-----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, LW6GZhOoPvIrxxzS/TFKl43bzmauPbmk2z0mJT6sHTK9h29S0vGuCJfD/f5jDsT7 vCcuf0nRQ1EOPXTnx0EqnQ== 0001068800-98-000028.txt : 19981116 0001068800-98-000028.hdr.sgml : 19981116 ACCESSION NUMBER: 0001068800-98-000028 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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 SEC ACT: SEC FILE NUMBER: 001-12551 FILM NUMBER: 98748197 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 1 MAIL-WELL, INC. FORM 10-Q ============================================================================= UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q /x/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 Commission file number 1-12551 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 November 13, 1998, the Registrant had 48,817,173 shares of Common Stock, $0.01 par value, outstanding. ============================================================================= 1 MAIL-WELL, INC. AND SUBSIDIARIES TABLE OF CONTENTS - --------------------------------------------------------------------- Page ---- Part I - FINANCIAL INFORMATION Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . . . . . 17 Part II - OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 17 Item 2. Changes in Securities. . . . . . . . . . . . . . . . . 17 Item 3. Defaults upon Senior Securities. . . . . . . . . . . . 17 Item 4. Submission of Matters to a Vote of Securities Holders . . . . . . . . . . . . . . . . . . 17 Item 5. Other Information. . . . . . . . . . . . . . . . . . . 17 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 18 Signature Page. . . . . . . . . . . . . . . . . . . . . . . . . . 21 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MAIL-WELL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS) SEPTEMBER 30, 1998 DECEMBER 31, 1997 ------------------ ----------------- CURRENT ASSETS Cash and cash equivalents $ 3,027 $ 40,911 Receivables, net 146,674 64,958 Accounts receivable -- other 9,119 10,307 Securitized interest in accounts receivable 24,003 22,319 Inventories 119,300 86,268 Other current assets 23,310 10,135 ---------- -------- Total current assets $ 325,433 $234,898 PROPERTY, PLANT AND EQUIPMENT -- NET 415,159 262,797 GOODWILL -- NET 305,305 153,927 OTHER ASSETS -- NET 25,339 19,789 ---------- -------- TOTAL ASSETS $1,071,236 $671,411 ========== ======== CURRENT LIABILITIES Accounts payable $ 91,385 $ 53,641 Accrued compensation and vacation 48,489 37,139 Other current liabilities 45,591 28,143 Current portion of long-term debt and capital leases 8,207 10,533 ---------- -------- Total current liabilities $ 193,672 $129,456 BANK BORROWINGS 279,298 90,179 SENIOR SUBORDINATED NOTES 85,000 85,000 CONVERTIBLE SUBORDINATED NOTES 152,050 152,050 OTHER LONG TERM LIABILITIES 57,224 39,406 ---------- -------- Total liabilities $ 767,244 $496,091 ---------- -------- MINORITY INTEREST $ 3,500 $ 3,500 ========== ======== STOCKHOLDERS' EQUITY Preferred stock, $0.01 par value; 25,000 shares authorized, none issued and outstanding $ - $ - Common stock, $0.01 par value; 100,000,000 shares authorized, 48,794,076 and 43,042,959 shares issued and outstanding, respectively (including 3,896,544 shares held by ESOP) 488 430 Paid-in capital 207,649 102,475 Retained earnings 102,672 72,541 Other (10,317) (3,626) ---------- -------- Total stockholders' equity $ 300,492 $171,820 ---------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,071,236 $671,411 ========== ======== See notes to unaudited consolidated financial statements.
3 MAIL-WELL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------- ------------- 1998 1997 1998 1997 ---- ---- ---- ---- NET SALES $404,143 $278,794 $1,072,936 $782,708 COST OF SALES 318,521 218,017 847,840 609,347 -------- -------- ---------- -------- GROSS PROFIT $ 85,622 $ 60,777 $ 225,096 $173,361 OTHER OPERATING COSTS Selling, administrative and other 53,175 37,500 141,234 111,566 Merger costs 284 - 3,286 - -------- -------- ---------- -------- OPERATING INCOME $ 32,163 $ 23,277 $ 80,576 $ 61,795 OTHER (INCOME) EXPENSE Interest expense 10,979 7,948 26,132 22,237 Other (49) 326 (1,134) (606) -------- -------- ---------- -------- INCOME BEFORE INCOME TAXES $ 21,233 $ 15,003 $ 55,578 $ 40,164 PROVISION FOR INCOME TAXES 8,510 6,186 22,023 15,620 -------- -------- ---------- -------- NET INCOME $ 12,723 $ 8,817 $ 33,555 $ 24,544 ======== ======== ========== ======== EARNINGS PER BASIC SHARE $ 0.27 $ 0.22 $ 0.73 $ 0.61 EARNINGS PER DILUTED SHARE $ 0.25 $ 0.21 $ 0.67 $ 0.59 WEIGHTED AVERAGE SHARES - BASIC 47,004 40,644 45,772 40,426 WEIGHTED AVERAGE SHARES - DILUTED 56,804 42,626 55,797 41,809 See notes to unaudited consolidated financial statements.
