-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RXx7X0wGGzigvHB5ic7iB6NCIrpgmC547vlORy3YX/RfRp9Fisl/NffSf7SxvUQs iPLq0XYZOUvfbD1TsWAYyw== 0000927356-97-001074.txt : 19970918 0000927356-97-001074.hdr.sgml : 19970918 ACCESSION NUMBER: 0000927356-97-001074 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970912 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MAIL WELL INC CENTRAL INDEX KEY: 0000920321 STANDARD INDUSTRIAL CLASSIFICATION: CONVERTED PAPER & PAPERBOARD PRODS (NO CONTAINERS/BOXES) [2670] IRS NUMBER: 841250533 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-12551 FILM NUMBER: 97679440 BUSINESS ADDRESS: STREET 1: 23 INVERNESS WAY EAST STREET 2: STE 160 CITY: ENGLEWOOD STATE: CO ZIP: 80112 BUSINESS PHONE: 3037908023 MAIL ADDRESS: STREET 1: 23 INVERNESS WAY EAST STREET 2: SUITE 160 CITY: ENGLEWOOD STATE: CO ZIP: 80112 FORMER COMPANY: FORMER CONFORMED NAME: MAIL WELL HOLDINGS INC DATE OF NAME CHANGE: 19940328 10-Q/A 1 FORM 10-Q/A - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 Commission file number 0-26692 MAIL-WELL, INC. (Exact name of Registrant as specified in its charter.) Colorado 84-1250533 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 23 Inverness Way East, Englewood, CO 80112 (Address of principal executive offices) (Zip Code) 303-790-8023 (Registrant's telephone number, including area code) Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_] As of July 31, 1997, the Registrant had 18,815,356 shares of Common Stock, $0.01 par value, outstanding. - -------------------------------------------------------------------------------- MAIL-WELL, INC. AND SUBSIDIARIES TABLE OF CONTENTS - -------------------------------------------------------------------------------- Page Part I - Financial Information Item 1. Financial Statements 3 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MAIL-WELL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS) (Unaudited) June 30, December 31, 1997 1996 - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents $ 12,523 $ 9,656 Receivables, net 35,954 40,612 Accounts receivable - other 10,108 7,743 Income tax receivable, net 2,374 3,504 Inventories 73,001 68,275 Deferred tax asset 2,361 2,309 Other current assets 4,933 3,513 --------- --------- Total current assets 141,254 135,612 PROPERTY, PLANT AND EQUIPMENT - NET 187,857 183,302 DEFERRED FINANCING COSTS - NET 13,207 14,497 GOODWILL - NET 128,451 128,812 OTHER ASSETS - NET 8,863 8,723 --------- --------- TOTAL $ 479,632 $ 470,946 ========= ========= CURRENT LIABILITIES Accounts payable $ 38,931 $ 44,539 Accrued compensation and vacation 23,952 23,312 Accrued interest 5,429 4,455 Other current liabilities 28,222 26,206 Current portion of long-term debt and capital leases 15,575 14,975 --------- --------- Total current liabilities 112,109 113,487 ACCRUED PENSION 1,330 1,284 CAPITAL LEASES 2,817 2,958 BANK BORROWINGS 112,853 121,992 SUBORDINATED NOTES 85,000 85,000 DEFERRED INCOME TAXES 27,099 23,153 OTHER LONG TERM LIABILITIES 3,559 1,865 --------- --------- Total liabilities 344,767 349,739 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $0.01 par value; 25,000 shares authorized, none issued and outstanding - - Common stock, $0.01 par value; 30,000,000 shares authorized, 18,774,562 and 19,414,242 shares issued and 18,774,562 and 18,731,130 (including 1,948,272 shares held by ESOP) outstanding, respectively 188 194 Paid-in capital 97,689 98,216 Retained earnings 40,188 27,631 Unearned ESOP compensation (2,832) (2,896) Cumulative foreign currency translation adjustment (258) (115) Pension liability adjustment (110) (110) Treasury stock - at cost; 683,112 shares outstanding at December 31, 1996 - (1,713) --------- --------- Total stockholders' equity 134,865 121,207 --------- --------- TOTAL $ 479,632 $ 470,946 ========= ========= See notes to unaudited consolidated financial statements. 3 MAIL-WELL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (DOLLARS IN THOUSANDS) - -------------------------------------------------------------------------------- Quarter Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 ---------- ----------- ----------- ----------- NET SALES $ 207,482 $ 185,110 $ 419,514 $ 378,835 COST OF SALES Materials 85,456 84,474 175,414 175,404 Labor and other 60,657 48,838 119,674 102,132 Manufacturing 14,025 10,300 29,566 21,037 Depreciation 3,324 3,993 6,679 7,478 Waste recovery (2,261) (1,877) (4,734) (4,292) ----------- ----------- ----------- ----------- Total cost of sales 161,201 145,728 326,599 301,759 GROSS PROFIT 46,281 39,382 92,915 77,076 OTHER OPERATING COSTS Selling 15,609 13,629 31,030 27,661 Administrative 12,120 10,112 25,165 20,132 