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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 27, 1998 Commission file number 1-11802
[logo]
WORLD COLOR PRESS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 37-1167902
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
THE MILL, 340 PEMBERWICK ROAD
GREENWICH, CONNECTICUT 06831
(Address of principal executive offices) (Zip Code)
203-532-4200
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
<S> <C>
Common Stock, $.01 par value per share New York Stock Exchange, Inc.
6% Convertible Senior Subordinated Notes due 2007 New York Stock Exchange, Inc.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The only class of voting securities of World Color Press, Inc. is its
common stock, par value $.01 per share (the "Common Stock"). On March 12,
1999, the aggregate market value of the voting stock held by non-affiliates
of the registrant was approximately $918 million.
-----------------------
The number of shares of the Common Stock outstanding as of March 12, 1999:
38,131,836
-----------------------
DOCUMENTS INCORPORATED BY REFERENCE
Certain exhibits as listed on the Exhibit Index and filed with
registrant's registration statement on Form S-1 (No. 33-99676), Form S-8
(No. 333-47743), Form S-1 (No. 33-59490) and Form S-4 (No. 333-74087) under
the Securities Act of 1933, as amended, are incorporated by reference into
Part IV of this Form 10-K. Portions of the registrant's 1998 Annual Report
to Stockholders are incorporated by reference into Part II of this Form 10-
K. Portions of the registrant's definitive Proxy Statement dated March 26,
1999 are incorporated by reference into Part III of this Form 10-K.
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INDEX
PAGE
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PART I
ITEM 1. Business . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. Properties . . . . . . . . . . . . . . . . . . . . 6
ITEM 3. Legal Proceedings. . . . . . . . . . . . . . . . . 7
ITEM 4. Submission of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . 7
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . . 8
ITEM 6. Selected Financial Data. . . . . . . . . . . . . . 8
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . 8
ITEM 7A. Quantitative and Qualitative Disclosures about
Market Risk. . . . . . . . . . . . . . . . . . . . 9
ITEM 8. Financial Statements and Supplementary Data. . . . 9
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure. . . . . . . . 9
PART III
ITEM 10. Directors and Executive Officers of the
Registrant . . . . . . . . . . . . . . . . . . . . 9
ITEM 11. Executive Compensation . . . . . . . . . . . . . . 9
ITEM 12. Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . . . . . 9
ITEM 13. Certain Relationships and Related Transactions . . 9
PART IV
ITEM 14. Exhibits, Financial Statement Schedule and Reports
on Form 8-K. . . . . . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . 18
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PART I
ITEM 1. BUSINESS.
GENERAL
We are an industry leader in the management and distribution of print
and digital information. We are the second largest diversified
commercial printer in the United States, providing digital prepress,
press, binding, distribution and multi-media services to customers in
the commercial, magazine, catalog, direct mail, book and directory
markets. Founded in 1903, we currently operate 52 facilities with a
network of sales offices nationwide. Through selective acquisitions and
internal expansion, we have strategically positioned ourselves as a
full-service provider of high technology solutions for our customers'
imaging, print and distribution needs.
We operate in one business segment -- printing services. The
following table presents the percentage of total revenue contributed
by each market sector during the past three fiscal years.
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1998 1997 1996
<S> <C> <C> <C>
Commercial 26% 23% 27%
Magazines 28 30 29
Catalogs 24 24 27
Direct Mail 8 7 9
Books 10 11 2
Directories 4 5 6
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TOTAL: 100% 100% 100%
==== ==== ====
</TABLE>
We completed five acquisitions in calendar year 1998: Magna Graphic,
Inc. (January), a prepress operation servicing customers primarily in
the educational textbook market, Dittler Brothers, Incorporated (March),
a direct mail and commercial printing operation, Acme Printing Company,
Inc. (April), a commercial printer and Century Graphics Corporation
(February) and Great Western Publishing, Inc. (December, fiscal year
1999), two operations serving customers in the retail insert market. The
above table includes the revenues we recognized from these operations from
their respective acquisition dates in 1998.
Substantially all sales are made to customers through our employees
based upon customer specification. A significant amount of our sales
are made pursuant to term contracts with our customers, with the
remainder being made on an order-by-order basis. As a result, we have
a significant backlog of orders. No customer accounted for more than
5% of our net sales in 1998. In our opinion, the loss, at
substantially the same time, of all of the business provided by any
one of our largest customers could have an adverse effect upon us.
1
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MARKET SECTORS
COMMERCIAL. We are a premier printer of virtually all of the
different kinds of printed materials used by businesses to promote
their goods and services to other businesses, investors and consumers.
We print high quality specialty products such as annual reports
(including our own) and automobile and travel brochures. We are also a
leading printer of product brochures, bill stuffers, informational
marketing materials and other advertising supplements.
We also print freestanding inserts and retail inserts for established
national and regional retailers and are the second largest offset
printer of retail advertising inserts in the United States. We are an
industry leader in three highly specialized areas: (1) complex
personalized direct response materials; (2) unique and intricate
consumer-involvement promotional materials such as scratch-off game
pieces; and (3) airline guides and hotel directories.
With a broad range of specialized equipment and focused attention to
customer service, we provide our commercial customers with format
flexibility, high-speed production and the ability to print high
quality commercial products from start to finish at one full-service
source. We believe our reputation for and dedication to innovation and
leadership in specialized services will allow us to enjoy continued
loyalty from our customers.
MAGAZINES. We believe that we are the second largest printer of
consumer magazines in the United States. Our principal competitors in
this sector consist of three diversified printing companies. Our
publication customer base includes some of the largest and most
established consumer magazine publishers in a diverse range of market
categories. The popularity of these magazines makes them less
susceptible to cyclical downturns in advertising spending, which we
believe provides us with a significant advantage over competitors
whose customers may be more susceptible to such downturns.
A majority of our magazine printing is performed under contracts with
remaining terms of between one and ten years, the largest of which are
with customers with whom we have had relationships for, on average,
more than 20 years. We have extended a majority of such contracts
beyond their initial expiration dates and intend to continue this
practice when economically practicable.
CATALOGS. We are a leading printer for the U.S. catalog market. We
currently print many of the most well known catalog titles. In
addition, our business-to-business catalog printing work spans a broad
range of industries including the computer, home and office furniture,
office products and industrial safety products industries. Our key
competitors in the catalog market consist of four diversified
commercial printers whose facilities enable them to compete in the
national market and smaller local and regional printers who compete
for regional business.
DIRECT MAIL. Direct mail marketing services are an important and
growing component of many businesses' marketing programs and overall
U.S. advertising expenditures. We print direct mail materials such as
booklets, inserts, bill stuffers and other advertisements. In
addition, we provide direct marketers with direct imaging,
personalization and other lettershop services. We believe that we are
the only direct mail printer capable of providing complex
personalization for both short and long-run projects.
BOOKS. We print mass-market, racksize books and hardcover books for
the consumer, education and reference markets. We service many of the
largest U.S. publishers.
2
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DIRECTORIES. We have printed directories since 1981, predominately
for Pacific Bell. We print four-color white-page and yellow-page
directories for Pacific Bell under a contract which extends through
the year 2002 and which can be extended by Pacific Bell for up to an
additional three years. We print more than 100 different regional
directory titles for Pacific Bell and certain other customers.
CURRENT SERVICES
DIGITAL AND PREPRESS SERVICES. We are a leader in the transition from
conventional prepress to an all-digital workflow, providing a complete
spectrum of film and digital preparation services, from traditional
paste-up and color separations to state-of-the-art, all-digital
prepress, as well as digital imaging and digital archiving. Our ten
specialized digital and prepress facilities, which are strategically
located close to our customers, provide high quality, 24-hour
preparatory services linked directly to our various printing
facilities. In addition, our computer systems enable us to exchange
images and textual material electronically directly between our
facilities and the customers' business locations. The integrated
prepress operations provide us with competitive advantages over
traditional prepress shops that are not able to provide the same level
of integrated services. Our digital group also provides multi-media
services such as the transformation of customers' existing printed and
digital material into interactive media such as user-friendly
information kiosk systems, Internet web sites, corporate intranets,
CD-ROM's and computer laptop sales presentations. Our digital
services group has provided a natural opportunity for our cross-
selling efforts by offering integrated prepress and multi-media
services to our print customers who may have historically used third-
party suppliers for their prepress and multi-media needs.
PRESS AND BINDING SERVICES. We believe that we provide our customers
with access to state-of-the-art technology in all phases of the
printing and binding process, including, among others, wide-web
presses, computerized quality information systems, computer-to-plate
and digital processing systems, high speed binding and personalization
capabilities and robotic material handling. Wide-web press technology,
which only a small number of well-capitalized printers are able to
justify, generates a significant cost savings on longer press runs.
Computerized quality information systems provide us and our customers
with instant analysis of the quality of the printing, thereby enabling
us to improve our performance and plan preventive maintenance of our
equipment more effectively. Computer-to-plate and digital processing
technologies eliminate the use of film which significantly reduces
costs and production time and enables our customers to extend their
production deadlines. Our personalization capabilities allow customers
to include different content, whether advertising or editorial or
both, within different copies of their product depending upon the
geographic, demographic and subscriber specifications of their
readers.
We operate web and sheetfed offset, rotogravure and flexographic
presses. We believe that the variety and capabilities of our presses
and other production equipment allow us to meet the broad range of our
customers' printing needs and be the full service provider demanded by
the market. This capacity provides us with the competitive advantage
over those smaller printers who are unable to meet this demand.
3
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DISTRIBUTION AND LOGISTICS. We believe that our sophisticated mailing
and distribution capabilities are among the best in the industry. We
maintain a network of strategic regional locations from which we
provide customers important local access to our nationwide services.
Nearly all of our printing facilities dedicated to servicing our
magazine, catalog and direct mail customers are strategically located
in the mid-region of the country. We believe that the size of these
printing plants and their central location and close proximity to each
other provide us with a significant advantage in distribution
capabilities, enabling us to distribute a greater volume of product
than our competitors to a wider target market at a lower cost. We also
operate facilities on the west and east coasts which serve more
regionalized needs. We use computerized cost studies to examine the
benefits of pooled and palletized mailing for each customer to develop
an efficient and cost effective distribution plan designed to ensure
that the customer's product reaches consumers at narrowly specified
delivery times.
COMPETITION
Although we are one of the largest diversified commercial printers in
the United States, the industry is highly competitive in most product
categories and geographic regions. Competition is largely based on
price, quality, range of services offered, distribution capabilities,
customer service, availability of printing time on appropriate
equipment and state-of-the-art technology. We compete for commercial
business not only with large national printers, but also with smaller
regional printers. In certain circumstances, due primarily to factors
such as freight rates and customer preference for local services,
printers with better access to certain regions of the country may have
a competitive advantage in such a region.
The printing industry is experiencing excess capacity. Further, the
industries that we serve have been subject to consolidation efforts,
leading to a smaller number of potential customers who exercise
increased pricing leverage over the industry. Primarily as a result
of this excess capacity and customer consolidation, there has been,
and will continue to be, downward pricing pressure and increased
competition in the printing industry.
RAW MATERIALS
The primary raw materials required in a printing operation are ink and
paper. We supply all of the ink and a substantial amount of the paper
used in the printing process. Our net sales include sales to certain
customers of paper that we purchase. We provide warehouse space for
both ourselves and customer supplied paper. The price of paper is volatile
over time and may cause significant swings in net sales and cost of sales.
We generally are able to pass on increases in the cost of paper to our
customers, while declines in paper costs result in lower prices to our
customers. The paper market firmed in pricing from early 1997 to late 1997.
In early 1998 paper pricing softened from late 1997 price levels. Prices
continued to decline throughout 1998 as availability became plentiful
for most grades of paper. We anticipate that pricing will continue to
soften in 1999. We believe we have adequate allocations with our paper
suppliers to meet our customers' needs. Our contracts with our
customers generally provide for price adjustments to reflect price
changes for other materials, wages and outside services.
Our materials management program capitalizes on our purchasing power
in order to minimize materials costs while optimizing inventory
management. In addition, our strong commercial relationships with a
relatively small number of suppliers allow us to negotiate favorable
price discounts and achieve more assured sourcing of high quality
paper that meets our specifications. We are not dependent upon any one
source for our paper or ink. Given the volume of our purchases, we
are generally able to obtain quality paper, ink and other materials at
competitive prices. We believe that an adequate supply of ink is
available.
4
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ENVIRONMENTAL COMPLIANCE
We are subject to regulation under various and changing federal, state
and local laws relating to the environment and to employee safety and
health. These environmental regulations relate to the generation,
storage, transportation, disposal and emission into the environment of
various substances. Permits are required for operation of our
business (particularly air emission permits), and these permits are
subject to renewal, modification and, in certain circumstances,
revocation. We believe that we are in substantial compliance with
such laws and permitting requirements. We are also subject to
regulation under various and changing federal, state and local laws
which allow regulatory authorities to compel (or to seek reimbursement
for) clean-up of environmental contamination at our own sites and at
facilities where our waste is or has been disposed.
We have internal controls and personnel dedicated to compliance with
all applicable environmental laws. We estimate that capital
expenditures in 1999 required to comply with federal, state and local
provisions for environmental controls, as well as expenditures for our
share of costs for environmental clean-up, if any, will not be
material and will not have a material adverse effect on us. We expect
to incur ongoing capital and operating costs to maintain compliance
with applicable environmental laws, which costs we do not expect to
be, in the aggregate, material.
RESEARCH AND DEVELOPMENT
Suppliers of equipment and materials used by companies such as us
perform most of the research and development related to the printing
industry. Accordingly, our expenses and capital investments for
research and development are not material. We do, however, dedicate
significant resources to improving our operating efficiencies and the
services we provide to our customers. In an effort to realize
increased efficiencies in our printing processes, we have made
significant investments in state-of-the-art equipment, including new
press and binding technology, digital photography, computer-to-plate
and digital processing technology and real-time product quality
monitoring systems.
EMPLOYEES
As of March 1, 1999, we had over 16,000 employees, approximately 16%
of who were represented by unions. As of March 1, 1999 approximately
1,600 of such union employees, in two different facilities, were
covered under several different contracts which have expired and are
currently under negotiation.
The balance of our union employees are covered under contracts which
expire during 1999, 2000 and 2002.