4 MAIL-WELL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS) NINE MONTHS ENDED ----------------- SEPTEMBER 30, ------------- 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 33,555 $ 24,544 Adjustments to reconcile net income to cash provided by operations Depreciation and amortization 29,279 21,149 Deferred income taxes 8,882 5,570 Decrease (increase) in receivables (19,595) (9,850) Decrease (increase) in inventories 2,202 (3,009) Increase (decrease) in accounts payable (6,610) (1,596) All other operating activities (6,649) 8,507 --------- -------- Net cash provided by operating activities $ 41,064 $ 45,315 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition costs, net of cash acquired $(313,431) $(55,882) Capital expenditures (49,421) (31,360) Other investing activities 586 20,036 --------- -------- Net cash used in investing activities $(362,266) $(67,206) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from common stock issuance $ 92,476 $ 188 Cash overdrafts 10,445 (391) Proceeds from long-term debt 372,770 81,023 Repayments of long-term debt and capital lease obligations (187,015) (52,553) Other financing activities (3,746) (2,615) --------- -------- Net cash provided by financing activities $ 284,930 $ 25,652 --------- -------- EFFECT OF EXCHANGE RATE CHANGES ON CASH $ (1,612) $ (355) --------- -------- NET CHANGE IN CASH AND CASH EQUIVALENTS $ (37,884) $ 3,406 BALANCE AT BEGINNING OF PERIOD 40,911 12,297 --------- -------- BALANCE AT END OF PERIOD $ 3,027 $ 15,703 ========= ======== 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. and subsidiaries (the "Company") is a leading consolidator in the highly fragmented printing industry, specializing in customized envelopes, high impact printing, commercial printing, consumer product labels and business communications documents. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION -- The Company, headquartered in Englewood, Colorado, is organized under Colorado law and its common stock is traded on the New York Stock Exchange. These financial statements include the accounts of the Company and its majority owned 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 8-K dated May 30, 1998 and its 1997 Form 10-K. The results for interim periods are not necessarily indicative of results to be expected for the Company's fiscal year ending December 31, 1998. The Company believes that the report filed on Form 10-Q is representative of its financial position, its results of operations and its cash flows for the three and nine months ended September 30, 1998 and 1997. EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")-- 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. RECLASSIFICATION -- Certain amounts in the 1997 financial statements have been reclassified to conform to the 1998 presentation. INVENTORIES -- Detail of inventories, in thousands
SEPTEMBER 30, 1998 DECEMBER 31, 1997 ------------------ ----------------- Raw materials $ 46,298 $34,656 Work in process 24,778 12,428 Finished goods 52,172 42,132 Reserve for obsolescence and loss (3,948) (2,948) -------- ------- $119,300 $86,268 ======== =======
6 OTHER COMPREHENSIVE INCOME -- Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", was adopted January 1, 1998. This statement requires reporting of changes in stockholders' equity that do not result directly from transactions with share owners. A summary of these changes is as follows:
THREE MONTHS ENDED ------------------ SEPTEMBER 30, 1998 SEPTEMBER 30, 1997 ------------------ ------------------ (in thousands) Net income $12,723 $8,817 Foreign currency translation adjustments, net (4,129) (55) Unrealized loss on investment securities, net (723) (55) ------- ------ Total $ 7,871 $8,707 ======= ====== NINE MONTHS ENDED ----------------- SEPTEMBER 30, 1998 SEPTEMBER 30, 1997 ------------------ ------------------ Net income $33,555 $24,544 Foreign currency translation adjustments, net (5,871) (198) Unrealized loss on investment securities, net (686) (55) ------- ------- Total $26,998 $24,291 ======= =======
EARNINGS PER SHARE -- In June 1997, the Company's common stock split 3:2 and in June 1998 the Company's common stock split 2:1; all share and per share information has been retroactively restated to reflect these splits. 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 (in thousands, except per share amounts) (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- --------- FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998, EARNINGS PER BASIC SHARE Income available to common stockholders $12,723 47,004 $0.27 EARNINGS PER DILUTED SHARE Stock options - 1,452 Convertible subordinated notes $ 1,313 8,003 Other - 345 Income available to common stockholders including assumed conversions $14,036 56,804 $0.25 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997, EARNINGS PER BASIC SHARE Income available to common stockholders $ 8,817 40,644 $0.22 EARNINGS PER DILUTED SHARE Stock options - 1,838 Other - 144 Income available to common stockholders including assumed conversions $ 8,817 42,626 $0.21 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998, EARNINGS PER BASIC SHARE Income available to common stockholders $33,555 45,772 $0.73 EARNINGS PER DILUTED SHARE Stock options - 1,702 Convertible subordinated notes $ 3,940 8,003 Other - 320 Income available to common stockholders including assumed conversions $37,495 55,797 $0.67 7 INCOME SHARES PER-SHARE (in thousands, except per share amounts) (NUMERATOR) (DENOMINATOR) AMOUNT ----------- ------------- --------- FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997, EARNINGS PER BASIC SHARE Income available to common stockholders $24,544 40,426 $0.61 EARNINGS PER DILUTED SHARE Stock options - 1,298 Other - 85 Income available to common stockholders including assumed conversions $24,544 41,809 $0.59
3. LONG-TERM DEBT Long-term debt consists of the following (in thousands):
INTEREST RATE AT SEPTEMBER 30, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1997 ------------------ ------------------ ----------------- Bank borrowings: Unsecured line of credit, due March 31, 2003 6.31% $247,295 $ - Unsecured loan, due June 9, 2003 6.88% 27,067 - Demand note - 55,393 Senior Subordinated Notes, due 2004 10.50% 85,000 85,000 Convertible Subordinated Notes, due 2002 5.00% 152,050 152,050 Other 11,188 44,709 -------- -------- $522,600 $337,152 Less current maturities (6,252) (9,923) -------- -------- Long-term debt $516,348 $327,229 ======== ========
