-----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, FRz198TSpfy5So7kYBEPU2saPiGO4I2a/vJLDI9kvGhed0/Ef8ebtGIkUc5c1y7L jQ+/mxAMbhyirmFaUa22hg== 0001068800-06-001388.txt : 20061109 0001068800-06-001388.hdr.sgml : 20061109 20061109092402 ACCESSION NUMBER: 0001068800-06-001388 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061108 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events FILED AS OF DATE: 20061109 DATE AS OF CHANGE: 20061109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENVEO, 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12551 FILM NUMBER: 061199674 BUSINESS ADDRESS: STREET 1: ONE CANTERBURY GREEN STREET 2: 201 BROAD STREET CITY: STAMFORD STATE: CT ZIP: 06901 BUSINESS PHONE: 2035953000 MAIL ADDRESS: STREET 1: ONE CANTERBURY GREEN STREET 2: 201 BROAD STREET CITY: STAMFORD STATE: CT ZIP: 06901 FORMER COMPANY: FORMER CONFORMED NAME: MAIL WELL INC DATE OF NAME CHANGE: 19950817 FORMER COMPANY: FORMER CONFORMED NAME: MAIL WELL HOLDINGS INC DATE OF NAME CHANGE: 19940328 8-K 1 cen8k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 8, 2006 CENVEO, INC. -------------------------------------------------- (Exact Name of Registrant as Specified in Charter) COLORADO 1-12551 84-1250533 - ------------------------ ------------- ------------------- (State of Incorporation) (Commission (IRS Employer File Number) Identification No.) ONE CANTERBURY GREEN 201 BROAD STREET STAMFORD, CT 06901 - ---------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (203) 595-3000 Not Applicable ------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On November 8, 2006, Cenveo, Inc. (the "Company") issued a press release announcing its results of operations for the third quarter ended September 30, 2006. A copy of the press release is attached as Exhibit 99.1 and is incorporated herein by reference. The foregoing information is intended to be furnished under Item 2.02 "Results of Operations and Financial Condition" in accordance with Securities and Exchange Commission Release No. 33-8400. Such information shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, except as expressly set forth by specific reference in such filing. ITEM 8.01 OTHER EVENTS. The Company advises its shareholders of the following information omitted from its most recent annual report to shareholders: The most recent certifications by the Company's CEO and CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 were filed as exhibits to the Company's Form 10-K for fiscal 2005. The Company also filed timely and without qualification with the New York Stock Exchange ("NYSE") its most recent annual CEO certification as required by Section 303A.12(a) of the NYSE Listed Company Manual. To the extent required, the Company will include this disclosure in future annual reports. 2 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 hereunto duly authorized. Date: November 8, 2006 CENVEO, INC. By: /s/ Sean S. Sullivan -------------------- Sean S. Sullivan Chief Financial Officer 3 EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99.1 Press Release of Cenveo, Inc. dated November 8, 2006 EX-99.1 CHARTER 2 ex99p1.txt [Cenveo logo] EXHIBIT 99.1 NEWS RELEASE CENVEO ANNOUNCES THIRD QUARTER 2006 RESULTS ------------------------------------------- 3rd Quarter EPS of $0.21 per diluted share 3rd Quarter Non-GAAP EPS of $0.27 per diluted share Adjusted EBITDA of $40.4 million, up 82% from prior year Significant improvement in cash flows from operating activities Robert G. Burton, Sr., extends contract with Company through 2010 STAMFORD, CT - (NOVEMBER 8, 2006) - Cenveo, Inc. (NYSE: CVO) today announced its results for the three and nine months ended September 30, 2006. For the third quarter, the Company reported net income of $11.6 million, or $0.21 per diluted share, compared to a net loss of $64.1 million, or $(1.28) per diluted share, in the third quarter of 2005. The third quarter 2006 results include restructuring, impairment and other charges of $4.7 million, as compared to $24.4 million in 2005. Net sales for the quarter decreased to $383.9 million from $430.8 million in 2005, primarily due to the Company's sale of Supremex. Non-GAAP net income totaled $14.9 million or $0.27 per diluted share in the third quarter of 2006. Non-GAAP net income excludes restructuring and impairment charges, and equity income from affiliate. A reconciliation of net income to Non-GAAP net income for these adjustments is presented in the attached tables. Adjusted EBITDA, as defined, (earnings before interest, taxes, depreciation and amortization, excluding restructuring, impairment, and other charges, gain (loss) on sale of non-strategic businesses, divested operations, additional stock compensation expense on the adoption of SFAS 123R, loss on early extinguishment of debt, and equity income in affiliate) in the third quarter of 2006, was $40.4 million compared to Adjusted EBITDA of $22.1 million in the same period last year, an increase of 82%. An explanation of the Company's use of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income is provided below. For the first nine months, the Company reported net income of $90.7 million, or $1.68 per diluted share compared to a net loss of $97.2 million, or $(1.99) per diluted share in the same period in 2005. The results for the first nine months of 2006 include restructuring and impairment charges of $35.4 million, the gain on sale of non-strategic businesses of $132.9 million, primarily relating to a sale of our 71.4% interest in Supremex, and the loss on early