5
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ITEM 2. PROPERTIES.
Our corporate office is currently located in leased facilities in
Greenwich, Connecticut. Production facilities are located throughout
the United States, as set forth below. We believe our facilities
provide adequate productive capacity for our needs. Summary
information regarding our facilities is set forth as follows:
<TABLE>
<CAPTION>
USE AND LOCATION OWNED/LEASED SQUARE FOOTAGE
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<S> <C> <C>
CORPORATE HEADQUARTERS:
Greenwich, Connecticut . . . . Leased 55,000
PRINTING PLANTS:
Atlanta, Georgia . . . . . . . Owned 129,000
Augusta, Georgia . . . . . . . Owned 700,000
Aurora, Illinois . . . . . . . Owned 226,000
Brookfield, Wisconsin. . . . . Owned 309,000
Corinth, Mississippi . . . . . Owned 630,000
Covington, Tennessee . . . . . Owned 535,000
Dresden, Tennessee . . . . . . Owned 678,000
Dyersburg, Tennessee . . . . . Owned 869,000
Elk Grove Village, Illinois. . Owned 177,000
Elk Grove Village, Illinois. . Leased 93,000
Effingham, Illinois. . . . . . Owned 570,000
Enfield, Connecticut . . . . . Owned 75,000
Jonesboro, Arkansas. . . . . . Owned 400,000
Lebanon, Ohio. . . . . . . . . Owned 270,000
Los Angeles, California. . . . Leased 283,000
Merced, California . . . . . . Owned 460,000
Metairie, Louisiana. . . . . . Owned 106,000
North Haven, Connecticut . . . Owned 440,000
Oakwood, Georgia . . . . . . . Owned 251,000
Oberlin, Ohio. . . . . . . . . Owned 110,000
Oklahoma City, Oklahoma. . . . Owned 220,000
Omaha, Nebraska. . . . . . . . Owned 52,000
Ontario, California. . . . . . Leased 39,000
Orlando, Florida . . . . . . . Leased 191,000
Phoenix, Arizona . . . . . . . Leased 83,000
Red Bank, Ohio . . . . . . . . Owned 180,000
Salem, Illinois. . . . . . . . Owned 688,000
Salt Lake City, Utah . . . . . Leased 39,000
South Windsor, Connecticut . . Owned 42,000
Stafford, Texas. . . . . . . . Leased 60,000
Stillwater, Oklahoma . . . . . Owned 332,000
Taunton, Massachusetts . . . . Owned 358,000
Versailles, Kentucky . . . . . Owned 1,058,000
Wilmington, Massachusetts. . . Leased 195,000
Winchester, Virginia . . . . . Owned 96,000
6
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<CAPTION>
<S> <C> <C>
DIGITAL SERVICES/PREPRESS:
Arlington Heights, Illinois. . Leased 18,000
Charlotte, North Carolina. . . Leased 25,000
Lake Mary, Florida . . . . . . Leased 19,000
Lexington, Kentucky. . . . . . Leased 27,000
Los Angeles, California. . . . Leased 22,000
New York, New York . . . . . . Leased 6,000
Orlando, Florida . . . . . . . Leased 18,000
St. Charles, Missouri. . . . . Leased 20,000
Warren, Michigan . . . . . . . Leased 12,000
Washington, D.C. . . . . . . . Owned 67,000
DISTRIBUTION:
Altamont, Illinois . . . . . . Leased 27,000
Bensenville, Illinois
(DISTRIBUTION/BINDERY) . . . Owned 307,000
Flora, Illinois. . . . . . . . Owned 120,000
Lexington, Kentucky. . . . . . Leased 26,000
Lexington, Kentucky. . . . . . Leased 240,000
Trenton, Tennessee . . . . . . Leased 96,000
WAREHOUSE:
Dresden, Tennessee . . . . . . Leased 35,000
Elk Grove Village, Illinois. . Leased 102,000
Jonesboro, Arkansas. . . . . . Leased 76,000
Memphis, Tennessee . . . . . . Leased 100,000
Newburn, Tennessee . . . . . . Leased 68,000
Versailles, Kentucky . . . . . Leased 27,000
West Annex, Oklahoma . . . . . Owned 26,000
Winchester, Virginia . . . . . Leased 20,000
</TABLE>
In addition, we maintain an extensive network of sales offices located
throughout the United States. We believe that none of our leases are
material to our operations and that such leases were entered into on
market terms.
ITEM 3. LEGAL PROCEEDINGS.
We do not believe that there are any pending legal proceedings, which,
if adversely determined, could have a material adverse effect on our
financial condition or results of operations, taken as a whole.
There were no material pending legal proceedings that were terminated
in the fourth quarter of the fiscal year ended December 27, 1998.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
MARKET PRICE RANGE OF COMMON STOCK
Our Common Stock is listed on the New York Stock Exchange under the
symbol: WRC. At March 12, 1999 there were approximately 138 registered
holders of record of our Common Stock. The following table sets forth
the range of the high and low sales prices of the Common Stock as
quoted on the New York Stock Exchange for 1997 and 1998. We did not
pay dividends during 1997 or 1998.
<TABLE>
<CAPTION>
1997 High Low Close
<S> <C> <C> <C>
First Quarter 22 5/8 18 1/8 20 1/4
Second Quarter 26 1/4 19 5/8 24 1/8
Third Quarter 32 7/16 23 1/4 29 9/16
Fourth Quarter 30 1/4 22 11/16 25 15/16
<CAPTION>
1998 High Low Close
<S> <C> <C> <C>
First Quarter 34 3/4 25 3/8 34 1/8
Second Quarter 35 11/16 29 7/8 33 1/16
Third Quarter 36 1/4 26 29 1/2
Fourth Quarter 34 3/4 22 3/4 27 1/8
</TABLE>
DIVIDEND POLICY
We do not anticipate declaring and paying cash dividends on the Common
Stock at any time in the foreseeable future. The decision whether to
apply legally available funds to the payment of dividends on the
Common Stock will be made by our Board of Directors from time to time
in the exercise of its prudent business judgment, taking into account,
among other things, our results of operations and financial condition,
any then existing or proposed commitments for our use of available
funds, and our obligations with respect to any then outstanding class
or series of our preferred stock. We are restricted by the terms of
certain of our outstanding debt and financing agreements from paying
cash dividends on our Common Stock.
ITEM 6. SELECTED FINANCIAL DATA.
See "Selected Financial Data" on page 19 of our Annual Report to
Stockholders, which information is incorporated by reference herein.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
See "Management's Discussion and Analysis" on pages 20 - 24 of our
Annual Report to Stockholders, which information is incorporated by
reference herein.
8
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
For quantitative and qualitative disclosures about market risk, see
the notes to the consolidated financial statements (Note 7) referenced
in Item 8 of this report, and the information presented under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations: Liquidity and Capital Resources" on pages 21 - 23
of our Annual Report to Stockholders, incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements described in Item 14(a) of this
report are incorporated herein. The supplementary quarterly data set
forth in Note 17 on page 40 of our Annual Report to Stockholders is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
See "Election of Directors" on pages 3 - 6; "Executive Officers" on
pages 12 - 13 and "Other Matters" on page 22 of our definitive Proxy
Statement dated March 26, 1999, which information is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
See "Director Compensation" on page 7; "Executive Compensation --
Summary Compensation Table," "-- Option Grants in 1998," "-- Aggregate
Option Exercises in Fiscal 1998 and Fiscal Year-End Option Values,"
"-- Compensation Under Retirement Plans," "-- Agreements With Named
Executive Officers," "--Board Compensation Report on Executive
Compensation" and "-- Compensation Committee Interlocks and Insider
Participation" on pages 14 - 20 and "Performance Information" on
page 21 of our definitive Proxy Statement dated March 26, 1999, which
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
See "Stock Ownership of Certain Beneficial Owners and Management" on
pages 10 - 11 of our definitive Proxy Statement dated March 26, 1999,
which information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See "Certain Relationships and Related Transactions" on page 9 of our
definitive Proxy Statement dated March 26, 1999, which information is
incorporated herein by reference.
9
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
(i) Financial Statements
Our consolidated financial statements, as included in
Part II, Item 8, are as follows:
Page in 1998
Annual Report to
Stockholders
------------
Independent Auditors' Report 25
Consolidated Balance Sheets as of December 27, 1998 and
December 28, 1997 26
Consolidated Statements of Operations for the Years ended
December 27, 1998 , December 28, 1997 and December 29, 1996 27
Consolidated Statements of Stockholders' Equity for the
Years ended December 27, 1998, December 28, 1997 and
December 29, 1996 28
Consolidated Statements of Cash Flows for the Years ended
December 27, 1998, December 28, 1997 and December 29, 1996 29
Notes to Consolidated Financial Statements 30 - 40
(ii) Financial Statement Schedule:
Independent Auditors' Report, as set forth on page 16 of this
report.
Schedule II, Valuation and Qualifying Accounts, as set forth
on page 17 of this report.
All other schedules have been omitted because they are
inapplicable or are not required or the information is
included elsewhere in the financial statements or notes
there to.
(iii) Exhibits:
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EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Certificate of Incorporation of World Color Press,
Inc., incorporated by reference to Exhibit 3.1 to World Color's
Registration Statement on Form S-1 (No. 33-99676) under the
Securities Act of 1933, as amended (the "World Color Equity S-1").
3.2 Amended and Restated By-Laws of World Color Press, Inc., incorporated by
reference to Exhibit 3.2 to World Color's Annual Report on Form 10-K
for the fiscal year ended December 29, 1996.
4.1 Indenture (the "Convert Indenture") between World Color Press, Inc. and
State Street Bank and Trust Company, as trustee, relating to World
Color's 6% Convertible Senior Subordinated Notes due 2007 (the
"Converts"), incorporated by reference to Exhibit 4.1 to World Color's
Quarterly Report on Form 10-Q for the quarterly period ended September
28, 1997.
4.2 Specimen of Converts (included in the Convert Indenture, incorporated by
reference as Exhibit 4.1).
4.3 Indenture between World Color Press, Inc. and The Bank of New York, as
trustee, relating to World Color's 8-3/8% Senior Subordinated Notes
due 2008, incorporated by reference to Exhibit 4.1 to World Color's
Registration Statement on Form S-4 (No. 333-74087) under the
Securities Act of 1933, as amended (the "World Color Debt S-4").
4.4 Specimen of World Color's 8-3/8% Senior Subordinated Notes due 2008
(included in the Indenture incorporated by reference as Exhibit 4.3).
4.5 Indenture between World Color Press, Inc. and The Bank of New York, as
trustee, relating to World Color's 7-3/4% Senior Subordinated Notes due
2009, incorporated by reference to Exhibit 4.3 to the World Color Debt
S-4.
4.6 Specimen of World Color's 7-3/4% Senior Subordinated Notes due 2009
(included in the Indenture incorporated by reference as Exhibit 4.5).
10.1 Second Amended and Restated Credit Agreement, dated as of June 6, 1996,
among World Color Press, Inc. and the lenders and agents party thereto
(the "Credit Agreement"), incorporated by reference to Exhibit 10.2 to
World Color's Current Report on Form 8-K dated June 21, 1996.
10.2 First Amendment dated as of June 10, 1996 to the Credit Agreement,
incorporated by reference to Exhibit 10.3 to World Color's Current
Report on Form 8-K dated June 21, 1996.
10.3 Limited Waiver, Consent and Second Amendment to Second Amended and
Restated Credit Agreement dated as of June 9, 1997, by and among
World Color Press, Inc., the Lenders party to the Second Amended and
Restated Credit Agreement, as amended, Bankers Trust Company, as
Administrative Agent, and the Guarantors listed on the signature
pages, incorporated by reference to Exhibit 10.1 to the World Color
Quarterly Report on Form 10-Q for the quarterly period ended June 29,
1997.
11
<PAGE>
<PAGE>
EXHIBIT NO. DESCRIPTION
10.4 Third Amendment to Second Amended and Restated Credit Agreement dated
as of June 27, 1997, by and among World Color Press, Inc., the
Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.2 to the World Color Quarterly Report on Form 10-Q for
the quarterly period ended June 29, 1997.
10.5 Limited Waiver, Consent and Fourth Amendment to Second Amended and
Restated Credit Agreement dated as of September 29, 1997, by and
among World Color Press, Inc., the Lenders party to the Second
Amended and Restated Credit Agreement, as amended, Bankers Trust
Company, as Administrative Agent, and the Guarantors listed on the
signature pages thereto, incorporated by reference to Exhibit 10.4 to
World Color's Quarterly Report on Form 10-Q for the quarterly period
ended September 28, 1997.
10.6 Fifth Amendment to Second Amended and Restated Credit Agreement dated
as of June 4, 1998, by and among World Color Press, Inc., the Lenders
party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for
the quarterly period ended June 28, 1998.
10.7 Sixth Amendment to Second Amended and Restated Credit Agreement dated
as of November 11, 1998, by and among World Color Press, Inc., the
Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.1 to the World Color Debt S-4.
10.8 Seventh Amendment to Second Amended and Restated Credit Agreement dated
as of November 23, 1998, by and among World Color Press, Inc., the
Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.2 to the World Color Debt S-4.
10.9 Limited Consent and Eighth Amendment to Second Amended and Restated
Credit Agreement dated as of February 3, 1999, by and among World Color
Press, Inc., the Lenders party to the Second Amended and Restated
Credit Agreement, as amended, Bankers Trust Company, as Administrative
Agent, and the Guarantors listed on the signature pages, incorporated
by reference to Exhibit 10.3 to the World Color Debt S-4.
10.10 Receivables Sale Agreement dated as of June 30, 1997 among World Color
Finance, Inc., as Seller, ABN AMRO Bank N.V., as the Agent, the
Liquidity Providers from time to time party to the agreement, ABN
AMRO Bank N.V., as the Enhancer, and the Windmill Funding
Corporation, incorporated by reference to Exhibit 10.4 to the World
Color Quarterly Report on Form 10-Q for the quarterly period ended
June 29, 1997.
12
<PAGE>
<PAGE>
EXHIBIT NO. DESCRIPTION
10.11 Receivables Purchase Agreement dated as of June 30, 1997 between World
Color Press, Inc., and World Color Finance, Inc., incorporated
by reference to Exhibit 10.5 to the World Color QuarterlY Report on
Form 10-Q for the quarterly period ended June 29, 1997.