On March 18,1998, the Company closed a new bank facility totaling $300 million with Bank of America, the lead agent for its syndicate of banks. The new bank facility consists of a five-year unsecured line of credit. Proceeds from the unsecured line of credit were used to repay the Demand Note outstanding at December 31, 1997. On June 9, 1998, Supremex (the Company's Canadian subsidiary) and the Company entered into a Canadian dollar denominated loan agreement of C$ 43,044 maturing over five years. 4. COMMON STOCK ISSUANCE On February 11, 1998, the Company completed the sale of 6,000,000 shares of its Common Stock at a price of $19.625 per share through a group of underwriters led by Prudential Securities Incorporated. Of these shares, 4,864,600 were sold by the Company and 1,135,400 were sold by a group of shareholders. Net proceeds from the sale of common stock by the Company and from the exercise of stock options of $92.50 million were used for general corporate purposes. 5. STOCK OPTIONS On February 4, 1998, the Company's Board of Directors adopted a non-qualified stock option plan (the "1998 Plan") for key employees and directors authorizing future grants of stock options to purchase up to 1,000,000 shares of the Company's common stock. The Compensation Committee of the Board has approved stock option grants for 234,000 shares under this plan during 1998. The exercise price of all options granted is at least the fair market value of the Company's common stock on the date of the grant. 8 6. ACQUISITIONS The presentation below summarizes the Company's acquisitions,
ESTIMATED MONTH OPERATING ANNUAL LOCATION ACQUIRED SEGMENT SALES ---------------------------------------------------------------------------- (MILLIONS) 1997 ACQUISITIONS Griffin Envelope, Inc. ("Griffin") Seattle, Washington June Envelope $ 12 The Allied Printers ("Allied") Seattle, Washington July High Impact 17 Murray Envelope Corporation ("Murray") Hattiesburg, Mississippi July Envelope 48 National Color Graphics, Inc. ("NCG") Atlanta, Georgia September High Impact 23 Intertec Mailing Services ("MW Services") Nashville, Tennessee October Envelope 7 Cambridge, Maryland plant of Western Graphics Communications ("MW Graphics") Cambridge, Maryland December Envelope 33 ---- Aggregate purchase price was $87.0 million, with $32.7 million goodwill recorded $140 1998 ACQUISITIONS THROUGH SEPTEMBER 1998 Poser Business Forms, Inc. ("Poser") Fairhope, Alabama January Documents $ 90 Rono Graphic Communications Co. ("Rono") Portland, Oregon March High Impact 12 Lawson Mardon Label Division ("MW Label") Toronto, Ontario March Labels 81 Denver Forms Company ("Denver Forms") Denver, Colorado March Documents 12 National Graphics Company ("Natl Graphics") Denver, Colorado March Envelope 8 EPX Denver ("EPX") Denver, Colorado March Documents 4 Blue Line Envelope ("Blue Line") Montreal, Quebec April Envelope 6 South Press, Inc. ("South Press") Dallas, Texas April High Impact 12 Century Index Corporation ("Century") Anaheim, California May Envelope 8 Label Division, IP Paper ("IP Label") Bowling Green, Kentucky May Labels 30 Anderson Lithograph ("Anderson") Los Angeles, California May High Impact 135 Illinois Envelope, Inc ("Illinois") Kalamazoo, Michigan June Envelope 7 Gould Packaging, Inc ("Gould") Vancouver, Washington June Envelope 14 Graphics Illustrated, Inc. ("Graphics") West Palm Beach, Florida August Commercial 11 McLaren, Morris and Todd Ltd. ("MM&T") Mississauga, Ontario August Commercial 34 John D. Lucas Printing Co. ("Lucas") Baltimore, Maryland August Commercial 27 Armstrong-White, Inc. ("Armstrong") Bloomfield Hills, Michigan August High Impact 2 Richtman Printing ("Richtman") Englewood, Colorado September Commercial 6 Production Press, Inc. ("PPI") Jacksonville, Illinois September Commercial 9 ---- Aggregate purchase price was $313.4 million, with $156.1 million goodwill recorded $508 1998 MERGERS, COMMERCIAL PRINTING GROUP Color Art, Inc. ("Color Art") St. Louis, Missouri May Commercial $ 76 Accu-Color, Inc. ("Accu-Color") St. Louis, Missouri May Commercial 14 Industrial Printing Company ("IPC") Toledo, Ohio May Commercial 20 IPC Graphics ("IPC Graphics") Toledo, Ohio May Commercial 11 United Lithograph, Inc.("United Litho") Somerville, Mass. May Commercial 21 French Bray, Inc. ("French Bray") Glen Burnie, Maryland May Commercial 23 Clarke Printing Co. ("Clarke") San Antonio, Texas May Commercial 11 ---- $176
All of the acquisitions have been accounted for under the purchase method of accounting. Accordingly the historical results of operations of the Company include results of operations of each of the acquisitions from their date of purchase. The mergers, as more fully described in Note 7 to the financial statements included elsewhere herein, were accounted for as poolings of interests and, accordingly, the Company's consolidated financial statements since inception have been restated to include the operations of the Commercial Printing Group, adjusted to conform with the Company's accounting policies and presentation. The table below presents the historical sales and cost of sales of the Company, restated for the mergers, adjusted to show the effects of the acquisitions as if the acquisitions had occurred on January 1 of the year prior to their actual purchase date. 9
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net sales as reported $404,143 $278,794 $1,072,936 $ 782,708 1997 acquisitions in the aggregate - 13,421 - 82,717 1998 acquisitions in the aggregate 13,860 132,226 175,499 384,134 -------- -------- ---------- ---------- Net sales, pro forma $418,003 $424,441 $1,248,435 $1,249,559 -------- -------- ---------- ---------- Cost of sales, as reported $318,521 $218,017 $ 847,840 609,347 1997 acquisitions in the aggregate - 11,447 - 67,866 1998 acquisitions in the aggregate 10,695 107,287 138,633 314,339 -------- -------- ---------- ---------- Cost of sales, pro forma $329,216 $336,751 $ 986,473 $ 991,552 -------- -------- ---------- ---------- Gross profit, as reported $ 85,622 $ 60,777 $ 225,096 $ 173,361 ======== ======== ========== ========== 21.2% 21.8% 21.0% 22.1% Gross profit, pro forma $ 88,787 $ 87,690 $ 261,962 $ 258,007 ======== ======== ========== ========== 21.2% $ 20.7% 21.0% 20.6%