extinguishment of debt of $32.7 million. Net sales for the first nine months decreased to $1.17 billion from $1.30 billion in 2005, primarily due to the Company's decision to sell Supremex, close certain facilities, and sell several other non-strategic businesses. Non-GAAP net income totaled $33.7 million or $0.62 per diluted share in the first nine months of 2006. Non-GAAP net income excludes restructuring and impairment charges, gain on sale of non-strategic businesses, loss on early extinguishment of debt and equity income in affiliate. A reconciliation of net income to Non-GAAP net income for these adjustments is presented in the attached tables. ROBERT G. BURTON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER STATED: "I am pleased to announce another quarter of strong operating performance with excellent growth in earnings and cash flows. We were once again able to exceed our financial targets and dramatically improve margins by executing the turnaround plan that we implemented last year. We continue to see strength across our envelopes, forms and label segment, due to strong backlog and solid operational improvement. Our commercial print segment has once again showed dramatic operational and financial improvement as our consolidation efforts and sales focus are resulting in solid margin expansion. Our cost containment efforts, combined with organic growth across our businesses allowed us to improve Adjusted EBITDA by 82% in the quarter from the same period last year. I would also point out the dramatic improvement we have made in regards to cash flow and working capital management. Since our arrival last September, we have been 2 intensely focused on improving our DSO's, inventory turns, capital expenditure criteria and cash management. As of September 30, 2006, we have reduced our DSO's by over 4 days in the year our management team has been on board. All of these efforts are resulting in a significant turnaround in cash flow. We will continue to put these funds to use by paying down debt, growing the business through acquisition and selected capital investments." MR. BURTON CONTINUED: "We have also strategically invested in higher growth sectors of our business to position us for future growth. For instance, in order to continue to properly service our customer's expanding envelope volumes in the fast growing direct mail market, the Company has ordered a new F.L. Smithe SW1 machine for its Chicago envelope facility. The purchase of this machine will allow for continued growth in unit volume and will provide significant efficiency and productivity improvements. We have also recently ordered two Komori sheet fed offset presses to support our growth initiatives in the commercial print market. These two presses will strengthen Cenveo's position in the high-end commercial print market across the Southwest. As I have stated all along, Cenveo will invest in capital when it makes both strategic and financial sense. These recent strategic investments not only meet our high return on capital thresholds, but also allow us to grow with our customers in higher growth sectors of our business. We will continue to make selected investments when advantageous, to position the Company for the future growth." MR. BURTON CONCLUDED: "I continue to be very pleased with the progress the Company has made in the year since our management team has arrived. We have executed on our turnaround plan and have consistently delivered on our financial commitments each quarter. We have continued to win in our markets by bringing great quality and service levels to our customers. We intend to continue to grow our business organically and through acquisition, as we did with Rx Technology, by adding high quality companies to our family. It is very clear to me that Cenveo is an outstanding platform to build the world's premiere printing company. I am 100% convinced that we have the opportunity not only to continue to 3 enhance shareholder value, but to create a company that is the envy of the industry. My commitment to making this happen has never been stronger, so much so that I have agreed to extend my original three year contract with the Company for an additional two years, through 2010. As the Company's largest individual shareholder, I am confident that our team will be successful in achieving this goal." CONFERENCE CALL: Cenveo will host a conference call tomorrow, Thursday November 9, 2006, at 10:00 a.m. Eastern Time. The conference call will be available via webcast, which can be accessed via the Internet at www.cenveo.com. 4 - ------------------------------------------------------------------------------------------------------------------------- CENVEO, INC., AND SUBSIDIARIES Condensed Consolidated Statements of Operations (in thousands, except per share data) (Unaudited)