Amortization 940 988 2,057 1,934 Loss on disposal of assets 351 598 1,222 598 ---------- ----------- ----------- ----------- Total other operating costs 29,020 25,327 59,474 50,325 OPERATING INCOME 17,261 14,055 33,441 26,751 OTHER EXPENSE Interest expense - debt 4,551 7,064 9,105 14,145 Interest expense - amortization of deferred financing costs 724 748 1,448 1,480 Discount on sale of accounts receivable 938 0 1,961 0 Other (income) expense (354) (77) (884) (23) ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAXES 11,402 6,320 21,811 11,149 PROVISION FOR INCOME TAXES Current 3,103 2,217 5,654 3,426 Deferred 1,723 491 3,600 1,344 ----------- ----------- ----------- ----------- NET INCOME $ 6,576 $ 3,612 $ 12,557 $ 6,379 =========== =========== =========== =========== NET INCOME PER SHARE $ 0.35 $ 0.20 $ 0.68 $ 0.36 WEIGHTED AVERAGE SHARES OUTSTANDING 18,565,921 17,824,593 18,362,111 17,802,282 See notes to unaudited consolidated financial statements. 4 MAIL-WELL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (DOLLARS IN THOUSANDS) - -------------------------------------------------------------------------------- Six Months Ended June 30, 1997 1996 ------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 12,557 $ 6,379 Adjustments to reconcile net income to cash provided by operations Depreciation 6,679 7,478 Amortization 3,505 3,414 Deferred tax provision 3,600 1,344 Loss on disposal of assets 1,222 598 ESOP compensation expense 68 1,089 Other 100 (125) Change in operating assets and liabilities Receivables 3,593 12,608 Current income taxes 1,073 597 Inventories (3,038) 9,971 Accounts payable (4,285) (1,489) Accrued interest 974 (1,052) Other working capital 4,843 (4,544) Accrued pension, current and long term (139) 115 Other assets and other long-term liabilities (895) (192) --------- --------- Net cash provided by operating activities 29,857 36,191 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition costs (6,235) (25,610) Capital expenditures (12,658) (7,133) Proceeds from sale of property, plant and equipment 152 2,101 Maturity of temporary cash investments - 250 --------- --------- Net cash used in investing activities (18,741) (30,392) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from common stock issuance 123 15 Cash overdrafts 810 (2,734) Proceeds from long-term debt 9,000 99,639 Repayments of long-term debt (17,472) (102,392) Repayments of capital lease obligations (395) (326) --------- --------- Net cash used in financing activities (7,934) (5,798) EFFECT OF EXCHANGE RATE CHANGES ON CASH (315) (1) --------- --------- INCREASE IN CASH AND CASH EQUIVALENTS 2,867 0 BALANCE AT BEGINNING OF PERIOD 9,656 0 --------- --------- BALANCE AT END OF PERIOD $ 12,523 $ 0 ========= ========= NON-CASH FINANCING ACTIVITIES Cash paid for interest $ 8,131 $ 15,197 Cash paid for taxes 5,163 2,824 Issuance of common stock for compensation 0 51 See notes to unaudited consolidated financial statements. 5 MAIL-WELL, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION Nature of Operations - Mail-Well, Inc. (the "Company") is one of the largest printers in North America, manufacturing both envelopes and high impact color commercial work. Within envelope printing, the Company competes in the consumer direct segment in which envelopes are designed and manufactured to customer specifications. In addition, the Company manufactures envelopes sold into the office products market. The Company is also a leading high impact commercial printer specializing in printing advertising literature, high-end catalogs, annual reports, calendars and computer instruction books and is recognized as an innovative provider of quality printed products to leading companies in the United States. The Company commenced operations on February 24, 1994 with the acquisition of the envelope businesses of Georgia-Pacific Corporation ("GP Envelope") and Pavey Envelope and Tag Corp. ("Pavey"). 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - The consolidated financial statements for all periods presented include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. Interim Financial Information - The interim financial information contained herein is unaudited and includes all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the information set forth. The consolidated financial statements should be read in conjunction with the Notes to the Consolidated Financial Statements which are included in the Company's Form 10-K. The results for interim periods are not necessarily indicative of results to be expected for the fiscal year of the Company ending December 31, 1997. The Company believes that the report filed on