7. MERGERS WITH COMMERCIAL PRINTING COMPANIES Effective May 30, 1998, the Company completed its mergers with seven commercial printing companies through the exchange of common stock, which had a market value of $21.965 per share, as shown in the table below:
SHARES OF MAIL-WELL OPERATING COMPANY NAME COMMON STOCK EXCHANGED Color Art, Inc. ("Color Art") 2,351,951 shares Accu-Color, Inc. ("Accu-Color") 622,391 Industrial Printing Company ("Industrial Printing") 570,161 IPC Graphics, Inc. ("IPC Graphics") 325,973 United Lithograph, Inc. ("United Lithograph") 519,568 French Bray, Inc. ("French Bray") 538,040 Clarke Printing, Co. ("Clarke Printing") 437,984
The Company's consolidated financial statements give retroactive effect to the mergers, which have been accounted for using the pooling of interests method and, as a result, the financial position, results of operations and cash flows are presented as if the combining companies had been consolidated for all periods presented. Color Art is a commercial printer with offices located in St. Louis and Osage Beach, Missouri, and also the operator of a short-run printing and graphics company through its subsidiary Graphic Links, LLC. Accu- Color, located in St. Louis, Missouri, is primarily a supplier of color separation and other graphic arts services to the printing and advertising industries. Industrial Printing is located in Toledo, Ohio and is engaged in the printing and selling of advertising pieces, labels and general commercial printing. IPC Graphics prints and sells advertising pieces, mailers and business forms from its facilities in Toledo, Ohio. 10 United Lithograph provides commercial printing services to individuals and businesses located in the New England region from its offices in Somerville, Massachusetts. French Bray, located in Glen Burnie, Maryland, provides commercial, high quality, multi-color printing in the Mid-Atlantic region. Clarke Printing designs, manufactures and sells printed materials throughout Texas and Mexico. The companies listed above are hereafter collectively referred to as the Commercial Printing Group. Each of the mergers was negotiated and consummated as separate transactions and the separate mergers were not contingent upon each other. Except for French Bray and Clarke Printing, all of the above entities had elected Subchapter S corporation treatment for U.S. federal income tax purposes and, accordingly, did not pay U.S. federal income taxes. Subsequent to May 30, 1998, these companies will be included in Mail-Well's consolidated U.S. federal income tax return. In connection with the mergers, the Company also issued common stock to acquire the net assets (including the assumption of the debt associated with such assets) of certain related real estate ventures owned by shareholders of the commercial printing companies. The shares of the Company's common stock exchanged for real estate assets are included with the shares exchanged for the respective operating company in the table above. The results of operations and financial condition of the real estate assets are reflected in the consolidated financial statements with significant intercompany transactions and balances eliminated. Each of the above transactions has been accounted for individually as a pooling of interests and, accordingly, the consolidated financial statements for the periods subsequent to February 24, 1994 (inception) have been restated to include the accounts of the Commercial Printing Group. Prior to the mergers, Industrial Printing's and IPC Graphics' fiscal year ended on September 30, United Lithograph's fiscal year ended on June 30 and French Bray's fiscal year ended on July 31. Accordingly, the accompanying financial statements include those financial statements of entities with different fiscal years restated on a calendar year basis. Additionally, the consolidated financial statements reflect certain minor adjustments to conform the accounting policies of the Commercial Printing Group with the Company's. In connection with the mergers, transaction costs incurred by the Commercial Printing Group of approximately $3.3 million were expensed in 1998. These costs consist primarily of investment banking, legal and accounting fees. 8. SEGMENT INFORMATION The Company's operating segments prepare separate financial information that is evaluated regularly by senior management in assessing performance and deciding how to allocate resources. The Company does not allocate corporate overhead, merger expense, interest (income) expense, amortization expense or income taxes by segment in assessing performance. Operating segments of the Company are defined primarily by product line, and segment information for the three and nine months ended September 30 is as follows:
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net sales U.S. envelope $169,133 $150,207 $ 503,404 $429,584 Canadian envelope 26,175 26,901 82,848 85,983 High impact color printing 105,997 56,388 225,654 137,443 Commercial printing 51,127 42,804 130,830 122,098 Business communication printing 28,728 2,494 81,887 7,600 Label printing 22,983 0 48,313 0 -------- -------- ---------- -------- Total net sales $404,143 $278,794 $1,072,936 $782,708 -------- -------- ---------- -------- 11 THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Operating income U.S. envelope $15,555 $15,868 $ 47,918 $ 45,126 Canadian envelope 4,997 4,396 14,147 12,938 High impact color printing 8,302 3,848 13,351 7,462 Commercial printing 5,241 2,602 10,119 7,365 Business communication printing 2,098 102 6,307 416 Label printing 1,686 0 3,610 0 Corporate (5,716) (3,539) (14,876) (11,512) -------- -------- -------- -------- Total operating income $32,163 $23,277 $ 80,576 $ 61,795 -------- -------- -------- -------- Depreciation U.S. envelope $3,292 $2,686 $9,638 $7,513 Canadian envelope 561 581 1,698 1,723 High impact color printing 3,015 1,709 7,193 4,747 Commercial printing 974 1,710 4,274 5,054 Business communication printing 426 88 1,277 231 Label printing 1,004 0 2,137 0 Corporate (1,212) (1,300) (3,643) (3,629) -------- -------- -------- -------- Total depreciation $8,060 $5,474 $ 22,574 $ 15,639 -------- -------- -------- -------- SEPTEMBER 30, DECEMBER 31, ------------- ------------ 1998 1997 ---- ---- Identifiable Assets U.S. envelope $ 401,193 $374,715 Canadian envelope 97,366 93,997 High impact color printing 320,840 161,070 Commercial printing 139,785 79,460 Business communication printing 84,188 5,750 Label printing 94,084 0 Corporate (66,220) (43,581) ---------- -------- Total assets $1,071,236 $671,411 ---------- -------- 1997 information for the business communication printing segment represents IPC Graphics, which was part of the merger completed on May 30, 1998 and accounted for under the pooling of interests method. Corporate identifiable assets include adjustments for the accounts receivable securitization sales and certain significant operating leases. This is done to reflect the return on assets employed within each segment on a consistent basis
