” it had with new printing equipment acquired that year. Phillips sued the manufacturer and, after a settlement, the manufacturer was required to install about $150,000 worth of equipment, which eliminated the problems.

The problems resulted in the loss of “a significant customer” for failure to produce printed material of a desired quality, and Phillips salvaged the relationship by printing the next year’s product at no cost. That cut 1996 profits by $252,917 before taxes.