- ------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, - ------------------------------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 - ------------------------------------------------------------------------------------------------------------------------- Net sales $ 383,868 $ 430,823 $ 1,168,440 $ 1,302,161 - ------------------------------------------------------------------------------------------------------------------------- Cost of sales 307,013 350,485 928,462 1,057,857 - ------------------------------------------------------------------------------------------------------------------------- Selling, general and administrative 45,703 59,740 151,197 188,769 - ------------------------------------------------------------------------------------------------------------------------- Amortization of intangible assets 1,422 1,272 3,985 3,878 - ------------------------------------------------------------------------------------------------------------------------- Restructuring, impairment and other charges 4,702 24,378 35,390 39,467 - ------------------------------------------------------------------------------------------------------------------------- Operating income (loss) 25,028 (5,052) 49,406 12,190 - ------------------------------------------------------------------------------------------------------------------------- (Gain) loss on sale of non-strategic businesses -- 759 (132,925) 2,019 - ------------------------------------------------------------------------------------------------------------------------- Interest expense, net 13,939 18,079 46,936 55,074 - ------------------------------------------------------------------------------------------------------------------------- Loss on early extinguishment of debt -- -- 32,744 -- - ------------------------------------------------------------------------------------------------------------------------- Other (income) expense, net (2,521) 768 (5,293) 1,203 - ------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 13,610 (24,658) 107,944 (46,106) - ------------------------------------------------------------------------------------------------------------------------- Income tax expense 1,994 39,420 17,221 51,140 - ------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 11,616 $(64,078) $ 90,723 $ (97,246) - ------------------------------------------------------------------------------------------------------------------------- Income (loss) per share: - ------------------------------------------------------------------------------------------------------------------------- Income (loss) per share--basic $0.22 $(1.28) $ 1.70 $(1.99) - ------------------------------------------------------------------------------------------------------------------------- Income (loss) per share--diluted $0.21 $(1.28) $ 1.68 $(1.99) - ------------------------------------------------------------------------------------------------------------------------- Weighted average shares--basic 53,342 50,212 53,237 48,932 - ------------------------------------------------------------------------------------------------------------------------- Weighted average shares--diluted 54,189 50,212 53,993 48,932 - -------------------------------------------------------------------------------------------------------------------------
5 - -------------------------------------------------------------------------------------------------------------- CENVEO, INC., AND SUBSIDIARIES Reconciliation of Net Income to Non-GAAP Net Income (in thousands, except per share data) (Unaudited)
- -------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED SEPTEMBER 30, 2006 - -------------------------------------------------------------------------------------------------------------- ADJUSTMENTS AS REPORTED TO NON-GAAP NON-GAAP - -------------------------------------------------------------------------------------------------------------- Net sales $ 383,868 -- $ 383,868 - -------------------------------------------------------------------------------------------------------------- Cost of sales 307,013 -- 307,013 - -------------------------------------------------------------------------------------------------------------- Selling, general and administrative 45,703 -- 45,703 - -------------------------------------------------------------------------------------------------------------- Amortization of intangible assets 1,422 -- 1,422 - -------------------------------------------------------------------------------------------------------------- Restructuring and impairment charges 4,702 (4,702) -- - -------------------------------------------------------------------------------------------------------------- Operating income 25,028 4,702 29,730 - -------------------------------------------------------------------------------------------------------------- Interest expense, net 13,939 -- 13,939 - -------------------------------------------------------------------------------------------------------------- Other (income) expense, net (2,521) 2,623 102 - -------------------------------------------------------------------------------------------------------------- Income before income taxes 13,610 2,079 15,689 - -------------------------------------------------------------------------------------------------------------- Income tax expense 1,994 (1,157) 837 - -------------------------------------------------------------------------------------------------------------- Net income $ 11,616 3,236 $14,852 - -------------------------------------------------------------------------------------------------------------- Income per share: - -------------------------------------------------------------------------------------------------------------- Income per share--basic $0.22 -- $0.28 - -------------------------------------------------------------------------------------------------------------- Income per share--diluted $0.21 -- $0.27 - -------------------------------------------------------------------------------------------------------------- Weighted average shares--basic 53,342 -- 53,342 - -------------------------------------------------------------------------------------------------------------- Weighted average shares--diluted 54,189 -- 54,189 - --------------------------------------------------------------------------------------------------------------