10.12 Indemnity Agreement dated as of June 30, 1997, made by and between
World Color Press, Inc. and ABN AMRO Bank N.V., as agent,
incorporated by reference to Exhibit 10.6 to the World Color
Quarterly Report on Form 10-Q for the quarterly period ended June
29, 1997.
10.13 Form of Unitholders Agreement, incorporated by reference to Exhibit
10.21 to World Color's Registration Statement on Form S-1 (No.
33-59490) under the Securities Act of 1933, as amended (the "World
Color Debt S-1").
10.14 Form of Optionholders Agreement between World Color and the
Optionholders (as defined therein), incorporated by reference to
Exhibit 10.23 to the World Color Debt S-1.
10.15 Second Amended and Restated Stock Option Plan of World Color Press,
Inc., incorporated by reference to Exhibit 10.9 to World Color's
Annual Report on Form 10-K for the fiscal year ended December 25, 1994.
10.16 The Restricted Stock Plan of World Color Press, incorporated by
reference to Exhibit 10.2 to the World Color Quarterly Report on
Form 10-Q for the quarterly period ended June 28, 1998.
10.17 Form of World Color Press Restricted Stock Agreement, incorporated by
reference to Exhibit 10.3 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended June 28, 1998.
10.18 1998 Stock Option Plan of World Color Press, Inc., incorporated by
reference to Exhibit 10.5 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended June 28, 1998.
10.19 Form of World Color Stock Option Agreement, incorporated by reference
to Exhibit 10.25 to the World Color Debt S-1.
10.20 Letter Agreement, dated as of November 4, 1991, between World Color
and Marc L. Reisch regarding certain severance arrangements,
incorporated by reference to Exhibit 10.26 to the World Color Debt
S-1.
10.21 Letter Agreement, dated as of May 27, 1998, between World Color and
Jennifer L. Adams regarding certain severance arrangements.
10.22 Third Amendment to the World Color Press, Inc. Supplemental Executive
Retirement Plan,incorporated by reference to Exhibit 10.18 to World
Color's Annual Report on Form 10-K for the fiscal year ended December 25,
1994.
10.23 The World Color Press, Inc. Third Amended and Restated Supplemental
Retirement Plan as of May 11, 1998 incorporated by reference to Exhibit
10.1 to the World Color Quarterly Report on Form 10-Q for the quarterly
period ended June 28, 1998.
10.24 Trust under the World Color Press, Inc. Supplemental Retirement Plan,
dated as of October 12, 1995, by and between World Color and Harris Trust
and Savings Bank, incorporated by reference to Exhibit 10.2 to the World
Color Form 10-Q for the quarterly period ended October 1, 1995.
13
<PAGE>
<PAGE>
EXHIBIT NO. DESCRIPTION
10.25 The World Color Press, Inc. Second Amended and Restated Supplemental
Retirement Plan dated June 14, 1995, as amended July 15, 1997,
incorporated by reference to Exhibit 10.1 to the World Color Quarterly
Report on Form 10-Q for the quarterly period ended September 28, 1997.
10.26 Stock Option Agreement dated as of June 12, 1997, incorporated by
reference to Exhibit 10.2 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended September 28, 1997.
10.27 Stock Option Agreement dated as of June 12, 1997, incorporated by
reference to Exhibit 10.3 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended September 28, 1997.
10.28 Form of Amended and Restated 1995 Senior Management Stock Option Plan of
World Color Press, Inc., incorporated by reference to Exhibit 10.3 to
the World Color Quarterly Report on Form 10-Q for the quarterly period
ended June 29, 1997.
10.29 Form of Stock Option Agreement between World Color and certain
Optionholders, incorporated by reference to Exhibit 4.7 to the World
Color Registration Statement on Form S-8 (No. 333-47743) under the
Securities Act of 1933, as amended.
10.30 Amended and Restated Registration Rights Agreement, dated as of November
20, 1995, among World Color Press, Inc., KKR Partners II, L.P.,
Manufacturing Acquisition Associates, L.P., PACE Equity Associates,
L.P., KKR Associates, L.P., Merrill Lynch Capital Appreciation PSHP,
No. 1, L.P., Merrill Lynch Offshore LBO Partnership No. 1, Merrill
Lynch Employees LBO Partnership No. 1, Merrill Lynch Kecalp L.P. 1984,
Merrill Lynch Kecalp L.P. 1986 and Merrill Lynch L.P. Holdings, Inc.,
incorporated by reference to Exhibit 10.24 to the World Color Equity S-1.
10.31 Registration Rights Agreement, dated as of November 20, 1995, among World
Color Press, Inc., APC Associates, GR Associates and WCP Associates,
incorporated by reference to Exhibit 10.25 to the World Color Equity S-1.
10.32 Promissory Note dated March 12, 1998, given by James E. Lillie.
10.33 Promissory Note dated March 12, 1998, given by Robert B. Lewis.
10.34 Stock Option Agreement dated as of February 26, 1999.
10.35 Stock Option Agreement dated as of February 26, 1999.
10.36 Stock Option Agreement dated as of February 26, 1999.
13.0 Pages 19 - 40 of the 1998 Annual Report to Stockholders (with the
exception of the pages incorporated by reference herein, the Annual
Report to Stockholders is not part of this filing).
21.0 Subsidiaries of World Color.
23.1 Independent Auditors' Consent.
27.1 Financial Data Schedule for the year ended December 27, 1998.
14
<PAGE>
<PAGE>
(b) Reports on Form 8-K
The registrant filed a Current Report on Form 8-K dated February 6, 1998, in
respect of the appointment of Michael D. Helfand to Executive Vice President,
Chief Financial Officer. The items reported in such Current Report were Item 5
(Other Events) and Item 7 (Text of Press Release dated February 5, 1998).
The registrant filed a Current Report on Form 8-K dated November 18, 1998, in
respect to the issuance of $300 million of Senior Subordinated Notes due 2008.
The items reported in such Current Report were Item 5 (Other Events) and Item 7
(Text of Press Release dated November 13, 1998).
The registrant filed a Current Report on Form 8-K dated December 11, 1998, in
respect of the appointment of Robert B. Lewis to Executive Vice President,
Chief Financial Officer. The items reported in such Current Report were Item 5
(Other Events) and Item 7 (Text of Press Release dated December 9, 1998).
The registrant filed a Current Report on Form 8-K dated February 23, 1999, in
respect to the issuance of $300 million of Senior Subordinated Notes due 2009.
The items reported in such Current Report were Item 5 (Other Events) and Item 7
(Text of Press Release dated February 17, 1999).
15
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of World Color Press, Inc.:
We have audited the consolidated financial statements of World Color
Press, Inc. and subsidiaries as of December 27, 1998 and December 28,
1997, and for each of the three years in the period ended December 27,
1998, and have issued our report thereon dated February 3, 1999; such
consolidated financial statements and report are included in your 1998
Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement schedule
of World Color Press, Inc., listed in Item 14. This financial
statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1999
(except for the last paragraph of Note 14,
as to which the date is February 26, 1999,
and except for Note 18, as to which the date is
March 9, 1999)
16
<PAGE>
<PAGE>
SCHEDULE II
WORLD COLOR PRESS, INC.
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Additions Other
Balance Charged to Charges- Balance
Beginning Costs and Deductions- Add (Deduct) at End
Classification Of Year Expenses Describe Describe of Year
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 27, 1998
Allowance for uncollectible
accounts receivable $9,287 $2,428 $2,545(1) $1,468(2) $10,638
YEAR ENDED DECEMBER 28, 1997
Allowance for uncollectible
accounts receivable $8,476 $7,193 $8,345(1) $1,963(2) $ 9,287
YEAR ENDED DECEMBER 29, 1996
Allowance for uncollectible
accounts receivable $6,356 $1,454 $ 834(1) $1,500(2) $ 8,476
</TABLE>
(1) Write-offs of receivables, net of recoveries.
(2) Balance of acquired companies at acquisition date.
17
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
WORLD COLOR PRESS, INC.
(Registrant)
Date: March 26, 1999 By: /s/ Robert B. Lewis
--------------------
Robert B. Lewis
Executive Vice President,
Chief Financial Officer
18
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities indicated on March 26, 1999.
SIGNATURES TITLES
/s/ Robert G. Burton Chairman of the Board of
- ---------------------- Directors
Robert G. Burton and Chief Executive Officer
(Principal Executive Officer)
/s/ Robert B. Lewis Executive Vice President,
- --------------------- Chief Financial Officer
Robert B. Lewis (Principal Financial
Officer; Principal
Accounting Officer)
/s/ Gerald S. Armstrong Director
- ------------------------
Gerald S. Armstrong
Director
- ------------------------
Patrice M. Daniels
Director
- ------------------------
Dr. Mark J. Griffin
/s/ Alexander Navab, Jr. Director
- -------------------------
Alexander Navab, Jr.
/s/ Marc L. Reisch Director and President
- -------------------------
Marc L. Reisch
/s/ Scott M. Stuart Director
- ------------------------
Scott M. Stuart
19
<PAGE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1 Amended and Restated Certificate of Incorporation of World Color Press,
Inc., incorporated by reference to Exhibit 3.1 to World Color's
Registration Statement on Form S-1 (No. 33-99676) under the
Securities Act of 1933, as amended (the "World Color Equity S-1").
3.2 Amended and Restated By-Laws of World Color Press, Inc., incorporated by
reference to Exhibit 3.2 to World Color's Annual Report on Form 10-K
for the fiscal year ended December 29, 1996.
4.1 Indenture (the "Convert Indenture") between World Color Press, Inc. and
State Street Bank and Trust Company, as trustee, relating to World
Color's 6% Convertible Senior Subordinated Notes due 2007 (the
"Converts"), incorporated by reference to Exhibit 4.1 to World Color's
Quarterly Report on Form 10-Q for the quarterly period ended September
28, 1997.
4.2 Specimen of Converts (included in the Convert Indenture, incorporated by
reference as Exhibit 4.1).
4.3 Indenture between World Color Press, Inc. and The Bank of New York, as
trustee, relating to World Color's 8-3/8% Senior Subordinated Notes
due 2008, incorporated by reference to Exhibit 4.1 to World Color's
Registration Statement on Form S-4 (No. 333-74087) under the
Securities Act of 1933, as amended (the "World Color Debt S-4").
4.4 Specimen of World Color's 8-3/8% Senior Subordinated Notes due 2008
(included in the Indenture incorporated by reference as Exhibit 4.3).
4.5 Indenture between World Color Press, Inc. and The Bank of New York, as
trustee, relating to World Color's 7-3/4% Senior Subordinated Notes due
2009, incorporated by reference to Exhibit 4.3 to the World Color Debt
S-4.
4.6 Specimen of World Color's 7-3/4% Senior Subordinated Notes due 2009
(included in the Indenture incorporated by reference as Exhibit 4.5).
10.1 Second Amended and Restated Credit Agreement, dated as of June 6, 1996,
among World Color Press, Inc. and the lenders and agents party thereto
(the "Credit Agreement"), incorporated by reference to Exhibit 10.2 to
World Color's Current Report on Form 8-K dated June 21, 1996.
10.2 First Amendment dated as of June 10, 1996 to the Credit Agreement,
incorporated by reference to Exhibit 10.3 to World Color's Current
Report on Form 8-K dated June 21, 1996.
10.3 Limited Waiver, Consent and Second Amendment to Second Amended and
Restated Credit Agreement dated as of June 9, 1997, by and among
World Color Press, Inc., the Lenders party to the Second Amended and
Restated Credit Agreement, as amended, Bankers Trust Company, as
Administrative Agent, and the Guarantors listed on the signature
pages, incorporated by reference to Exhibit 10.1 to the World Color
Quarterly Report on Form 10-Q for the quarterly period ended June 29,
1997.
20
<PAGE>
<PAGE>
EXHIBIT NO. DESCRIPTION
10.4 Third Amendment to Second Amended and Restated Credit Agreement dated
as of June 27, 1997, by and among World Color Press, Inc., the
Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.2 to the World Color Quarterly Report on Form 10-Q for
the quarterly period ended June 29, 1997.
10.5 Limited Waiver, Consent and Fourth Amendment to Second Amended and
Restated Credit Agreement dated as of September 29, 1997, by and
among World Color Press, Inc., the Lenders party to the Second
Amended and Restated Credit Agreement, as amended, Bankers Trust
Company, as Administrative Agent, and the Guarantors listed on the
signature pages thereto, incorporated by reference to Exhibit 10.4 to
World Color's Quarterly Report on Form 10-Q for the quarterly period
ended September 28, 1997.
10.6 Fifth Amendment to Second Amended and Restated Credit Agreement dated
as of June 4, 1998, by and among World Color Press, Inc., the Lenders
party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.4 to the World Color Quarterly Report on Form 10-Q for
the quarterly period ended June 28, 1998.
10.7 Sixth Amendment to Second Amended and Restated Credit Agreement dated
as of November 11, 1998, by and among World Color Press, Inc., the
Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.1 to the World Color Debt S-4.
10.8 Seventh Amendment to Second Amended and Restated Credit Agreement dated
as of November 23, 1998, by and among World Color Press, Inc., the
Lenders party to the Second Amended and Restated Credit Agreement, as
amended, Bankers Trust Company, as Administrative Agent, and the
Guarantors listed on the signature pages, incorporated by reference
to Exhibit 10.2 to the World Color Debt S-4.
10.9 Limited Consent and Eighth Amendment to Second Amended and Restated
Credit Agreement dated as of February 3, 1999, by and among World Color
Press, Inc., the Lenders party to the Second Amended and Restated
Credit Agreement, as amended, Bankers Trust Company, as Administrative
Agent, and the Guarantors listed on the signature pages, incorporated
by reference to Exhibit 10.3 to the World Color Debt S-4.
10.10 Receivables Sale Agreement dated as of June 30, 1997 among World Color
Finance, Inc., as Seller, ABN AMRO Bank N.V., as the Agent, the
Liquidity Providers from time to time party to the agreement, ABN
AMRO Bank N.V., as the Enhancer, and the Windmill Funding
Corporation, incorporated by reference to Exhibit 10.4 to the World
Color Quarterly Report on Form 10-Q for the quarterly period ended
June 29, 1997.