12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following should be read in conjunction with the consolidated historical financial statements and related notes of Mail-Well, Inc. and its subsidiaries (the "Company") included elsewhere in this report. In addition to the historical information contained herein, this report contains forward-looking statements. The reader of this information should understand that all such forward-looking statements are subject to various uncertainties and risks that could affect their outcome. The Company's actual results could differ materially from those suggested by such forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, product demand and sales, growth rate, ability to obtain assumed productivity savings, quality controls, availability of acquisition opportunities and their related costs, cost savings due to integration and synergies associated with acquisitions, ability to obtain additional financings and bank debt restructuring, interest rates, foreign currency exchange rates, paper and raw material costs, waste paper prices, ability to pass through paper costs to customers, postage rates, changes in the direct mail industry, competition, ability to develop new products, labor costs, labor relations and advertising costs. This entire report should be read to put such forward-looking statements in context and to gain a more complete understanding of the uncertainties and risks involved in the Company's business.
OVERVIEW THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1998 1997 1998 1997 ---- ---- ---- ---- Net sales U.S. envelope $169,133 $150,207 $ 503,404 $429,584 Canadian envelope 26,175 26,901 82,848 85,983 High impact color printing 105,997 56,388 225,654 137,443 Commercial printing 51,127 42,804 130,830 122,098 Business communication printing 28,728 2,494 81,887 7,600 Label printing 22,983 0 48,313 0 -------- -------- ---------- -------- Total net sales $404,143 $278,794 $1,072,936 $782,708 -------- -------- ---------- -------- Operating income U.S. envelope $ 15,555 $ 15,868 $ 47,918 $ 45,126 Canadian envelope 4,997 4,396 14,147 12,938 High impact color printing 8,302 3,848 13,351 7,462 Commercial printing 5,241 2,602 10,119 7,365 Business communication printing 2,098 102 6,307 416 Label printing 1,686 0 3,610 0 Corporate (5,716) (3,539) (14,876) (11,512) -------- -------- ---------- -------- Total operating income $ 32,163 $ 23,277 $ 80,576 $ 61,795 Interest expense 10,979 7,948 26,132 22,237 Other (income) expense (49) 326 (1,134) (606) Income tax expense 8,510 6,186 22,023 15,620 -------- -------- ---------- -------- Net income $ 12,723 $ 8,817 $ 33,555 $ 24,544 ======== ======== ========== ========
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE SAME PERIOD IN 1997 Mail-Well's net income for the third quarter of 1998 was $12.7 million, an increase of 44.3% over the same period in 1997. Earnings per diluted share increased 19.0% to $0.25, up from last year's $0.21 as restated for the 1998 merger transactions. Revenues, including acquisitions from date of purchase, increased to a record $404.1 million, 45.0% higher than last year as restated. 13 Revenue growth is primarily attributable to acquisitions since the third quarter of 1997. The average Canadian exchange rate was 8.6% lower in the third quarter of 1998 compared to the third quarter of 1997 resulting in a 0.8% decline in total revenue between the periods. Excluding acquisitions, volume improvement in the third quarter of 1998, over the same period in 1997, of 0.7% is offset by price declines attributable primarily to material cost reductions between the periods. Because of the historical ability to pass through material cost fluctuations to customers the Company uses material margin (that is, net sales less net cost of materials) as revenue trend indicators. Material margin dollars for the third quarter 1998 increased 45.3% compared to the same period in 1997, primarily due to acquisitions. Excluding acquisitions material margin dollars, adjusted for the Canadian dollar fluctuation, for the third quarter of 1998 increased 4.4% over the same period in 1997. Gross profit of $85.6 million for the third quarter of 1998 increased 40.9% over the same period in 1997. Expressed as a percent of sales gross profit declined 0.6% to 21.2% in the third quarter of 1998 compared to the year ago period. This decline is partially attributable to acquisitions, which generally have lower gross profit to sales percent than the existing business. It is also due to increased labor and distribution costs in the existing business, particularly in the U.S. Envelope segment. Expressed as a percent of sales, selling and administrative expense decreased 0.3% in the third quarter of 1998 compared to the year ago period. Interest expense increased $3.0 million to $11.0 million in the third quarter of 1998 compared to the prior year period primarily due to the increase in acquisitions. RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THE SAME PERIOD IN 1997 Mail-Well's net income for the first nine months of 1998 was $33.6 million, an increase of 36.7% over the same period in 1997. Earnings per diluted share increased 13.6% to $0.67, up from last year's $0.59 as restated for the 1998 merger transaction. Revenues, including acquisitions from date of purchase, rose to a record $1.1 billion, 37.1% higher than last year as restated. Revenue growth for the first nine months of 1998 is primarily attributable to acquisitions in 1997 and 1998. The average Canadian exchange rate was 5.5% lower in the first