6 - ---------------------------------------------------------------------------------------------------------------- CENVEO, INC., AND SUBSIDIARIES Reconciliation of Net Income to Non-GAAP Net Income (in thousands, except per share data) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED SEPTEMBER 30, 2006 - ---------------------------------------------------------------------------------------------------------------- ADJUSTMENTS AS REPORTED TO NON-GAAP NON-GAAP - ---------------------------------------------------------------------------------------------------------------- Net sales $ 1,168,440 -- $ 1,168,440 - ---------------------------------------------------------------------------------------------------------------- Cost of sales 928,462 -- 928,462 - ---------------------------------------------------------------------------------------------------------------- Selling, general and administrative 151,197 -- 151,197 - ---------------------------------------------------------------------------------------------------------------- Amortization of intangible assets 3,985 -- 3,985 - ---------------------------------------------------------------------------------------------------------------- Restructuring and impairment charges 35,390 (35,390) -- - ---------------------------------------------------------------------------------------------------------------- Operating income 49,406 35,390 84,796 - ---------------------------------------------------------------------------------------------------------------- Gain on sale of non-strategic businesses (132,925) 132,925 -- - ---------------------------------------------------------------------------------------------------------------- Interest expense, net 46,936 -- 46,936 - ---------------------------------------------------------------------------------------------------------------- Loss on early extinguishment of debt 32,744 (32,744) -- - ---------------------------------------------------------------------------------------------------------------- Other (income) expense, net (5,293) 4,911 (382) - ---------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes 107,944 (69,702) 38,242 - ---------------------------------------------------------------------------------------------------------------- Income tax expense 17,221 (12,699) 4,522 - ---------------------------------------------------------------------------------------------------------------- Net income $ 90,723 (57,003) $ 33,720 - ---------------------------------------------------------------------------------------------------------------- Income per share: - ---------------------------------------------------------------------------------------------------------------- Income per share--basic $ 1.70 -- $ 0.63 - ---------------------------------------------------------------------------------------------------------------- Income per share--diluted $ 1.68 -- $ 0.62 - ---------------------------------------------------------------------------------------------------------------- Weighted average shares--basic 53,237 -- 53,237 - ---------------------------------------------------------------------------------------------------------------- Weighted average shares--diluted 53,993 -- 53,993 - ----------------------------------------------------------------------------------------------------------------
7 - -------------------------------------------------------------------------------------------------------------------- CENVEO, INC. AND SUBSIDIARIES Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands)
- -------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, - -------------------------------------------------------------------------------------------------------------------- 2006 2005 2006 2005 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 11,616 $(64,078) $ 90,723 $ (97,246) - -------------------------------------------------------------------------------------------------------------------- Interest expense 13,939 18,079 46,936 55,074 - -------------------------------------------------------------------------------------------------------------------- Income taxes 1,994 39,420 17,221 51,140 - -------------------------------------------------------------------------------------------------------------------- Depreciation 8,610 11,611 27,449 34,900 - -------------------------------------------------------------------------------------------------------------------- Amortization of intangible assets 1,422 1,272 3,985 3,878 - -------------------------------------------------------------------------------------------------------------------- Restructuring, impairment and other charges 4,702 24,378 35,390 39,467 - -------------------------------------------------------------------------------------------------------------------- (Gain) loss on sale of non-strategic businesses -- 759 (132,925) 2,019 - -------------------------------------------------------------------------------------------------------------------- Loss on early extinguishment of debt -- -- 32,744 -- - -------------------------------------------------------------------------------------------------------------------- Equity income in affiliate and other (2,623) -- (4,911) -- - -------------------------------------------------------------------------------------------------------------------- Divested operations -- (9,307) (8,436) (28,128) - -------------------------------------------------------------------------------------------------------------------- Additional stock compensation expense on the adoption of SFAS 123R 732 -- 1,813 -- - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Adjusted EBITDA, as defined $ 40,392 $ 22,134 $ 109,989 $ 61,104 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Supremex operations -- 8,896 9,784 27,222 - -------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------- Adjusted EBITDA, as defined and Supremex operations $ 40,392 $ 31,030 $ 119,773 $ 88,326 -------- -------- --------- -------- - --------------------------------------------------------------------------------------------------------------------