21
<PAGE>
<PAGE>
EXHIBIT NO. DESCRIPTION
10.11 Receivables Purchase Agreement dated as of June 30, 1997 between World
Color Press, Inc., and World Color Finance, Inc., incorporated
by reference to Exhibit 10.5 to the World Color QuarterlY Report on
Form 10-Q for the quarterly period ended June 29, 1997.
10.12 Indemnity Agreement dated as of June 30, 1997, made by and between
World Color Press, Inc. and ABN AMRO Bank N.V., as agent,
incorporated by reference to Exhibit 10.6 to the World Color
Quarterly Report on Form 10-Q for the quarterly period ended June
29, 1997.
10.13 Form of Unitholders Agreement, incorporated by reference to Exhibit
10.21 to World Color's Registration Statement on Form S-1 (No.
33-59490) under the Securities Act of 1933, as amended (the "World
Color Debt S-1").
10.14 Form of Optionholders Agreement between World Color and the
Optionholders (as defined therein), incorporated by reference to
Exhibit 10.23 to the World Color Debt S-1.
10.15 Second Amended and Restated Stock Option Plan of World Color Press,
Inc., incorporated by reference to Exhibit 10.9 to World Color's
Annual Report on Form 10-K for the fiscal year ended December 25, 1994.
10.16 The Restricted Stock Plan of World Color Press, incorporated by
reference to Exhibit 10.2 to the World Color Quarterly Report on
Form 10-Q for the quarterly period ended June 28, 1998.
10.17 Form of World Color Press Restricted Stock Agreement, incorporated by
reference to Exhibit 10.3 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended June 28, 1998.
10.18 1998 Stock Option Plan of World Color Press, Inc., incorporated by
reference to Exhibit 10.5 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended June 28, 1998.
10.19 Form of World Color Stock Option Agreement, incorporated by reference
to Exhibit 10.25 to the World Color Debt S-1.
10.20 Letter Agreement, dated as of November 4, 1991, between World Color
and Marc L. Reisch regarding certain severance arrangements,
incorporated by reference to Exhibit 10.26 to the World Color Debt
S-1.
10.21 Letter Agreement, dated as of May 27, 1998, between World Color and
Jennifer L. Adams regarding certain severance arrangements.
10.22 Third Amendment to the World Color Press, Inc. Supplemental Executive
Retirement Plan,incorporated by reference to Exhibit 10.18 to World
Color's Annual Report on Form 10-K for the fiscal year ended December 25,
1994.
10.23 The World Color Press, Inc. Third Amended and Restated Supplemental
Retirement Plan as of May 11, 1998 incorporated by reference to Exhibit
10.1 to the World Color Quarterly Report on Form 10-Q for the quarterly
period ended June 28, 1998.
10.24 Trust under the World Color Press, Inc. Supplemental Retirement Plan,
dated as of October 12, 1995, by and between World Color and Harris Trust
and Savings Bank, incorporated by reference to Exhibit 10.2 to the World
Color Form 10-Q for the quarterly period ended October 1, 1995.
22
<PAGE>
<PAGE>
EXHIBIT NO. DESCRIPTION
10.25 The World Color Press, Inc. Second Amended and Restated Supplemental
Retirement Plan dated June 14, 1995, as amended July 15, 1997,
incorporated by reference to Exhibit 10.1 to the World Color Quarterly
Report on Form 10-Q for the quarterly period ended September 28, 1997.
10.26 Stock Option Agreement dated as of June 12, 1997, incorporated by
reference to Exhibit 10.2 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended September 28, 1997.
10.27 Stock Option Agreement dated as of June 12, 1997, incorporated by
reference to Exhibit 10.3 to the World Color Quarterly Report on Form
10-Q for the quarterly period ended September 28, 1997.
10.28 Form of Amended and Restated 1995 Senior Management Stock Option Plan of
World Color Press, Inc., incorporated by reference to Exhibit 10.3 to
the World Color Quarterly Report on Form 10-Q for the quarterly period
ended June 29, 1997.
10.29 Form of Stock Option Agreement between World Color and certain
Optionholders, incorporated by reference to Exhibit 4.7 to the World
Color Registration Statement on Form S-8 (No. 333-47743) under the
Securities Act of 1933, as amended.
10.30 Amended and Restated Registration Rights Agreement, dated as of November
20, 1995, among World Color Press, Inc., KKR Partners II, L.P.,
Manufacturing Acquisition Associates, L.P., PACE Equity Associates,
L.P., KKR Associates, L.P., Merrill Lynch Capital Appreciation PSHP,
No. 1, L.P., Merrill Lynch Offshore LBO Partnership No. 1, Merrill
Lynch Employees LBO Partnership No. 1, Merrill Lynch Kecalp L.P. 1984,
Merrill Lynch Kecalp L.P. 1986 and Merrill Lynch L.P. Holdings, Inc.,
incorporated by reference to Exhibit 10.24 to the World Color Equity S-1.
10.31 Registration Rights Agreement, dated as of November 20, 1995, among World
Color Press, Inc., APC Associates, GR Associates and WCP Associates,
incorporated by reference to Exhibit 10.25 to the World Color Equity S-1.
10.32 Promissory Note dated March 12, 1998, given by James E. Lillie.
10.33 Promissory Note dated March 12, 1998, given by Robert B. Lewis.
10.34 Stock Option Agreement dated as of February 26, 1999.
10.35 Stock Option Agreement dated as of February 26, 1999.
10.36 Stock Option Agreement dated as of February 26, 1999.
13.0 Pages 19 - 40 of the 1998 Annual Report to Stockholders (with the
exception of the pages incorporated by reference herein, the Annual
Report to Stockholders is not part of this filing).
21.0 Subsidiaries of World Color.
23.1 Independent Auditors' Consent.
27.1 Financial Data Schedule for the year ended December 27, 1998.
23
<PAGE>
<PAGE>
EXHIBIT 10.21
Dear Jenny:
This will amend the commitment I made to you in October, 1995.
In the event your employment with the Company is terminated at any time for any
reason other than "Cause", you will receive your base salary for a period of
eighteen months as severance. In addition, in the event your employment is
terminated for any reason other than "Cause" prior to October 29, 1999, the
common stock you purchased and the stock options you received from the Company
on July 31, 1995 with a Vesting Reference Date of October 28, 1994 will, upon
such event, become fully vested. The Company will have "Cause" to terminate
your employment in the event you (1) engage in acts or omissions with respect to
the Company which constitute intentional misconduct which adversely affects the
Company or a knowing violation of law, (2) personally receive a benefit in
money, property or services from another person dealing with the Company in
violation of applicable law or (3) commit an act of fraud, conversion,
misappropriation, embezzlement or felony.
Sincerely,
/s/ Robert G. Burton
- --------------------
May 27, 1998
<PAGE>
<PAGE>
EXHIBIT 10.32
SECURED PROMISSORY NOTE
$100,000.00 Greenwich, Connecticut
March 12, 1998
FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to pay
to the order of World Color Press, Inc. (the "Company"), at its office at The
Mill, 340 Pemberwick Road, Greenwich, Connecticut 06831, in lawful money of the
United States, ONE HUNDRED THOUSAND DOLLARS ($100,000.00). The undersigned
promises to pay interest in like money at such office on the unpaid principal
amount hereof from time to time outstanding from the date hereof at the rate of
6.9% from November 5, 1997, the date of the loan through December 31, 1998 and
at such other rate as the Company may reasonably determine thereafter. Interest
shall be calculated annually on the basis of a 365 day year and the number of
actual days elapsed until the respective Due Date (as defined below).
Except as otherwise provided herein or in the Repayment and Stock Pledge
Agreement between the Company and the undersigned dated March 12, 1998 (the
"Pledge"), principal and interest payments hereunder shall be due and payable as
set forth on Exhibit A. Each such date on which a payment of principal and/or
interest is due is referred to as a "Due Date".
This Note is issued in connection with the pledge of shares of common
stock, par value $0.01 per share, of the Company (the "Common Stock") and other
collateral (the "Collateral") pursuant to the Pledge.
The undersigned shall have the right to prepay this Note, in whole or in
part, at any time without notice and without penalty and, notwithstanding
anything to the contrary herein, this Note shall be prepaid, in whole or in part
and from time to time, from the proceeds from any sale, transfer or other
disposition of Pledged Securities. Any partial prepayments shall be applied
first to accrued and unpaid interest and then to principal.
Notwithstanding the existence of the Pledged Securities as security for
repayment of the Note, the undersigned remains personally liable to the Company
for any deficiency which the Pledged Securities do not cover.
If an Event of Default (as defined in the Pledge) shall have occurred and
be continuing, then, at such time, the unpaid principal amount hereof, all
accrued and unpaid interest hereunder and all other amounts owing hereunder
shall be and become immediately due and payable without notice to the
undersigned. In the event of any default in payment or other Event of Default,
the Company may pursue any available remedy to collect the payment of principal
and interest hereunder or to otherwise enforce the terms and provisions of this
Note.
The Company shall have all of the rights to a secured creditor under the
Connecticut Commercial Code with respect to the Collateral pledged as security
hereunder.
The undersigned promises to pay all costs and expenses, including
reasonable attorney's fees incurred by the Company in collecting or attempting
to collect the indebtedness under the Note.
<PAGE>
<PAGE>
If any payment of principal or interest on this Note becomes due and
payable on a day other than a business day, such payment shall be made on the
next succeeding business day. As used herein, the term "business day" means any
day other than a Saturday, Sunday or other day on which banks in the City of
Greenwich, Connecticut are authorized by law to close.
No delay or omission by the Company in exercising any right or remedy shall
impair such (or any other) right or remedy or operate as a waiver thereof or an
acquiescence in such default, and no single or partial exercise by the Company
of any right or remedy shall preclude other or further exercise thereof, or the
exercise or any other right or remedy. The non-exercise by the Company of its
rights under this Note in any instance shall not constitute a waiver thereof in
that or any subsequent instance. All remedies are cumulative to the extent
permitted by law.
The terms and conditions of this Note may not be amended, modified or
waived except in a writing executed by the parties hereto, nor shall any waiver
be applicable except in the specific insurance for which it is given.
None of the provisions hereof and none of the Company's rights or remedies
hereunder shall be or be deemed to be waived by the Company's acceptance of any
past due payment or by any indulgence granted by the Company to the undersigned.
Except as otherwise provided herein, presentment for payment, demand,
notice of dishonor, protest and notice of protest are hereby waived. All
notices, declarations and other communications hereunder shall be in writing,
hand delivered (including delivery by a courier service) as follows:
If to the Company:
World Color Press
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Attention: Chief Legal and Administrative Officer
If to the undersigned:
James E. Lillie
140 Catalpa Road
Wilton, CT 06897
or to such other address as the Company or the undersigned may deliver to the
other party from time to time in writing in like manner.
If any term or provision of this Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions shall in no way be
be affected thereby. The undersigned and the Company agree that, in the event of
any litigation arising on, out of or by reason of this Note, the undersigned
waives the right to a trial by jury and all rights of set off and rights to
interpose counterclaims and cross-claims.
2
<PAGE>
<PAGE>
This Note shall not be assigned by the undersigned without the prior
written consent of the Company. This note shall inure to the benefit of the
Company, its successors, endorsers and assigns. This Note may be assigned by
the Company at any time.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CONNECTICUT.
/s/ James E. Lillie
---------------------------
James E. Lillie
3
<PAGE>
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Date Payment
---- -------
<S> <C>
4/15/98 $10,000 plus accrued interest from
November 5, 1997
3/01/99 $20,000 plus accrued interest
3/01/00 $20,000 plus accrued interest
3/01/01 $20,000 plus accrued interest
3/01/02 $30,000 plus accrued interest
</TABLE>
<PAGE>
<PAGE>
EXHIBIT 10.33
SECURED PROMISSORY NOTE
$100,000.00 Greenwich, Connecticut
March 12, 1998
FOR VALUE RECEIVED, the undersigned hereby unconditionally promises to pay
to the order of World Color Press, Inc. (the "Company"), at its office at The
Mill, 340 Pemberwick Road, Greenwich, Connecticut 06831, in lawful money of the
United States, ONE HUNDRED THOUSAND DOLLARS ($100,000.00). The undersigned
promises to pay interest in like money at such office on the unpaid principal
amount hereof from time to time outstanding from the date hereof at the rate of
6.9% from November 5, 1997, the date of the loan through December 31, 1998 and
at such other rate as the Company may reasonably determine thereafter. Interest
shall be calculated annually on the basis of a 365 day year and the number of
actual days elapsed until the respective Due Date (as defined below).
Except as otherwise provided herein or in the Repayment and Stock Pledge
Agreement between the Company and the undersigned dated March 12, 1998 (the
"Pledge"), principal and interest payments hereunder shall be due and payable as
set forth on Exhibit A. Each such date on which a payment of principal and/or
interest is due is referred to as a "Due Date".
This Note is issued in connection with the pledge of shares of common
stock, par value $0.01 per share, of the Company (the "Common Stock") and other
collateral (the "Collateral") pursuant to the Pledge.
The undersigned shall have the right to prepay this Note, in whole or in
part, at any time without notice and without penalty and, notwithstanding
anything to the contrary herein, this Note shall be prepaid, in whole or in part
and from time to time, from the proceeds from any sale, transfer or other
disposition of Pledged Securities. Any partial prepayments shall be applied
first to accrued and unpaid interest and then to principal.
Notwithstanding the existence of the Pledged Securities as security for
repayment of the Note, the undersigned remains personally liable to the Company
for any deficiency which the Pledged Securities do not cover.
If an Event of Default (as defined in the Pledge) shall have occurred and
be continuing, then, at such time, the unpaid principal amount hereof, all
accrued and unpaid interest hereunder and all other amounts owing hereunder
shall be and become immediately due and payable without notice to the
undersigned. In the event of any default in payment or other Event of Default,
the Company may pursue any available remedy to collect the payment of principal
and interest hereunder or to otherwise enforce the terms and provisions of this
Note.
The Company shall have all of the rights to a secured creditor under the
Connecticut Commercial Code with respect to the Collateral pledged as security
hereunder.
The undersigned promises to pay all costs and expenses, including
reasonable attorney's fees incurred by the Company in collecting or attempting
to collect the indebtedness under the Note.