Form 10-Q is representative of its financial position, its results of operations and its cash flow for the quarter and six months ended June 30, 1997 and 1996. Employee Stock Ownership Plan - Unearned ESOP compensation balance is presented in the accompanying financial statements as a reduction of equity. As the ESOP shares are allocated to participants, the unearned ESOP compensation balance will decrease and compensation expense will be recorded. Earnings Per Share - In June 1997, the Company's common stock split 3:2; all shares and per share information has been retroactively restated to reflect the conversion. Net income per share is computed by dividing net income by the weighted average number of common shares. Common shares outstanding excludes unallocated and uncommitted shares held by the ESOP.
Quarter Ended June 30, Six Months Ended June 30, 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Common shares 17,840,479 17,484,683 17,808,467 17,480,645 Common stock equivalents 725,442 339,910 553,644 321,637 ---------- ---------- ---------- ---------- Total shares outstanding 18,565,921 17,824,593 18,362,111 17,802,282 ========== ========== ========== ==========
Reclassification - Certain amounts in the 1996 financial statements have been reclassified to conform to 1997 presentation. 6 3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (in thousands)
Inventories: June 30, 1997 December 31, 1996 Raw materials $ 25,922 $ 25,953 Work in process 7,982 7,549 Finished goods 41,728 37,385 Reserve for obsolescence and loss (2,631) (2,612) -------- -------- Total $ 73,001 $ 68,275 ======== ======== Property, plant and equipment: June 30, 1997 December 31, 1996 Land and land improvements $ 11,698 $ 11,429 Buildings 50,645 45,385 Leasehold improvements 2,390 3,627 Machinery and equipment 125,977 124,028 Furniture and fixtures 3,332 3,066 Automobiles and trucks 587 556 Computers and software 9,897 7,457 Assets under capital lease 1,502 3,584 Construction in progress 10,608 6,576 -------- -------- 216,636 205,708 Less accumulated depreciation (28,779) (22,406) -------- -------- Total $187,857 $183,302 ======== ======== 4. LONG-TERM DEBT Long-term debt consists of the following (in thousands): June 30, 1997 December 31, 1996 Bank borrowings: Revolving credit loans $ 0 $ 768 Term loans 127,788 135,000 Subordinated notes 85,000 85,000 Other 229 651 -------- -------- 213,017 221,419 Less current maturities (15,164) (14,427) -------- -------- Long-term debt $197,853 $206,992 ======== ========
The bank credit agreements of the Company include a $30.0 million revolving credit facility, a C$10.0 million revolving credit facility, $135.0 million of term loans, a $30.0 million acquisitions loan facility, a $12.0 million letter of credit facility and a C$8.0 million letter of credit facility. The Company's obligations under the bank credit agreement are secured by substantially all of the assets of the domestic subsidiaries of the Company and by 66% of the common stock of a Canadian subsidiary. An interest rate cap agreement is used to reduce the potential impact of increases in the rates on floating-rate long-term debt. At June 30, 1997, the Company was party to an interest rate cap agreement for the notional amount of $55.0 million which provides an effective LIBOR interest rate cap of 9.0% and expires June 30, 1999. The agreement entitles the Company to receive from counterparties the amounts, if any, by which the Company's interest payments exceed the interest rate cap. 7 5. PRO FORMA EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128 establishes standards for computing and presenting earnings per share and applies to all entities with publicly held common stock or potential common stock. SFAS 128 replaces the presentation of primary earnings per share and fully diluted earnings per share with a presentation of basic earnings per share and diluted earnings per share, respectively. Basic earnings per share excludes dilution and is computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Similar to fully diluted earnings per share, diluted earnings per share reflects the potential dilution of securities that could share in the earnings. SFAS 128 is effective for periods ending after December 15, 1997, including interim periods, and will require restatement of all prior period earnings per share data presented; earlier application is not permitted. The following pro forma disclosure illustrates earnings per share if calculated in accordance with SFAS 128. The unallocated shares issued under the Employee Stock Ownership Plan are excluded from both the basic and diluted earnings per share calculations.