8 CENVEO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited)
- ------------------------------------------------------------------------------------------------------------- SEPTEMBER 30, 2006 DECEMBER 31, 2005(A) ------------------ -------------------- - ------------------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------------------- Current assets: - ------------------------------------------------------------------------------------------------------------- Cash and cash equivalents $ 842 $ 1,035 - ------------------------------------------------------------------------------------------------------------- Accounts receivable, net 226,378 247,277 - ------------------------------------------------------------------------------------------------------------- Inventories 98,706 108,704 - ------------------------------------------------------------------------------------------------------------- Other current assets 31,701 25,767 ------ ------ - ------------------------------------------------------------------------------------------------------------- Total current assets 357,627 382,783 - ------------------------------------------------------------------------------------------------------------- Property, plant and equipment, net 268,795 317,606 - ------------------------------------------------------------------------------------------------------------- Goodwill 258,139 311,146 - ------------------------------------------------------------------------------------------------------------- Investment in affiliate 48,839 -- - ------------------------------------------------------------------------------------------------------------- Other assets 59,206 68,029 ------ ------ - ------------------------------------------------------------------------------------------------------------- Total assets $ 992,606 $1,079,564 ========= ========== - ------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) - ------------------------------------------------------------------------------------------------------------- Current liabilities: - ------------------------------------------------------------------------------------------------------------- Current maturities of long-term debt $ 4,109 $ 2,791 - ------------------------------------------------------------------------------------------------------------- Accounts payable 93,261 124,901 - ------------------------------------------------------------------------------------------------------------- Accrued compensation and related liabilities 43,323 53,765 - ------------------------------------------------------------------------------------------------------------- Other current liabilities 76,678 79,051 ------ ------ - ------------------------------------------------------------------------------------------------------------- Total current liabilities 217,371 260,508 - ------------------------------------------------------------------------------------------------------------- Long-term debt 697,329 809,345 - ------------------------------------------------------------------------------------------------------------- Deferred income taxes 4,879 10,045 - ------------------------------------------------------------------------------------------------------------- Other liabilities 39,253 49,216 - ------------------------------------------------------------------------------------------------------------- Shareholders' equity (deficit): - ------------------------------------------------------------------------------------------------------------- Preferred stock -- -- - ------------------------------------------------------------------------------------------------------------- Common stock 534 530 - ------------------------------------------------------------------------------------------------------------- Paid-in capital 242,859 239,432 - ------------------------------------------------------------------------------------------------------------- Retained deficit (214,369) (305,091) - ------------------------------------------------------------------------------------------------------------- Unearned compensation -- (1,825) - ------------------------------------------------------------------------------------------------------------- Accumulated other comprehensive income 4,750 17,404 ----- ------ - ------------------------------------------------------------------------------------------------------------- Total shareholders' equity (deficit) 33,774 (49,550) ------ ------- - ------------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity (deficit) $ 992,606 $1,079,564 ========= ========== - ------------------------------------------------------------------------------------------------------------- (A) Derived from the audited consolidated financial statements as of December 31, 2005.