<PAGE>
<PAGE>
If any payment of principal or interest on this Note becomes due and
payable on a day other than a business day, such payment shall be made on the
next succeeding business day. As used herein, the term "business day" means any
day other than a Saturday, Sunday or other day on which banks in the City of
Greenwich, Connecticut are authorized by law to close.
No delay or omission by the Company in exercising any right or remedy shall
impair such (or any other) right or remedy or operate as a waiver thereof or an
acquiescence in such default, and no single or partial exercise by the Company
of any right or remedy shall preclude other or further exercise thereof, or the
exercise or any other right or remedy. The non-exercise by the Company of its
rights under this Note in any instance shall not constitute a waiver thereof in
that or any subsequent instance. All remedies are cumulative to the extent
permitted by law.
The terms and conditions of this Note may not be amended, modified or
waived except in a writing executed by the parties hereto, nor shall any waiver
be applicable except in the specific insurance for which it is given.
None of the provisions hereof and none of the Company's rights or remedies
hereunder shall be or be deemed to be waived by the Company's acceptance of any
past due payment or by any indulgence granted by the Company to the undersigned.
Except as otherwise provided herein, presentment for payment, demand,
notice of dishonor, protest and notice of protest are hereby waived. All
notices, declarations and other communications hereunder shall be in writing,
hand delivered (including delivery by a courier service) as follows:
If to the Company:
World Color Press
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Attention: Chief Legal and Administrative Officer
If to the undersigned:
Robert Lewis
55 Tanners Drive
Wilton, CT 06897
or to such other address as the Company or the undersigned may deliver to the
other party from time to time in writing in like manner.
If any term or provision of this Note shall be held invalid, illegal or
or unenforceable, the validity of all other terms and provisions shall in no way
be affected thereby. The undersigned and the Company agree that, in the event of
any litigation arising on, out of or by reason of this Note, the undersigned
waives the right to a trial by jury and all rights of set off and rights to
interpose counterclaims and cross-claims.
2
<PAGE>
<PAGE>
This Note shall not be assigned by the undersigned without the prior
written consent of the Company. This note shall inure to the benefit of the
Company, its successors, endorsers and assigns. This Note may be assigned by
the Company at any time.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CONNECTICUT.
/s/ Robert Lewis
----------------------------
Robert Lewis
3
<PAGE>
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
Date Payment
---- -------
<S> <C>
4/15/98 $10,000 plus accrued interest from
November 5, 1997
3/01/99 $20,000 plus accrued interest
3/01/00 $20,000 plus accrued interest
3/01/01 $20,000 plus accrued interest
3/01/02 $30,000 plus accrued interest
</TABLE>
4
<PAGE>
<PAGE>
EXHIBIT 10.34
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") dated February 26, 1999 is
made by and between World Color Press, Inc., a Delaware corporation ("WCP"),
and Robert G. Burton, an individual with a residence at 170 Clapboard Ridge
Road, Greenwich, CT 06831 (the "Optionholder"). WCP and the Optionholder are
sometimes herein referred to collectively as the "Parties."
RECITALS
A. The Optionholder is a senior management employee of WCP.
B. WCP has established the 1995 Senior Management Stock Option Plan of
World Color Press, Inc. (the "Option Plan"), and, pursuant to the Option Plan,
WCP wishes to afford the Optionholder the opportunity to purchase shares of its
common stock, par value $.01 per share (the "Common Stock"). The term
"Options" as used in this Agreement shall include all Options granted to the
Optionholder pursuant to this Agreement. Upon exercise of Options granted
hereunder in accordance with the terms hereof and issuance of Common Stock upon
such exercise the Optionholder will become the holder of "Option Shares."
C. The Compensation Committee (the "Committee") of the Board of
Directors of WCP (the "Board") has determined that it would be to the advantage
and best interest of WCP and its stockholders to grant the Options provided for
herein to the Optionholder as an inducement to continue to perform services for
the Company (as hereinafter defined) and as an incentive for increased efforts
during such service, and has advised WCP thereof and instructed the undersigned
officer to issue said Options. For the purposes of this Agreement, the
"Company" shall mean WCP, together with its subsidiaries.
D. This Agreement is one of several agreements ("Other Stock Option
Agreements") which have been, or which in the future will be, entered into
between WCP and other holders of Options granted pursuant to the Option Plan
(collectively, the "Other Optionholders").
<PAGE>
<PAGE>
AGREEMENTS
1. GRANT OF OPTIONS. In consideration of the Optionholder's agreement
to provide services to the Company and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
WCP irrevocably grants to the Optionholder on the date hereof an aggregate of
125,000 Options, each to purchase initially one share of Common Stock (shares
issuable upon exercise of the Options are collectively referred to herein as
the "Option Shares"), upon the terms and conditions set forth in this
Agreement. This Agreement and the grant of the Options herein are subject to
all of the terms and provisions of the Option Plan attached hereto as Exhibit A
(which terms and provisions are incorporated herein by reference and are
expressly made part of this Agreement). In the event of any conflict between
the provisions of this Agreement and the Option Plan, the terms of the Option
Plan shall govern. All capitalized terms used herein without definition and
defined in the Option Plan have the meanings ascribed to such terms in the
Option Plan. The Options granted hereby are designated non-qualified stock
options and are nontransferable except as otherwise expressly set forth in the
Option Plan.
2. EXERCISE PRICE. The purchase price of the Option Shares upon
exercise of any of the Options (the "Exercise Price" or "Option Price Per
Share") shall initially be $24.33 per share, without commission or other
charge.
3. EXERCISABILITY. (a) The Options shall become exercisable as follows:
<TABLE>
<CAPTION>
DATE OPTIONS BECOME EXERCISABLE EXERCISABLE PERCENTAGE
OF OPTIONS
<S> <C>
From February 3, 1999 ("Vesting 0%
Date") until the first anniversary of
the Vesting Date
On and after the first anniversary of 20%
the Vesting date until the second
anniversary of the Vesting date
On and after the second anniversary 40%
of the Vesting date until the third
anniversary of the Vesting date
On and after the third anniversary of 60%
the Vesting date until the fourth
anniversary of the Vesting date
On and after the fourth anniversary 80%
of the Vesting date until the fifth
anniversary of the Vesting date
On and after the fifth anniversary of 100%
the Vesting date
</TABLE>
(b) Notwithstanding the foregoing, all Options that are not exercisable
at the time of the termination of employment of the Optionholder for any reason
other than by reason of the Optionholder's death, Permanent Disability or
Permitted Retirement (each as hereinafter defined) shall be automatically and
immediately cancelled without any payment or other action by the Company. In
the event of and upon the termination of the Optionholder's employment because
of the Optionholder's death, Permanent Disability or Permitted Retirement, all
of the Optionholder's Options granted hereunder shall immediately become
exercisable.
(c) For purposes of this Agreement the following definitions shall apply:
"Cause" shall mean (i) the Optionholder's failure to render services to the
Company, which failure amounts to a material and flagrant neglect of such
duties, (ii) the Optionholder's willful engagement in conduct that is, or that
he or she intends to be, materially injurious to the Company, (iii) the
Optionholder's commission of an act of fraud, conversion, misappropriation
(including, but not limited to, the unauthorized use or disclosure of
confidential or proprietary information of the Company), embezzlement or
felony, (iv) a conviction of or guilty plea or his or her confession to any
fraud, conversion, misappropriation, embezzlement or felony or (v) the
Optionholder's repeated taking of any action prohibited by the Board, PROVIDED
that he or she has received at least one written notice of having taken an
action so prohibited; "Good Reason" shall mean, in each case without the
Optionholder's consent, (i) a material adverse change, when viewed in the
aggregate, in the Optionholder's duties, responsibilities, base compensation,
bonus eligibility and/or other material matters directly related to his or her
employment with the Company or (ii) the Optionholder's relocation by the
Company to a location more than 100 miles from the Optionholder's immediately
prior location.
<PAGE>
<PAGE>
(d) For purposes of this Agreement, the Optionholder shall be deemed to
have a "Permanent Disability" if he or she is unable to engage in the
activities required by employment by reason of any medically determined
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months, as reasonably determined by the Board in good faith and in its
discretion.
4. MANNER OF EXERCISE
(a) PARTIAL EXERCISE. An exercisable Option may be exercised at any time
prior to the time when the Option becomes unexercisable under Section 10;
PROVIDED that each exercise shall be for not less than 50 Option Shares and
shall be for whole Option Shares only.
(b) MANNER OF EXERCISE. An exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his or
her office:
(i) A written notice complying with the applicable rules established
by the Committee stating that the Option is exercised. The Optionholder
shall sign the notice or other person then entitled and authorized to
exercise the Option;
(ii) Such representations and documents as the Committee, in its
discretion, deems necessary, appropriate or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended
(the "Act"), and any other federal or state securities laws, rules or
regulations. The Committee may, in its discretion, also take whatever
additional actions it deems necessary, appropriate or advisable to effect
such compliance, including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to transfer agents and
registrars;
(iii) In the event that the Option shall be exercised by any
person or persons other than the Optionholder, appropriate proof of the
right of such person or persons to exercise the Option; and
(iv) Full payment (by certified or bank check or by wire transfer of
immediately available funds) to the Secretary of the Company for the
Option Shares with respect to which Options are exercised and any
applicable withholding taxes. In its discretion, however, the Committee
may (A) allow a delay in payment up to thirty (30) days from the date the
Option is exercised; (B) allow payment, in whole or in part, through the
delivery of shares of Common Stock owned by the Optionholder (including,
subject to Section 4(c), Option Shares issuable upon such exercise), duly
endorsed for transfer to WCP, having an Aggregate Market Value (as
hereinafter defined) on the date of delivery equal to the aggregate
Exercise Price of the Options; (C) allow payment, in whole or in part,
through the delivery of property of any kind which constitutes good and
valuable consideration; (D) allow payment, in whole or in part, through
the delivery of a full recourse promissory note bearing interest (at no
less than such rate as shall then preclude the imputation of interest
under the Code) and payable upon such terms as may be prescribed by the
Committee; or (E) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (B), (C) and (D).
In the case of a promissory note, the Committee may also prescribe the
form of such note and the security to be given for such note. No Option
may be exercised, however, by delivery of a promissory note or by a loan
from the Company when or where such loan or other extension of credit is
prohibited by law.
<PAGE>
<PAGE>
(c) CERTAIN TIMING REQUIREMENTS. At the discretion of the Committee,
shares of Common Stock issuable to the Optionholder upon exercise of the Option
may be used to satisfy the Option Exercise Price or the tax withholding
consequences of such exercise, but in the case of persons subject to Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") shares
of Common Stock maybe so used only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company and ending on the twelfth
business day following such date or (ii) pursuant to an irrevocable written
election by the Optionholder to use shares of Common Stock issuable to the
Optionholder upon exercise of the Option to pay all or part of the Option
Exercise Price or the withholding taxes made at least six months prior to the
payment of such Option Exercise Price or withholding taxes.
(d) RIGHTS AS STOCKHOLDERS. The holders of Options shall not be, nor
have any of the rights or privileges of, stockholders of WCP in respect of any
shares purchasable upon the exercise of any Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
(e) CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. WCP may postpone the
time of delivery of the certificates for Option Shares for such additional time
as WCP shall deem necessary or desirable to enable it to comply with the
listing requirements of any securities exchange with which the Common Stock may
be listed or the requirements of the Act or the Exchange Act, or any rules and
regulations of the Securities and Exchange Commission promulgated thereunder,
or the requirements of applicable state laws relating to the authorization,
issuance or sale of securities.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE OPTIONHOLDER
(a) The Optionholder hereby represents and warrants that he or she is
acquiring the Options and any Option Shares issued upon exercise thereof for
investment for his or her own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The
Optionholder acknowledges and affirms Section 7.1 of the Option Plan. The
Optionholder further agrees and acknowledges that he or she will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being referred to herein as a "transfer") any Option
Shares unless such transfer complies with Section 6 of this Agreement and such
transfer is pursuant to (i) an effective registration statement under the Act
and the rules and regulations thereunder and in compliance with any applicable
state securities or "blue sky" laws, or (ii) (A) an opinion of counsel to the
Optionholder (which counsel shall be reasonably acceptable to WCP) furnished to
WCP and satisfactory in form and substance to WCP that no such registration is
required because of the availability of an exemption from registration under
the Act and (B) if the Optionholder is a citizen or resident of any country
other than the United States, or the Optionholder desires to effect any
Transfer in any such country, counsel for the Optionholder (which counsel shall
be reasonably satisfactory to WCP) shall have furnished WCP with an opinion or
other advice satisfactory in form and substance to WCP to the effect that such
Transfer will comply with the securities laws of such jurisdiction.
(b) Notwithstanding the foregoing, WCP acknowledges and agrees that any
of the following transfers of Option Shares are deemed to be in compliance with
the Act and this Agreement and no opinion of counsel is required in connection
therewith:
<PAGE>
<PAGE>
(i) A transfer of Option Shares made pursuant to Sections 7 or 8 of
this Agreement;
(ii) A transfer of Option Shares upon the death of the Optionholder
to his or her executors, administrators, testamentary trustees, legatees
or beneficiaries (the "Optionholder's Estate") or a transfer to the
executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Option Shares in
accordance with the terms of this Agreement; PROVIDED that such transfer
is made expressly subject to this Agreement and that the transferee agrees
in writing to be bound by the terms and conditions of this Agreement as if
such transferee were the Optionholder;
(iii) A transfer of Option Shares made in compliance with the
federal securities laws to a trust or custodianship the beneficiaries of
which, a partnership (general or limited) the partners of which, or a
limited liability company the members of which, may include only the
Optionholder, his or her spouse or his or her lineal descendants by blood
or adoption (the "Optionholder's Trust") or a transfer of Option Shares
made after the third anniversary of the Vesting date to such a trust,
partnership or limited liability corporation by a person who has become a
holder of such Option Shares in accordance with the terms of this
Agreement; PROVIDED that such transfer is made expressly subject to this
Agreement and that the transferee agrees in writing to be bound by the
terms and conditions of this Agreement as if such transferee were the
Optionholder; and
(iv) A pledge or hypothecation by the Optionholder or the
Optionholder's Trust of the Option Shares or his or her or its interest
therein to a bank or other financial institution (a "Pledgee") reasonably
satisfactory to WCP to secure a loan by such Pledgee to the Optionholder
or the Optionholder's Trust, as the case may be, for the purchase of the
Option Shares or the refinancing of any indebtedness incurred for the
purchase of the Option Shares; PROVIDED that (A) such Pledgee agrees in
writing to accept the Option Shares or interest therein subject to all of
the terms and conditions of this Agreement as if such Pledgee were the
Optionholder and to notify WCP upon the happening of any default or event
of default under the terms of the agreement with the Optionholder or the
Optionholder's Trust, as the case may be, relating to such pledge or
hypothecation and (B) the Optionholder or the Optionholder's Trust, as the
case may be, delivers to the Board a copy of all proposed documentation
relating to such pledge or hypothecation at least ten days before the
scheduled date of such pledge or hypothecation, and prior to such scheduled
date WCP has confirmed that such documentation is reasonably satisfactory
to it in form and substance.