Income Shares Per-Share (dollars in thousands) (Numerator) (Denominator) Amount - --------------------------------------------------------------------------------- For the Quarter Ended June 30, 1997 ----------------------------------- Basic Earnings Per Share Income available to common stockholders $ 6,576 17,840,479 $0.37 ====== Effect of Dilutive Securities Stock options, primarily 0 725,442 ------- ---------- Diluted Earnings Per Share Income available to common stockholders including assumed conversions $ 6,576 18,565,921 $0.35 ======= ========== ====== For the Quarter Ended June 30, 1996 ----------------------------------- Basic Earnings Per Share Income available to common stockholders $ 3,612 17,484,683 $0.21 ====== Effect of Dilutive Securities Stock options, primarily 0 339,910 ------- ---------- Diluted Earnings Per Share Income available to common stockholders including assumed conversions $ 3,612 17,824,593 $0.20 ======= ========== ====== For the Six Months Ended June 30, 1997 -------------------------------------- Basic Earnings Per Share Income available to common stockholders $12,557 17,808,467 $0.71 ====== Effect of Dilutive Securities Stock options, primarily 0 553,644 ------- ---------- Diluted Earnings Per Share Income available to common stockholders including assumed conversions $12,557 18,362,111 $0.68 ======= ========== ======
8
For the Six Months Ended June 30, 1996 -------------------------------------- Basic Earnings Per Share Income available to common stockholders $6,379 17,480,645 $0.36 ===== Effect of Dilutive Securities Stock options, primarily 0 321,637 ------ ---------- Diluted Earnings Per Share Income available to common stockholders including assumed conversions $6,379 17,802,282 $0.36 ====== ========== =====
6. STOCK OPTIONS On March 31, 1997, the Company's Board of Directors adopted a non- qualified stock option plan for key employees and directors, authorizing future grants of stock options to purchase up to 975,000 shares of the Company's common stock. Also at that time, stock options were granted under the non-qualified stock option plan for the purchase of up to approximately 600,000 shares of common stock, in addition to the granting of stock options under the Company's 1994 stock option plan for the purchase of approximately 187,500 shares of common stock. The exercise price of all options granted equals or exceeds the fair market value of the Company's common stock on the date of grant. 7. ACQUISITIONS On June 27, 1997, the Company acquired all of the outstanding shares of common stock of Griffin Envelope, Inc. ("Griffin"). Griffin, which is located in Seattle, Washington, manufactures and distributes envelopes in the northwestern United States. Annual sales for Griffin approximate $12 million. The balance sheet of Griffin is included in the consolidated balance sheet of the Company as of June 30, 1997; the statement of operations excludes the operations of Griffin. On July 11,1997, the Company acquired all of the outstanding shares of common stock of The Allied Printers ("Allied"). Allied, which is located in Seattle, Washington, is a high impact color printer servicing customers with sheet fed printing needs. Annual sales for Allied approximate $17 million. The Company issued 36,531 shares of common stock in connection with this acquisition. On July 14, 1997, the Company acquired all of the outstanding shares of common stock of Murray Envelope Corporation ("Murray"). Murray, which is located in Hattiesburg, Mississippi, manufactures envelopes primarily for sales through distributors in the south eastern and south central markets. Additionally, the Barkley division of Murray distributes filing products for the national market. Annual sales for Murray approximate $48 million. In connection with the acquisition, a wholly-owned subsidiary of the Company issued 110,236 shares of common stock which are convertible into an equal number of shares of Company common stock. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MAIL-WELL, INC. (Registrant) By /s/ PAUL V. REILLY -------------------------- Paul V. Reilly Senior Vice President, Chief Financial Officer September 11, 1997 10 -----END PRIVACY-ENHANCED MESSAGE-----