9 CENVEO, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------- NINE MONTHS ENDED SEPTEMBER 30, - ---------------------------------------------------------------------------------------------------------------------- 2006 2005 - ---------------------------------------------------------------------------------------------------------------------- Cash flows from operating activities: - ---------------------------------------------------------------------------------------------------------------------- Net income (loss) $90,723 $(97,246) - ---------------------------------------------------------------------------------------------------------------------- Adjustments to reconcile net income (loss) to net cash used in operating activities: - ---------------------------------------------------------------------------------------------------------------------- Depreciation and amortization, excluding amortization of deferred financing costs 31,434 38,778 - ---------------------------------------------------------------------------------------------------------------------- Amortization of deferred financing costs 1,353 2,869 - ---------------------------------------------------------------------------------------------------------------------- Loss on early extinguishment of debt 32,744 -- - ---------------------------------------------------------------------------------------------------------------------- Deferred income taxes 3,991 35,970 - ---------------------------------------------------------------------------------------------------------------------- Non-cash restructuring and impairment charges, net 6,244 9,801 - ---------------------------------------------------------------------------------------------------------------------- Other non-cash charges 6,321 3,247 - ---------------------------------------------------------------------------------------------------------------------- (Gain) loss on sale of non-strategic businesses (132,925) 2,019 - ---------------------------------------------------------------------------------------------------------------------- Equity income in affiliate, net (769) -- - ---------------------------------------------------------------------------------------------------------------------- Changes in operating assets and liabilities: - ---------------------------------------------------------------------------------------------------------------------- Accounts receivable 4,894 (5,423) - ---------------------------------------------------------------------------------------------------------------------- Inventories (2,853) (11,861) - ---------------------------------------------------------------------------------------------------------------------- Accounts payable and accrued compensation and related liabilities (42,497) (1,336) - ---------------------------------------------------------------------------------------------------------------------- Other working capital changes (8,407) 1,354 - ---------------------------------------------------------------------------------------------------------------------- Other, net (369) (5,473) ---- ------ - ---------------------------------------------------------------------------------------------------------------------- Net cash used in operating activities (10,116) (27,301) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from investing activities: - ---------------------------------------------------------------------------------------------------------------------- Proceeds from divestitures, net 213,104 6,514 - ---------------------------------------------------------------------------------------------------------------------- Cost of business acquisition, net of cash acquired (49,425) -- - ---------------------------------------------------------------------------------------------------------------------- Capital expenditures (16,376) (19,698) - ---------------------------------------------------------------------------------------------------------------------- Acquisition payments (4,653) (3,980) - ---------------------------------------------------------------------------------------------------------------------- Proceeds from sale of property, plant and equipment 6,025 724 ----- --- - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) investing activities 148,675 (16,440) - ---------------------------------------------------------------------------------------------------------------------- Cash flows from financing activities: - ---------------------------------------------------------------------------------------------------------------------- Repayment of 9 5/8% senior notes (339,502) -- - ---------------------------------------------------------------------------------------------------------------------- (Repayments) borrowings under senior secured revolving credit facility, net (123,931) 25,200 - ---------------------------------------------------------------------------------------------------------------------- Repayments of other long-term debt (12,265) (2,535) - ---------------------------------------------------------------------------------------------------------------------- Payment of redemption premiums and expenses (26,142) -- - ---------------------------------------------------------------------------------------------------------------------- Payment of debt issuance costs (3,770) -- - ---------------------------------------------------------------------------------------------------------------------- Proceeds from issuance of term loan 325,000 -- - ---------------------------------------------------------------------------------------------------------------------- Borrowings under new revolving credit facility, net 40,000 -- - ---------------------------------------------------------------------------------------------------------------------- Proceeds from exercise of stock options 1,860 21,087 ----- ------ - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities (138,750) 43,752 - ---------------------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (2) 76 --- --- - ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents (193) 87 - ---------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at beginning of year 1,035 796 ----- --- - ---------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of quarter $842 $ 883 ==== ===== - ----------------------------------------------------------------------------------------------------------------------