(c) The certificate (or certificates) representing the Option Shares
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF STOCK OPTION AGREEMENT
DATED DECEMBER 18, 1998 BETWEEN WORLD COLOR PRESS, INC. ("WCP") AND
THE OPTIONHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICE OF WCP). EXCEPT AS OTHERWISE PROVIDED IN
SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS OR (B) (I) IF WCP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION
OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE PROVISIONS OF
STATE SECURITIES LAWS, AND (II) IF THE HOLDER IS A CITIZEN OR
RESIDENT OF ANY COUNTRY OTHER THAN THE UNITED STATES, OR THE HOLDER
DESIRES TO EFFECT ANY SUCH TRANSACTION IN ANY SUCH COUNTRY, THE
COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OR OTHER
ADVICE OF COUNSEL FOR THE HOLDER THAT SUCH TRANSACTION WILL NOT
VIOLATE THE LAWS OF SUCH COUNTRY."
<PAGE>
<PAGE>
(d) The Optionholder acknowledges that he or she has been advised that
(i) the issuance of the Option Shares upon exercise of the Options will not
have been registered under the Act, (ii) the Option Shares must be held
indefinitely and the Optionholder must continue to bear the economic risk of
the investment in the Option Shares unless they are subsequently registered
under the Act or an exemption from such registration is available, (iii) no
assurance can be given that there will be any public market for the Option
Shares, (iv) no assurance can be given that Rule 144 promulgated under the Act
will be available with respect to the sales of any securities of WCP, and WCP
has made no covenant to make such Rule available, (v) when and if any of the
Option Shares may be disposed of without registration in reliance on Rule 144,
such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule, (vi) if the Rule 144 exemption is not
available, public sale without registration will require compliance with some
other exemption under the Act, (vii) a restrictive legend in the form
heretofore set forth shall be placed on the certificates representing the
Option Shares and (viii) a notation shall be made in the appropriate records of
WCP and/or the transfer agent for the Common Stock indicating that the Option
Shares are subject to restriction on transfer and appropriate stop transfer
restrictions will be issued to WCP's stock transfer agent with respect to the
Option Shares.
(e) If any of the Option Shares are to be disposed of in accordance with
Rule 144 under the Act or otherwise, the Optionholder shall promptly notify WCP
of such intended disposition and shall deliver to WCP at or prior to the time
of such disposition such documentation as WCP may reasonably request in
connection with such sale and, in the case of a disposition pursuant to Rule
144, shall deliver to WCP an executed copy of any notice on Form 144 required
to be filed with the Securities and Exchange Commission ("SEC").
(f) The Optionholder agrees that, if any securities of WCP are offered to
the public pursuant to an effective registration statement under the Act, the
Optionholder will not effect any public sale or distribution of any Option
Shares not covered by such registration statement within seven days prior to,
or within 180 days (or in an underwritten public offering, any such lesser
period as the underwriters may agree to) after, the effective date of such
registration statement, unless otherwise agreed to in writing by WCP; PROVIDED
that the Optionholder shall have been notified in writing of such offering.
6. RESTRICTION ON TRANSFER OF OPTION SHARES
(a) Except for transfers otherwise permitted by this Agreement, the
Optionholder agrees that he or she will not transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any Option Shares at any time prior to the
fifth anniversary of the Vesting date. The restrictions on transfer provided
in this Section 6 shall not apply as of any date (the "Calculation Date") to a
number of Option Shares (the "Unrestricted Shares") held in the aggregate by
the Optionholder, the Optionholder's Trust, the Optionholder's Estate and all
Pledgees equal to the excess, if any, of (i) the product of (A) the total
number of Option Shares covered by all Options received by the Optionholder on
the Vesting date and (B) the Vested Percentage as of such date over (ii) the
total number of Option Shares transferred by the Optionholder, the
Optionholder's Trust, the Optionholder's Estate and all Pledgees after the date
hereof, other than pursuant to transfers permitted by clauses (ii), (iii) and
(iv) of Section 5(b) hereof. No transfer of any such shares in violation
hereof shall be made or recorded on the books of WCP (or any transfer agent or
registrar therefor) and any such transfer shall be null and void and of no
force or effect.
<PAGE>
<PAGE>
(b) For purposes of this Agreement, the "Vested Percentage" with respect
to Option Shares shall be determined as follows:
<TABLE>
<CAPTION>
CALCULATION DATE VESTED PERCENTAGE
<S> <C>
From Vesting date until the first 0%
anniversary of the Vesting date
On and after the first anniversary of 20%
the Vesting date until the second
anniversary of the Vesting date
On and after the second anniversary 40%
of the Vesting date until the third
anniversary of the Vesting date
On and after the third anniversary of 60%
the Vesting date until the fourth
anniversary of the Vesting date
On and after the fourth anniversary 80%
of the Vesting date until the fifth
anniversary of the Vesting date
On and after the fifth anniversary of 100%
the Vesting date
</TABLE>
7. OPTIONHOLDER'S RIGHT TO RESELL OPTION SHARES AND OPTIONS TO WCP UPON
DEATH OR DISABILITY
(a) Except as otherwise provided herein, if on or before the fifth
anniversary of the Vesting date, (i) the Optionholder dies or becomes
Permanently Disabled (as hereinafter defined) and (ii) at the time of his or
her death or Permanent Disability, the Optionholder (A) was still in the employ
of the Company, (B) had retired from the Company at age 65 or over (or such
other age as may be approved by the Board) after having been employed by the
Company continuously for at least three years after the Vesting date (a
"Permitted Retirement"), or (C) had terminated employment with Good Reason (as
hereinafter defined), then the Optionholder, the Optionholder's Estate and/or
the Optionholder's Trust, as the case may be, shall have the right for six
months from the date of death or Permanent Disability to elect on one occasion
(x) to sell to WCP, and WCP shall be required to purchase all or any portion of
the Option Shares then held by the Optionholder, the Optionholder's Estate
and/or the Optionholder's Trust, as the case may be, at the Section 7
Repurchase Price, as determined in accordance with Section 9 and/or (y) to
require WCP to pay to the Optionholder an amount equal to the Option Excess
Price (as defined in Section 10(a)) determined on the basis of the Section 7
Repurchase Price as provided in Section 9 with respect to the termination of
all or any portion of outstanding Options held by the Optionholder.
(b) The Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be, shall send written notice to WCP of his, her or its
election to sell such Option Shares and/or to terminate such Options in
exchange for the payment referred to in the preceding subsection (a) (the
"Redemption Notice") within the six-month period referred to in Section 7(a).
The completion of the purchase shall take place at the principal office of WCP
on the 15th business day after the receipt by WCP of a properly given
Redemption Notice. The Section 7 Repurchase Price and any payment with respect
to the Options as described above shall be paid by delivery to the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, of a certified or bank check or checks in the appropriate amount
payable to the order of the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, against delivery of certificates or
other instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, appropriately endorsed or
executed by the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, or his, her or its duly authorized representative.
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(c) Notwithstanding any other provision of this Section 7 and subject to
Section 13, if there exists and is continuing a default or any event which
after a notice or lapse of time or both would cause a default under any loan,
guarantee or other agreement under which WCP or any of its Subsidiaries has
borrowed money or such repurchase would result in any default or event of
default on the part of the WCP or any of its Subsidiaries under any such
agreement or if the capital of WCP or any of its Subsidiaries is then impaired
or would be impaired as a result of such repurchase or such repurchase would
otherwise violate the General Corporation Law of the State of Delaware (each
such occurrence being an "Event"), WCP shall not be obligated to repurchase any
of the Option Shares from, or to make any payment with respect to the Options
to, the Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be until the first business day which is five business
days after all of the foregoing Events have ceased to exist (the "Repurchase
Eligibility Date"), PROVIDED that (i) the Section 7 Repurchase Price shall be
calculated as of the time of the delivery of a Redemption Notice in accordance
with Section 7(b) and (ii) the number of Option Shares subject to repurchase
under this Section 7(c) and the number of Exercisable Option Shares (as defined
in Section 10(a)) for purposes of calculating the Option Excess Price payable
under Section 7(a), shall be that number of Option Shares and Exercisable
Option Shares, respectively, held by the Optionholder, the Optionholder's
Estate or the Optionholder's Trust, as the case may be, at the time of the
delivery of a Redemption Notice in accordance with Section 7(b). All Options
exercisable as of the date of a Redemption Notice shall continue to be
exercisable until the repurchase pursuant to such Redemption Notice.
(d) Notwithstanding any other provision of this Section 7 to the
contrary, the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, as the case may be, shall have the right to withdraw any Redemption
Notice which has been pending for 120 or more days and which has remained
unsatisfied because of the provisions of Section 7(c).
8. WCP'S RIGHT TO REPURCHASE OPTION SHARES AND TERMINATE OPTIONS OF
OPTIONHOLDER
(a) If on or prior to the fifth anniversary of the Vesting date, (i) the
Optionholder's employment with WCP (and, if applicable, its Subsidiaries) is
voluntarily or involuntarily terminated for any reason whatsoever, with or
without Cause or Good Reason, (ii) the beneficiaries of an Optionholder's Trust
shall include any person or entity other than the Optionholder, his or her
spouse or his or her lineal descendants by blood or adoption, (iii) the
Optionholder shall effect a transfer of any of the Option Shares other than as
permitted by this Agreement or (iv) there shall occur a transfer of Option
Shares then held by the Optionholder pursuant to a bankruptcy proceeding, levy,
property settlement or disposition pursuant to law incident to marital
separation or divorce (alternatively, a "Call Event"), then WCP shall have the
right to purchase all, but not less than all, of the Option Shares then held by
the Optionholder, the Optionholder's Estate, the Optionholder's Trust and all
Pledgees at the Section 8 Repurchase Price determined in accordance with
Section 9 hereof; PROVIDED that the Call Event described in clause (iv) of this
Section 8 shall entitle WCP to repurchase only the number of Option Shares that
are the subject of the transfer resulting in the Call Event; and PROVIDED,
FURTHER, that if the Call Event results from the death, Permanent Disability or
Permitted Retirement of the Optionholder, or the termination of the
Optionholder's employment by the Optionholder with Good Reason or by the
Company without Cause, WCP shall have the right to purchase all, but not less
than all, of the Option Shares held by the Optionholder, the Optionholder's
Estate, the Optionholder's Trust and any Pledgee at the Section 7 Repurchase
Price. WCP shall have a period of 75 days after the date of a Call Event (or
the date of WCP's knowledge that a Call Event described in clause (ii) or (iii)
above has occurred) in which to give notice in writing to the Optionholder of
WCP's exercise of such repurchase election (the "Call Notice"). If (X) the
Optionholder holds Option Shares and Options and WCP exercises its right to
repurchase Option Shares pursuant to this Section 8 or (Y) the Optionholder
holds only Options and WCP elects (in accordance with the requirements of the
Call Notice), WCP shall also pay the Optionholder an amount equal to the Option
Excess Price determined on the basis of the Section 8 Repurchase Price or
Section 7 Repurchase Price, as applicable, with respect to the termination of
(A) if the Call Event is described in clause (i), (ii) or (iii) above, all, but
not less than all, of the then exercisable outstanding Options held by the
Optionholder and (B) if the Call Event is described in clause (iv) above, a pro
rata portion (based on the number of Option Shares that are the subject of the
transfer) of the then exercisable outstanding Options held by the Optionholder.
<PAGE>
<PAGE>
(b) Subject to Section 13 hereof, the completion of the purchases pursuant
to Section 8 (a) shall take place at the principal office of WCP on the 15th
business day after the giving of notice of the exercise by WCP of its right to
purchase Option Shares and/or to terminate Options. All payments as described
above shall be made by delivery to the Optionholder, the Optionholder's Estate,
the Optionholder's Trust and/or the Pledgee, as the case may be, of a certified
or bank check or checks in the appropriate amounts payable to the order of the
Optionholder, the Optionholder's Estate, the Optionholder's Trust and/or the
Pledgee, as the case may be, against delivery of certificates or other
instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, in each case appropriately
endorsed or executed by the Optionholder, the Optionholder's Estate, the
Optionholder's Trust, the Pledgee or his or her or its duly authorized
representatives.
(c) Notwithstanding any other provision of this Section 8 to the contrary
and subject to Section 13, if there exists and is continuing any Event, WCP
shall delay the repurchase of any of the Option Shares or the Options (pursuant
to a Call Notice timely given in accordance with Section 8(a) hereof) from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, until the Repurchase Eligibility Date; PROVIDED that (i) the
Section 8 Repurchase Price or the Section 7 Repurchase Price, as the case may
be, shall be calculated as of the time of the delivery of a Call Notice in
accordance with Section 8(a) and (ii) the number of Option Shares subject to
repurchase under this Section 8 and the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price payable under this Section 8,
shall be the number of Option Shares and Exercisable Option Shares,
respectively, held by the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, at the time of the delivery of a Call
Notice in accordance with Section 8(a). All Options exercisable as of the date
of a Call Notice shall continue to be exercisable until the repurchase pursuant
to such Call Notice.
(d) Notwithstanding any other provision of this Section 8 to the
contrary, WCP's right to purchase Option Shares and cancel Options pursuant to
this Section 8 shall terminate with respect to any Option Shares and Options
that have not been so repurchased or cancelled on or before the 120th day after
the date of the Call Notice.