nine months of 1998 compared to the same period in 1997, resulting in a 0.6% decline in total revenue between the periods. Excluding acquisitions, volume for the first nine months of 1998 increased 2.2% compared to the same period in 1997, but is offset by price declines in the same period. Because of the historical ability to pass through material cost fluctuations to customers the Company uses material margin (that is, net sales less net cost of materials) as revenue trend indicators. Material margin dollars for the first nine months of 1998 increased 35.3% compared to the same period in 1997, primarily due to acquisitions. Excluding acquisitions material margin dollars, adjusted for the Canadian dollar fluctuation, for the first nine months of 1998 increased 0.1% compared to the same period in 1997. Gross profit of $225 million for the first nine months of 1998 increased 29.8% over the same period in 1997. Expressed as a percent of sales gross profit declined 1.1% to 21.0% for the first nine months of 1998 compared to the same period of 1997. This decline is partially due to acquisitions, which generally have a lower gross profit to sales percent than existing business. It is also due to the effects of the merger on restated operating results since, under pooling of interests accounting operations of the commercial printing companies are included as of the beginning of 1998 even though the merger was completed on May 30, 1998. As a result commercial printing operations include results from periods when they were privately owned companies and not experiencing the cost benefits of Mail-Well ownership. Expressed as a percent of sales, selling and administrative expense decreased 0.9% in the first nine months of 1998 compared to the year ago period, due to consolidation of certain administrative functions in the envelope segments. Merger expenses of $3.3 million are legal and consulting fees relating to the May 30, 1998, commercial printing companies mergers, which are required to be expensed under the pooling of interest accounting method. Interest expense increased $3.9 million to $26.1 million in the first nine months of 1998 compared to the prior year period primarily due to the increase in acquisitions. 14 YEAR 2000 The Company completed an assessment of its existing computer systems in 1997 and expects to spend and capitalize approximately $9 to $11 million in 1998 and 1999 to purchase and install new systems. The new systems are capable of distinguishing between the year 1900 and the year 2000 ("Year 2000 compliant"). The Company is also conducting an evaluation of actions required to ensure its remaining business critical computer systems will not be disrupted with respect to dating in the Year 2000. The Company has completed or is engaged in the process of updating, replacing and testing certain of its computer systems so as to operate without disruption due to Year 2000 issues. These actions are scheduled to be completed through the third quarter of 1999 and, based on current information available, the Company does not anticipate the costs of remedial actions, which are being expensed as incurred, will be material. Since there can be no assurance that remedial actions can be completed on a timely basis contingency plans are also being developed to address business critical systems which may not be Year 2000 compliant. All business critical vendors and customers have been identified and contacted for information on their actions to mitigate Year 2000 disruptions. The Company is in the process of evaluating information supplied to date and contacting those who have not responded to our inquiries. If Year 2000 issues of our business critical vendors and customers are not addressed satisfactorily they could conceivably cause widespread problems, disrupting our business causing a decline in earnings. These theoretical consequences are of a kind and magnitude not unique to the Company, but are generally shared with other manufacturing companies. Although there is inherent uncertainty with respect to these Year 2000 issues, particularly with respect to the Year 2000 readiness of our vendors and customers, at this time management does not believe that the Company's business will be materially affected by Year 2000 issues. NEW ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ( the "Statement"). The Statement, which will be effective for the year 2000, requires derivative instruments to be recorded in the balance sheet at their fair value with changes in fair value being recognized in earnings unless specific hedging accounting criteria are met. Given the current level of its derivative and hedging activities, the Company believes the impact will not be material. LIQUIDITY AND CAPITAL RESOURCES CAPITAL REQUIREMENTS -- Net cash provided by operating activities was $41.1 million for the first nine months of 1998 as compared to $45.3 million for the same period for 1997. The decrease is mainly due to increased sales in the third quarter for the high impact segment causing a corresponding increase in receivables of $20 million. Capital expenditures for the first nine months of 1998 were $49.4 million compared to $31.4 million for the same period in 1997 due primarily to replacement of obsolete equipment with new more efficient equipment. At September 30, 1998, the Company had approximately $53 million of available credit under the $300 million facility with the Bank of America. In addition receivable sales continue to be a significant source of funding for the Company. At September 30, 1998, the Company had sold $76 million of receivables under a $100 million securitization facility. The Company believes that cash from operations, its cash position and cash available under credit facilities will be sufficient to meet its capital expenditure, debt maturity and other funding requirements through December 31, 1998. COMMON STOCK ISSUANCE -- In February 1998 the Company sold 4,864,600 shares of its Common Stock at a price of $19.625 per share, adjusted for the 2:1 split, through a group of underwriters led by Prudential Securities Incorporated. Proceeds from the sale of stock of $91.2 million were used for general corporate purposes. Additional proceeds have resulted from the exercise of options. 