10 ### The common definition of EBITDA is "Earnings before Interest, Taxes, Depreciation and Amortization". Adjusted EBITDA is equivalent to the common definition of EBITDA excluding restructuring, impairment and other changes, (gain) loss on sale of non-strategic businesses, divested operations EBITDA, additional stock compensation expense on the adoption of SFAS 123R, gain (loss) on early extinguishment of debt and gain (loss) on disposal of discontinued operations. Restructuring, impairment and other charges have been excluded from Adjusted EBITDA to maintain comparability of our results with the results of competitors using similar measures. Adjusted EBITDA should be used in conjunction with U.S. GAAP financial measures and is not presented as an alternative to cash flow from operations as a measure of our liquidity or as an alternative to net income as an indicator of our operating performance. We believe the use of Adjusted EBITDA along with U.S. GAAP financial measures enhances the understanding of our operating results and is useful to investors in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA allows investors to compare operating results of competitors exclusive of depreciation and amortization. Adjusted EBITDA is a useful tool given the significant variation that can result from the timing of capital expenditures, the amount of intangible assets recorded or the differences in assets' lives. Adjusted EBITDA as used here may not be comparable to similarly titled measures reported by competitors. We also use Adjusted EBITDA to evaluate operating performance of our segments, to allocate resources and capital to such segments, to measure performance for incentive compensation programs, and to evaluate future growth opportunities. ### CENVEO IS ONE OF NORTH AMERICA'S LEADING PROVIDERS OF PRINT AND VISUAL COMMUNICATIONS, WITH ONE-STOP SERVICES FROM DESIGN THROUGH FULFILLMENT. THE COMPANY'S BROAD PORTFOLIO OF SERVICES AND PRODUCTS INCLUDE COMMERCIAL PRINTING, ENVELOPES, LABELS, PACKAGING AND BUSINESS DOCUMENTS DELIVERED THROUGH A NETWORK OF PRODUCTION, FULFILLMENT AND DISTRIBUTION FACILITIES THROUGHOUT NORTH AMERICA. ------------------------ 11 Statements made in this release, other than those concerning historical financial information, may be considered forward-looking statements, which speak only as of the date of this release and are based upon current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual result to differ materially from such forward-looking statements. Those assumptions, risks and uncertainties include, without limitation: (1) uncertainties regarding future growth and our ability to successfully integrate acquisitions; (2) substantial indebtedness impairing our financial condition and limiting our ability to incur additional debt; (3) indebtedness imposing significant restrictions on our business; (4) additional indebtedness exacerbating the above factors; (5) debt instruments providing cross defaults causing all debt to become due and payable as a result of a default under an unrelated debt instrument; (6) our history of losses and uncertain return to consistent profitability; (7) the absence of long-term customer agreements in our industry, subjecting our business to fluctuations; (8) factors affecting the U.S. postal services; (9) increases in paper costs and decreases in its availability; (10) availability of alternative delivery media; (11) intense competition; (12) supply, availability, and costs of raw materials and components; (13) fires or explosions at any of the Company's facilities; (14) environmental rules and regulations, non-compliance with which may expose the Company to adverse consequences; (15) acquisitions that might be unsuccessful; (16) contract pricing and timing of awards; (17) changing economic and political conditions in the U.S. and in other countries; (18) dependence on key management personnel; (19) customer product acceptance; (20) continued access to technical and capital resources; (21) availability of insurance coverage at acceptable terms; (22) changes in accounting or tax rules or pronouncements; (23) actual pension asset returns and assumptions regarding future returns, discount rates, and service costs; (24) changes in cost estimates related to restructuring or relocation of facilities; (25) the timing and extent of changes in interest rates; (26) access to capital markets and the costs thereof; (27) legal proceedings; and (28) other economic, political, and technological risks and uncertainties. This list of factors is not exhaustive, and new factors may emerge or changes to the foregoing factors may occur that would impact the Company's business. Additional information regarding these and other factors may be contained in the Parent's filings with the SEC. All such risk factors are difficult to predict, contain material uncertainties that may affect actual results and may be beyond the Company's control. These risks and uncertainties are set forth under Item 1 and Item 1A, Risk Factors, in Cenveo's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and Cenveo's other SEC filings. A copy of the Annual Report is available at http://www.cenveo.com. Inquiries from analysts and investors should be directed to Robert G. Burton, Jr. at (203) 595-3005. 12 -----END PRIVACY-ENHANCED MESSAGE-----