9. DETERMINATION OF REPURCHASE PRICE
(a) The Section 7 Repurchase Price and the Section 8 Repurchase Price are
hereinafter collectively referred to as the "Repurchase Price." The Repurchase
Price shall be calculated on the basis of the unaudited financial statements of
the Company or the Market Price Per Share (as defined in Section 9(e)) as of
the last day of the month preceding the month in which the event giving rise to
the repurchase occurs (the "Repurchase Calculation Date"). The event giving
rise to the repurchase shall be the transfer, death, Permanent Disability,
Permitted Retirement or termination of employment, or other event, as the case
may be, not the giving of any notice required pursuant to Section 7 or 8.
<PAGE>
<PAGE>
(b) The Section 7 Repurchase Price per Option Share shall be equal to the
greater of the Market Price Per Share and the Option Price Per Share.
(c) (i) If the Call Event results from the occurrence of an event
described in clauses (ii), (iii) or (iv) of Section 8(a), the Section 8
Repurchase Price per Option Share shall be equal to the lesser of (x) the
Market Price Per Share and (y) the Option Price Per Share plus the product
of (I) the Vested Percentage (as defined in Section 6) and (II) the amount,
if any, by which the Market Price Per Share exceeds the Option Price Per
Share.
(ii) If the Call Event results from the Optionholder's voluntary
termination of employment other than for Good Reason, the Section 8
Repurchase Price per Option Share shall be equal to the Market Price Per
Share.
(iii) If the Call Event results from the Optionholder's
termination of employment by the Company with Cause, the Section 8
Repurchase Price per Option Share shall be equal to the lesser of the
Market Price Per Share and the Option Price Per Share.
(d) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the Securities and Exchange
Commission (other than a registration statement on Form S-8 or any other
similar form) immediately after which sale an active trading market in the
Common Stock exists; PROVIDED that an active trading market in the Common Stock
shall be deemed to exist if the Common Stock is listed on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market System, but
the failure of the Common Stock to be so listed shall not PER SE be
determinative as to whether an active trading market does not exist.
(e) As used herein the term "Market Price Per Share" shall mean the price
per share equal to the average of the last sale price of the Common Stock on
each of the ten trading days prior to the Repurchase Calculation Date on each
exchange on which the Common Stock may at the time be listed and on which the
Common Stock traded on such date or, if there shall have been no sales on any
of such exchanges on any such trading day, the average of the closing bid and
asked prices on each such exchange at the end of each such trading day or, if
there is no such bid and asked price on such trading day, on the next preceding
date when such bid and asked price occurred or, if the Common Stock shall not
be so listed, the average of the closing sales prices as reported by NASDAQ at
the end of each of the ten trading days prior to the Repurchase Calculation
Date in the over-the-counter market. If the Common Stock is not so listed or
reported by NASDAQ, then the Market Price Per Share shall be the fair market
value established by the Board acting in good faith.
(f) As used herein the term "Aggregate Market Value" shall mean the
product of (i) the number of shares of Common Stock to be applied as payment of
the Exercise Price pursuant to Section 4(b)(iv)(B) and (ii) the Market Value
Per Share as of the payment date.
<PAGE>
<PAGE>
(g) In determining the Repurchase Price, appropriate adjustments shall be
made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of
outstanding shares of Common Stock.
10. SHARES ISSUED TO OPTIONHOLDER UPON EXERCISE OF OPTIONS; TERMINATION
OF OPTIONS
(a) All Options, whether or not then exercisable, shall be automatically
terminated to the extent that, pursuant to the provisions of this Agreement,
WCP shall pay the Optionholder an amount equal to the Option Excess Price with
respect to such Options. If the Option Excess Price is zero or a negative
number, all outstanding Options granted to the Optionholder, whether or not then
exercisable, shall be automatically terminated upon the repurchase of any Option
Shares pursuant to Section 7 or Section 8. For purposes hereof, "Option Excess
Price" shall mean the excess, if any, of the Section 7 Repurchase Price or
the Section 8 Repurchase Price, depending on which Repurchase Price is (or
would be) used to repurchase the Option Shares, over the exercise price
applicable to such Options multiplied by the number of Exercisable Option
Shares. For purposes hereof, "Exercisable Option Shares" shall mean the shares
of Common Stock which, at the time of determination, could be purchased by the
Optionholder upon exercise of his or her outstanding exercisable Options.
(b) Except as otherwise provided herein or in the Option Plan, the
Options shall expire and cease to be exercisable to any extent after the first
to occur of the following events:
(i) the tenth anniversary of the Vesting date; or
(ii) the date that is six months after the Optionholder's termination
of employment by reason of death, Permanent Disability or Permitted Retirement;
or
(iii) the first business day which is fifteen calendar days after
the earlier of (A) 75 days after the Optionholder's termination of employment
for any reason other than for Cause, Good Reason, death, Permanent Disability
or Permitted Retirement, or (B) the delivery of notice by WCP that it does not
intend to exercise its call right under Section 8; PROVIDED that in any event
the Options shall remain exercisable under this Section 10 until at least 45
days after termination of the Optionholder's employment for any reason other
than death, Permanent Disability, or Permitted Retirement; or
(iv) upon the occurrence of a Transfer Event (as hereinafter defined)
and upon payment to the Optionholder of an amount in cash equal to the
difference between (i) the product of (A) the Per Share Consideration (as
hereinafter defined) received in such Transfer Event by a holder of Common
Stock multiplied by (B) the number of Option Shares for which the unexercised
Options are then exercisable and (ii) the aggregate Option Price Per Share for
such unexercised Options which are then exercisable. For the purposes of this
Section 10, the term "Per Share Consideration" shall mean the quotient of (x)
the aggregate consideration paid or to be paid (but only as and when received)
in respect of the Transfer Event to the holders of Common Stock of WCP, as
applicable, divided by (y) the number of outstanding shares of Common Stock on
a fully diluted basis (after giving effect to the exercise of all outstanding
options to acquire Common Stock to the extent then exercisable); and the term
"Transfer Event" shall mean any of a merger or consolidation involving WCP, a
sale or exchange of all or substantially all of the assets of WCP, an
acquisition by another corporation or other entity of 80% or more of WCP's
outstanding shares of voting stock or the liquidation or dissolution of WCP.
<PAGE>
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11. WCP'S REPRESENTATIONS AND WARRANTIES
(a) WCP represents and warrants to the Optionholder that (i) this
Agreement has been duly authorized, executed and delivered by WCP and (ii) the
Option Shares, when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and nonassessable.
(b) WCP shall file the reports required to be filed by it under the Act
and the Exchange Act to the extent required from time to time to enable the
Optionholder to sell Option Shares without registration under the Act within
the limitations of the exemptions provided by (i) Rule 144 under the Act, as
such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Notwithstanding anything contained in
this Section 11(b), WCP may deregister under Section 12 of the Exchange Act if
it is then permitted to do so pursuant to the Exchange Act and the rules and
regulations thereunder, and, upon such deregistration, shall be relieved of its
obligations to file reports pursuant to this Section 11(b). Nothing in this
Section 11(b) shall be deemed to limit in any manner the restrictions on sales
of Option Shares contained in this Agreement.
12. "PIGGYBACK" REGISTRATION RIGHTS
(a) If WCP, in connection with any Public Offering, plans to register any
shares of Common Stock held by WCP Associates, L.P., APC Associates, L.P., GR
Associates, L.P., KKR Partners II, L.P. or any other KKR Affiliate (as defined
below) (the "Institutional Investors") for public offering pursuant to the Act,
WCP will promptly notify the Optionholder in writing (a "Registration Notice")
of such proposed registration (the "Proposed Registration"). If within ten
business days of the receipt by the Optionholder of such Registration Notice
(and, in any event, within 15 business days after such Registration Notice is
sent by WCP), WCP receives from the Optionholder, the Optionholder's Estate or
the Optionholder's Trust a written request (a "Registration Request") to
register Option Shares held by the Optionholder, the Optionholder's Estate or
the Optionholder's Trust (which Registration Request will be irrevocable unless
otherwise mutually agreed to in writing by the Optionholder and WCP), Option
Shares will be so registered as provided in this Section 12; PROVIDED that for
each such Proposed Registration only one Registration Request, which shall be
executed by the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, as the case may be, may be submitted for all Registrable Securities held
by the Optionholder, the Optionholder's Estate and the Optionholder's Trust,
respectively. All Option Shares acquired by the Optionholder pursuant to the
exercise of Options granted pursuant to this Agreement and held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, including
shares purchased upon the exercise of Options, shall be deemed to be
Registrable Securities.
(b) The maximum number of Option Shares which will be registered pursuant
to a Registration Request will be the lowest of (i) the number of Option Shares
then held by the Optionholder (which for purposes of this subparagraph (b)
shall include shares held by the Optionholder's Estate or a Optionholder's
Trust), including all Option Shares which the Optionholder is then entitled to
acquire under an unexercised Option to the extent then exercisable (the
"Maximum Shares"), (ii) the Maximum Shares then held by the Optionholder
multiplied by the ratio of (A) the number of shares of Common Stock to be
registered by the Institutional Investors in the Proposed Registration to (B)
the total number of shares of Common Stock beneficially owned by all
Institutional Investors and (iii) the maximum number of shares which the
Optionholder can register in the public offering pursuant to any limits set by
the managing underwriter for inclusion in such public offering and agreed to in
good faith by WCP.
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(c) Except as may otherwise be provided in this Section 12, Option Shares
will be registered by WCP and offered to the public pursuant to this Section 12
on the same terms and subject to the same conditions applicable to registration
in the Proposed registration of shares held by an Institutional Investor. Such
terms and conditions shall include, without limitation: the public offering
price; the payment of fees, commissions and expenses; the provision of, and
representation and warranty as to, information requested by WCP; and the
provision of requisite indemnifications.
(d) Upon delivering a Registration Request, the Optionholder will, if
requested by WCP, execute and deliver a Custody Agreement and Power of Attorney
in form and substance satisfactory to WCP with respect to the Option Shares to
be registered pursuant to this Section 12 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, will deliver to and deposit in
custody with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Option Shares (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as the
Optionholder, the Optionholder's Estate's or the Optionholder's Trust's, as the
case may be, agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on behalf of the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, with respect to the matters specified therein. The Optionholder
agrees that he will execute such other agreements as WCP may reasonably request
to further evidence the provisions of this Section 12.
13. CONTINUED EXERCISABILITY OF WCP'S RIGHT OR OBLIGATION TO REPURCHASE.
Notwithstanding anything to the contrary contained in Sections 7 and 8 hereof,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Stock Option Agreements would
result in an Event, then the Company shall make purchases from, and payments
to, the Optionholder and Other Optionholders pro rata (on the basis of the
proportion of the number of Option Shares and the number of Options each such
Optionholder and all Other Optionholders have elected or are required to sell
to the Company) for the maximum number of Option Shares and shall pay the
Option Excess Price for the maximum number of Options permitted without
resulting in an Event (the "Maximum Repurchase Amount"). The provisions of
Section 7(d) and 8(c) shall apply in their entirety to payments and repurchases
with respect to Options and Option Shares which may not be made due to the
limits imposed by the Maximum Repurchase Amount under this Section 13. Until
all of such Options and Option Shares are purchased and paid for by the
Company, the Optionholder and the Other Optionholders whose Options and Option
Shares are not purchased in accordance with this Section 13 shall have
priority, on a pro rata basis, over other purchases of Options and Option
Shares by the Company pursuant to this Agreement and Other Stock Option
Agreements.
14. RIGHT TO NEGOTIATE PURCHASE PRICE. Nothing contained in this
Agreement shall be deemed to restrict or prohibit WCP from purchasing Option
Shares and the Options from the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, at any time, for such price upon such other terms and
conditions as may be mutually agreed upon between such parties, whether or not
at the time of such purchase circumstances exist which specifically grant WCP
the right to purchase, or the Optionholder, the Optionholder's Estate or the
Optionholder's Trust to sell, Option Shares and the Options under the terms of
this Agreement, and all such purchases shall be deemed to be in accordance with
the terms of this Agreement.
15. COVENANT REGARDING 83(B) ELECTION. EXCEPT AS WCP MAY OTHERWISE AGREE
IN WRITING, THE OPTIONHOLDER HEREBY COVENANTS AND AGREES THAT HE OR SHE WILL
MAKE AN ELECTION UNDER SECTION 83(B) OF THE CODE PURSUANT TO TREASURY
REGULATION SECTION 1.83-2 WITH RESPECT TO ANY OPTION SHARES ISSUED UPON
EXERCISE OF THE OPTIONS. THE OPTIONHOLDER FURTHER COVENANTS AND AGREES THAT HE
OR SHE WILL FURNISH WCP WITH COPIES OF THE FORM OF ELECTION THE OPTIONHOLDER
FILES WITHIN 30 DAYS AFTER EACH EXERCISE OF ANY OF THE OPTIONS AND WITH
EVIDENCE THAT EACH SUCH ELECTION HAS BEEN FILED IN A TIMELY MANNER.
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16. NOTICE OF CHANGE OF BENEFICIARY. Immediately prior to any transfer
of Option Shares to the Optionholder's Trust, the Optionholder shall provide
WCP with a copy of the instruments creating the Optionholder's Trust and with
the identity of the beneficiaries of the Optionholder's Trust. The
Optionholder shall notify WCP immediately prior to any change in the identity
of any beneficiary of the Optionholder's Trust.
17. EXPIRATION OF CERTAIN PROVISIONS
(a) The provisions contained in Sections 7 and 8 of this Agreement, and
the portions of other provisions of this Agreement which incorporates the
provisions of Sections 7 and 8, shall terminate and be of no further force or
effect with respect to any Option Shares which are permitted to be sold by the
Optionholder pursuant to this Agreement and which are sold by the Optionholder
(i) pursuant to an effective registration statement filed by the Company under
the Act or (ii) pursuant to Rule 144, as amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
(b) The provisions contained in Sections 5(f), 6, 7, 8 and 15 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of any of such Sections, shall terminate and be of
no further force or effect upon the consummation of a Change of Control. For
purposes of this Section, "Change of Control" means the occurrence of any of
the following: (i) the sale, lease, transfer conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company taken as
a whole to any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than the "KKR Affiliates" (as hereinafter
defined), (ii) the adoption of a plan relating to the liquidation or
dissolution of WCP, (iii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that
any "person" (as defined above), other than the KKR Affiliates, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the voting stock
of WCP, (iv) the consummation of the first transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as defined above),
directly or indirectly, of more of the voting stock of WCP than is at the time
"beneficially owned" (as defined above) by the KKR Affiliates. For purposes of
this Agreement, "KKR Affiliate" shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, Kohlberg
Kravis Roberts & Co., L.L.P., its successors or assigns; "Person" means an
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature, and "control" shall have the meaning given
such term under Rule 405 of the Act.