15 RECENT DEVELOPMENTS ACQUISITIONS -- Acquisitions pending or closed subsequent to September 30, 1998, are as follows: On October 26, 1998, the Company acquired Perfection Forms and Apico Corporation. Both companies are business communication document printers located in Girard, Kansas, with combined annual sales of $20 million. On October 30, 1998, the Company acquired Trafton Printing, Inc. ("Trafton") of Amarillo, Texas. Trafton is a high-end sheetfed printer with annual sales of $9 million. On November 2, 1998, the Company acquired Imperial Litho and Dryography, Inc. ("Imperial") of Phoenix, Arizona. Imperial is a full- service web and sheetfed printer with annual sales of $26 million. 16 ITEM 3.--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK -- N/A PART II -- OTHER INFORMATION ITEM 1.--LEGAL PROCEEDINGS -- None ITEM 2.--CHANGES IN SECURITIES -- None ITEM 3.--DEFAULTS UPON SENIOR SECURITIES -- None ITEM 4.--SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS -- None ITEM 5.--OTHER INFORMATION -- NONE 17 ITEM 6.--EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 3(i) Articles of Incorporation of the Company - incorporated by reference from Exhibit 3(i) of the Company's Form 10-Q for the quarter ended June 30, 1997. 3(i)(a) Amendment to Articles of Incorporation of the Company. 3(ii) Bylaws of the Company - incorporated by reference from Exhibit 3.4 of the Company's Registration Statement on Form S-1 dated September 21, 1995. 4.1 Form of Certificate representing the Common Stock, par value $0.01 per share, of the Company - incorporated by reference from Exhibit 4.1 of the Company's Amendment No. 1 to Form S-3 dated October 29, 1997 (Reg. No. 333-35561). 4.2 Indenture dated as of February 24, 1994 by and between M-W Corp. and Shawmut Bank, National Association, as Trustee, with respect to the 10-1/2% Original Senior Subordinated Notes and the 10-1/2% Exchange Senior Subordinated Notes due 2004, including the form of Note and the guarantees of the Company, Wisco and Pavey - incorporated by reference from Exhibit 4.3 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 4.2.1 Supplemental Indenture dated July 31, 1995 to the Indenture identified in Exhibit 4.2 - incorporated by reference from Exhibit 4.4.1 of the Company's Registration Statement on Form S-1 dated September 21, 1995. 4.2.2 Form of Second Supplemental Indenture to the Indenture identified in Exhibit 4.2 - incorporated by reference from Exhibit 4.4.2 of the Company's Registration Statement on Form S-1 dated September 21, 1995. 4.3 Form of Indenture between the Company and The Bank of New York, as Trustee, dated November 1997, relating to the Company's $152,050,000 aggregate principal amount of 5% Convertible Subordinated Notes due 2002 - incorporated by reference from Exhibit 4.2 to the Company's Amendment No. 2 to Form S-3 dated November 10, 1997 (Reg. No. 333-36337). 4.4 Form of Supplemental Indenture between the Company and The Bank of New York, as Trustee, dated November 1997, relating to the Company's $152,050,000 aggregate principal amount of 5% Convertible Subordinated Notes due 2002 and Form of Convertible Note - incorporated by reference from Exhibit 4.5 to the Company's Amendment No. 2 to Form S-3 dated November 10, 1997 (Reg. No. 333-36337). 10.1 Asset Purchase Agreement dated December 7, 1993 by and among GP Envelope, G-P, M-W Corp. and the Company, as amended - incorporated by reference from Exhibit 10.1 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.2 General Indemnity Agreement between M-W Corp. and Amwest Surety Insurance Company together with form of Letter of Credit - incorporated by reference from Exhibit 10.16 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.3 Form of Indemnity Agreement between the Company and each of its officers and directors - incorporated by reference from Exhibit 10.17 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.4 Form of Indemnity Agreement between Mail-Well I Corporation and each of its officers and directors - incorporated by reference from Exhibit 10.18 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.5 Form of M-W Corp. Employee Stock Ownership Plan effective as of February 23, 1994 and related Employee Stock Ownership Plan Trust Agreement - incorporated by reference from Exhibit 10.19 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.6 Form of M-W Corp. 401(k) Savings Retirement Plan - incorporated by reference from Exhibit 10.20 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.7 Company 1994 Stock Option Plan, as amended on May 7, 1997 - incorporated by reference from Exhibit 10.56 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. 18 10.8 Form of the Company Incentive Stock Option Agreement - incorporated by reference from Exhibit 10.22 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.9 Form of the Company Nonqualified Stock Option Agreement - incorporated by from Exhibit 10.23 of the Company's Registration Statement on Form S-1 dated March 25, 1994. 10.10 Asset Purchase Agreement dated April 26, 1996 by and between Quality Park Products, Inc. and Mail-Well I Corporation - incorporated by reference from Exhibit 1 of the Company's Form 8-K dated May 2, 1996. 10.11 Acquisition Agreement and Plan of Share Exchange by and among Graphic Arts Center, Inc. and Shepard Poorman Communications Corporation dated November 6, 1996 - incorporated by reference from Exhibit 10.33 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.12 Amendment No. 1 to Acquisition Agreement and Plan of Share Exchange by and among Graphic Arts Center, Inc. and Shepard Poorman Communications Corporation dated November 6, 1996 - incorporated by reference from Exhibit 10.34 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.13 Asset Purchase Agreement dated as of October 15, 1996 by and between Supremex, Inc. and PNG Products, Inc. Pac National Group and PNG Envelope Internationale, Inc. - incorporated by reference from Exhibit 10.35 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996 10.14 Master Lease Agreement dated as of August 1, 1996 between General Electric Capital Corporation and Mail-Well, Inc., Mail-Well I Corporation, Graphic Arts Center, Inc., Mail-Well West, Pavey Envelope and Tag Corp., Wisco II, L.L.C and Wisco Envelope Corp - incorporated by reference from Exhibit 10.36 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.15 Purchase and Contribution Agreement dated as of November 15, 1996 between Mail- Well I Corporation, Wisco Envelope Corp., Pavey Envelope and Tag Corp., Mail-Well West, Inc., Graphic Arts Center, Inc., Wisco III, L.L.C., Supremex, Inc., Innova Envelope, Inc., as Sellers, and Mail-Well Trade Receivables Corp., as Purchaser - incorporated by reference from Exhibit 10.39 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.16 Mail-Well Receivables Master Trust Pooling and Servicing Agreement dated as of November 15, 199 by and between Mail-Well Trade Receivables Corporation, Seller, Mail-Well I Corporation, Servicer, and Norwest Bank Colorado, National Association, Trustee - incorporated by reference from Exhibit 10.40 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.17 Series 1996-1 Supplement dated as of November 15, 1996 to Pooling and Servicing Agreement, dated as of November 15, 1996, by and between Mail-Well Trade Receivables Corporation, Seller, Mail-Well I Corporation, Servicer, and Norwest Bank Colorado, National Association, as Trustee on behalf of the Series 1996-1 Certificateholders - incorporated by reference from Exhibit 10.41 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.18 Series 1996-1 Certificate Purchase Agreement dated as of November 15, 1996 among Mail-Well Trade Receivables Corporation, as Seller, Corporate Receivables Corporation, as Purchaser, Norwest Bank Colorado, National Association, as Trustee, and Mail-Well I Corporation, as Servicer - incorporated by reference from Exhibit 10.42 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.19 Intercreditor Agreement dated as of November 15, 1996 by and among Citicorp North America, Inc., as Securitization Company Agent, Banque Paribas, New York Branch, as Liquidity Agent, Banque Paribas, as Credit Lenders' Agent, Norwest Bank Colorado, National Association, as Trustee, Mail-Well Trade Receivables Corporation, as Servicer, originator and Mail-Well Credit Borrower, Supremex, Inc., as the Supremex Credit Borrower and the other parties hereto - incorporated by reference from Exhibit 10.43 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 19 10.20 Series 1996-1 Asset Purchase Agreement among Corporate Receivables Corporation, the Liquidity Providers Parties hereto, Citicorp North America, Inc., as Securitization Company Agent, Banque Paribas, New York Branch, as Liquidity Agent, and Norwest Bank Colorado, National Association, as trustee, dated as of November 15, 1996 - incorporated by reference from Exhibit 10.44 of the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 10.21 1997 Non-Qualified Stock Option Plan - incorporated by reference from exhibit 10.54 of the Company's Form 10-Q for the quarter ended March 31, 1997 10.22 Company's 1998 Incentive Stock Option Plan - incorporated by reference from the Company's definitive proxy statement for the regular annual meeting of stockholders held April 29, 1998 10.23 Credit Agreement dated as of March 16, 1998 among Mail-Well I Corporation, certain Guarantors, Bank of America National Trust and Savings Association, as Agent and other financial institutions party thereto - incorporated by reference from the Company's 10-Q for the quarter ended March 31, 1998. 10.24 Credit Agreement dated as of March 16, 1998 among Supremex Inc., certain Guarantors, Bank of America National Trust and Savings Association, as Agent and other financial institutions party thereto - incorporated by reference from the Company's 10-Q for the quarter ended March 31, 1998. 10.25 Participation Agreement dated as of December 15, 1997 among Mail-Well I Corporation, Keybank National Association, as Trustee and other financial institutions party thereto - incorporated by reference from the Company's 10-Q for the quarter ended March 31, 1998. 10.26 Equipment Lease dated as of December 15, 1997 among Mail-Well I Corporation, Keybank National Association, as Trustee and other financial institutions party thereto - incorporated by reference from the Company's 10-Q for the quarter ended March 31, 1998. 10.27 Guaranty Agreement dated as of December 15, 1997 among Mail-Well, Inc., Graphic Arts Center, Inc., Griffin Envelope Inc., Murray Envelope Corporation, Shepard Poorman Communications Corporation, Wisco Envelope Corp., Wisco II, LLC, Wisco III, LLC, Mail-Well I Corporation, Keybank National Association, as Trustee and other financial institutions party thereto - incorporated by reference from the Company's 10-Q for the quarter ended March 31, 1998. 10.28 Stock Purchase Agreement dated as of December 15, 1997 among Mail-Well I Corporation and Poser Business Forms, Inc. and other Selling Shareholders party thereto, incorporated by reference from the Company's report on Form 8-K dated January 6, 1998. 10.29 Asset Purchase Agreement dated as of January 31, 1998 among Lawson Mardon Packaging USA, Inc (USA), incorporated by reference from the Company's report on Form 8-K dated March 10, 1998. 10.30 Asset Purchase Agreement dated as of January 31, 1998 among 3014597 Nova Scotia Company and Lawson Mardon Packaging Inc. (Canada), incorporated by reference from the Company's report on Form 8-K dated March 10, 1998. 10.31 Agreement and Plan of Merger among Mail-Well I Corporation, Mail-Well, Inc. and Anderson Lithograph Holding Corp. dated April 23, 1998, incorporated by reference from the Company's report on Form 8-K dated May 28, 1998. 10.32 Acquisition Agreement and Plan of Merger among Mail-Well, Inc., Mail-Well I Corporation, Color Art, Inc. and certain controlling shareholders thereof, dated May 15, 1998, incorporated by reference from the Company's report on Form 8-K dated May 30, 1998. 27.1 Financial Data Schedule - as of and for the three months ended September 30, 1998. _____________ Filed herewith.
(b) Reports on Form 8-K None 20 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/ Michael A. Zawalski ----------------------- Michael A. Zawalski Senior Vice President, Chief Financial Officer Date: November 13, 1998 21 EX-27.1 2 FINANCIAL DATA WORKSHEET FOR MAIL-WELL, INC.
5 1,000 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 3,027 24,003 155,793 0 119,300 325,433 524,480 (109,321) 1,071,236 193,672 0 488 0 0 300,004 1,071,236 1,072,936 1,072,936 847,840 992,360 (1,134) 0 26,132 55,578 22,023 33,555 0 0 0 33,555 0.73 0.67
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