18. RECAPITALIZATION. Except to the extent otherwise provided by Section
17 hereof, the provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Option Shares and the Options, to any and all
capital stock of WCP and any partnership units, capital stock or other security
evidencing ownership interests in any successor or assign of WCP (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for or in substitution of Option Shares and the
Options, by reason of any dividend, distribution, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.
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19. OPTIONHOLDER'S EMPLOYMENT BY THE COMPANY. Nothing contained in this
Agreement or in any other agreement entered into by the Company and the
Optionholder in connection with the execution of this Agreement (i) obligates
the Company to employ the Optionholder in any capacity whatsoever or (ii)
prohibits or restricts the Company from terminating the employment, if any, of
the Optionholder at any time or for any reason whatsoever, with or without
cause, and the Optionholder hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises
whatsoever to the Optionholder concerning the Optionholder's employment or
continued employment by the Company except as otherwise set forth in a separate
written agreement between the Company and the Optionholder.
20. STATE SECURITIES LAWS. WCP hereby agrees to use all reasonable
efforts to comply with all state securities or "blue sky" laws, which might be
applicable to the issuance of the Option Shares to the Optionholder.
21. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns. In the case of a
transferee permitted under Section 5(b) hereof, such transferee shall be deemed
to be the Optionholder hereunder; PROVIDED that no transferee (including,
without limitation, any transferee referred to in Section 5(b) hereof) shall
derive any rights under this Agreement unless and until such transferee has
delivered to WCP a valid undertaking and becomes bound by the terms of this
Agreement.
22. AMENDMENT. This Agreement may be amended only by a written agreement
or instrument signed by the Parties hereto; PROVIDED that WCP may, in its
discretion, amend this Agreement by a written agreement or instrument signed
only by WCP to reduce or eliminate any restriction on the sale, transfer or
other disposition of Option Shares.
23. CLOSING. Except as otherwise provided herein, the closing of each
purchase and sale of Option Shares and any outstanding Options pursuant to this
Agreement shall take place at the principal office of WCP on the 15th business
day following delivery of the notice by either Party to the other of its
exercise of the right to purchase or sell hereunder.
24. APPLICABLE LAW. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
25. ASSIGNABILITY OF CERTAIN RIGHTS BY WCP. WCP shall have the right to
assign any or all of its rights or obligations to purchase Option Shares and
any outstanding Options pursuant to Sections 7 and 8 hereof.
<PAGE>
<PAGE>
26. PAYMENT BY WCP. If at any time WCP purchases Option Shares or any
outstanding Options from the Optionholder hereunder, and the Optionholder is
indebted to WCP in any amount whatsoever, WCP, in its sole discretion, may
apply all or any part of such indebtedness to the purchase price.
27. NOTICES. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed delivered when delivered in person or sent by first-class mail
(certified or registered mail, return receipt requested, postage prepaid),
facsimile or overnight air courier guaranteeing next day delivery, addressed as
follows:
(a) If to WCP, to it at the following address:
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Facsimile No.: (203) 532-4371
Attn: Chief Legal Officer
(b) If to the Optionholder, to him or her at the following address:
170 Clapboard Ridge Road
Greenwich, CT 06831
28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
29. SECTION HEADINGS. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
30. REMEDIES FOR VIOLATIONS. The Parties agree that they would be
irreparably damaged and that money damages would not be a sufficient remedy in
the event that the Parties do not follow this Agreement. In the event of any
such breach, the non-breaching Party shall be entitled, without being required
to post a bond or other security, to equitable relief (including, without
limitation, injunction and specific performance) as a remedy for such breach.
Such remedies shall not be deemed to be the exclusive remedies for any such
breach but shall be in addition to all other remedies available at law or
equity to the non-breaching Party.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
WORLD COLOR PRESS, INC.
/s/ Jennifer L. Adams
By: --------------------------------------------
Jennifer L. Adams
Vice Chairman
/s/ Robert G. Burton
--------------------------------------------
Robert G. Burton
<PAGE>
<PAGE>
EXHIBIT 10.35
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") dated February 26, 1999 is
made by and between World Color Press, Inc., a Delaware corporation ("WCP"),
and Robert G. Burton, an individual with a residence at 170 Clapboard Ridge
Road, Greenwich, CT 06831 (the "Optionholder"). WCP and the Optionholder are
sometimes herein referred to collectively as the "Parties."
RECITALS
A. The Optionholder is a senior management employee of WCP.
B. WCP has established the 1998 Senior Management Stock Option Plan of
World Color Press, Inc. (the "Option Plan"), and, pursuant to the Option Plan,
WCP wishes to afford the Optionholder the opportunity to purchase shares of its
common stock, par value $.01 per share (the "Common Stock"). The term
"Options" as used in this Agreement shall include all Options granted to the
Optionholder pursuant to this Agreement. Upon exercise of Options granted
hereunder in accordance with the terms hereof and issuance of Common Stock upon
such exercise the Optionholder will become the holder of "Option Shares."
C. The Compensation Committee (the "Committee") of the Board of
Directors of WCP (the "Board") has determined that it would be to the advantage
and best interest of WCP and its stockholders to grant the Options provided for
herein to the Optionholder as an inducement to continue to perform services for
the Company (as hereinafter defined) and as an incentive for increased efforts
during such service, and has advised WCP thereof and instructed the undersigned
officer to issue said Options. For the purposes of this Agreement, the
"Company" shall mean WCP, together with its subsidiaries.
D. This Agreement is one of several agreements ("Other Stock Option
Agreements") which have been, or which in the future will be, entered into
between WCP and other holders of Options granted pursuant to the Option Plan
(collectively, the "Other Optionholders").
AGREEMENTS
1. GRANT OF OPTIONS. In consideration of the Optionholder's agreement
to provide services to the Company and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
WCP irrevocably grants to the Optionholder on the date hereof an aggregate of
200,000 Options, each to purchase initially one share of Common Stock (shares
issuable upon exercise of the Options are collectively referred to herein as
the "Option Shares"), upon the terms and conditions set forth in this
Agreement. This Agreement and the grant of the Options herein are subject to
all of the terms and provisions of the Option Plan attached hereto as Exhibit A
(which terms and provisions are incorporated herein by reference and are
expressly made part of this Agreement). In the event of any conflict between
the provisions of this Agreement and the Option Plan, the terms of the Option
Plan shall govern. All capitalized terms used herein without definition and
defined in the Option Plan have the meanings ascribed to such terms in the
Option Plan. The Options granted hereby are designated non-qualified stock
options and are nontransferable except as otherwise expressly set forth in the
Option Plan.
<PAGE>
<PAGE>
2. EXERCISE PRICE. The purchase price of the Option Shares upon
exercise of any of the Options (the "Exercise Price" or "Option Price Per
Share") shall initially be $24.33 per share, without commission or other
charge.
3. EXERCISABILITY. (a) The Options shall become exercisable as follows:
<TABLE>
<CAPTION>
DATE OPTIONS BECOME EXERCISABLE EXERCISABLE PERCENTAGE
OF OPTIONS
<S> <C>
From February 3, 1999 ("Vesting 0%
Date") until the first anniversary of
the Vesting Date
On and after the first anniversary of 20%
the Vesting date until the second
anniversary of the Vesting date
On and after the second anniversary 40%
of the Vesting date until the third
anniversary of the Vesting date
On and after the third anniversary of 60%
the Vesting date until the fourth
anniversary of the Vesting date
On and after the fourth anniversary 80%
of the Vesting date until the fifth
anniversary of the Vesting date
On and after the fifth anniversary of 100%
the Vesting date
</TABLE>
(b) Notwithstanding the foregoing, all Options that are not exercisable
at the time of the termination of employment of the Optionholder for any reason
other than by reason of the Optionholder's death, Permanent Disability or
Permitted Retirement (each as hereinafter defined) shall be automatically and
immediately cancelled without any payment or other action by the Company. In
the event of and upon the termination of the Optionholder's employment because
of the Optionholder's death, Permanent Disability or Permitted Retirement, all
of the Optionholder's Options granted hereunder shall immediately become
exercisable.
(c) For purposes of this Agreement the following definitions shall apply:
"Cause" shall mean (i) the Optionholder's failure to render services to the
Company, which failure amounts to a material and flagrant neglect of such
duties, (ii) the Optionholder's willful engagement in conduct that is, or that
he or she intends to be, materially injurious to the Company, (iii) the
Optionholder's commission of an act of fraud, conversion, misappropriation
(including, but not limited to, the unauthorized use or disclosure of
confidential or proprietary information of the Company), embezzlement or
felony, (iv) a conviction of or guilty plea or his or her confession to any
fraud, conversion, misappropriation, embezzlement or felony or (v) the
Optionholder's repeated taking of any action prohibited by the Board, PROVIDED
that he or she has received at least one written notice of having taken an
action so prohibited; "Good Reason" shall mean, in each case without the
Optionholder's consent, (i) a material adverse change, when viewed in the
aggregate, in the Optionholder's duties, responsibilities, base compensation,
bonus eligibility and/or other material matters directly related
to his or her employment with the Company or (ii) the Optionholder's relocation
by the Company to a location more than 100 miles from the Optionholder's
immediately prior location.
(d) For purposes of this Agreement, the Optionholder shall be deemed to
have a "Permanent Disability" if he or she is unable to engage in the
activities required by employment by reason of any medically determined
physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than
12 months, as reasonably determined by the Board in good faith and in its
discretion.
<PAGE>
<PAGE>
4. MANNER OF EXERCISE
(a) PARTIAL EXERCISE. An exercisable Option may be exercised at any time
prior to the time when the Option becomes unexercisable under Section 10;
PROVIDED that each exercise shall be for not less than 50 Option Shares and
shall be for whole Option Shares only.
(b) MANNER OF EXERCISE. An exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his or
her office:
(i) A written notice complying with the applicable rules established
by the Committee stating that the Option is exercised. The Optionholder
shall sign the notice or other person then entitled and authorized to
exercise the Option;
(ii) Such representations and documents as the Committee, in its
discretion, deems necessary, appropriate or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended
(the "Act"), and any other federal or state securities laws, rules or
regulations. The Committee may, in its discretion, also take whatever
additional actions it deems necessary, appropriate or advisable to effect
such compliance, including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to transfer agents and
registrars;
(iii) In the event that the Option shall be exercised by any
person or persons other than the Optionholder, appropriate proof of the
right of such person or persons to exercise the Option; and
(iv) Full payment (by certified or bank check or by wire transfer of
immediately available funds) to the Secretary of the Company for the
Option Shares with respect to which Options are exercised and any
applicable withholding taxes. In its discretion, however, the Committee
may (A) allow a delay in payment up to thirty (30) days from the date the
Option is exercised; (B) allow payment, in whole or in part, through the
delivery of shares of Common Stock owned by the Optionholder (including,
subject to Section 4(c), Option Shares issuable upon such exercise), duly
endorsed for transfer to WCP, having an Aggregate Market Value (as
hereinafter defined) on the date of delivery equal to the aggregate
Exercise Price of the Options; (C) allow payment, in whole or in part,
through the delivery of property of any kind which constitutes good and
valuable consideration; (D) allow payment, in whole or in part, through
the delivery of a full recourse promissory note bearing interest (at no
less than such rate as shall then preclude the imputation of interest
under the Code) and payable upon such terms as may be prescribed by the
Committee; or (E) allow payment through any combination of the
consideration provided in the foregoing subparagraphs(B), (C) and (D).
In the case of a promissory note, the Committee may also prescribe the
form of such note and the security to be given for such note. No Option
may be exercised, however, by delivery of a promissory note or by a loan
from the Company when or where such loan or other extension of credit is
prohibited by law.
<PAGE>
<PAGE>
(c) CERTAIN TIMING REQUIREMENTS. At the discretion of the Committee,
shares of Common Stock issuable to the Optionholder upon exercise of the Option
may be used to satisfy the Option Exercise Price or the tax withholding
consequences of such exercise, but in the case of persons subject to Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") shares
of Common Stock maybe so used only (i) during the period beginning on the third
business day following the date of release of the quarterly or annual summary
statement of sales and earnings of the Company and ending on the twelfth
business day following such date or (ii) pursuant to an irrevocable written
election by the Optionholder to use shares of Common Stock issuable to the
Optionholder upon exercise of the Option to pay all or part of the Option
Exercise Price or the withholding taxes made at least six months prior to the
payment of such Option Exercise Price or withholding taxes.
(d) RIGHTS AS STOCKHOLDERS. The holders of Options shall not be, nor
have any of the rights or privileges of, stockholders of WCP in respect of any
shares purchasable upon the exercise of any Option unless and until
certificates representing such shares have been issued by the Company to such
holders.
(e) CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. WCP may postpone the
time of delivery of the certificates for Option Shares for such additional time
as WCP shall deem necessary or desirable to enable it to comply with the
listing requirements of any securities exchange with which the Common Stock may
be listed or the requirements of the Act or the Exchange Act, or any rules and
regulations of the Securities and Exchange Commission promulgated thereunder,
or the requirements of applicable state laws relating to the authorization,
issuance or sale of securities.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE OPTIONHOLDER
(a) The Optionholder hereby represents and warrants that he or she is
acquiring the Options and any Option Shares issued upon exercise thereof for
investment for his or her own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The
Optionholder acknowledges and affirms Section 7.1 of the Option Plan. The
Optionholder further agrees and acknowledges that he or she will not, directly
or indirectly, offer, transfer, sell, assign, pledge, hypothecate or otherwise
dispose of (any such act being referred to herein as a "transfer") any Option
Shares unless such transfer complies with Section 6 of this Agreement and such
transfer is pursuant to (i) an effective registration statement under the Act
and the rules and regulations thereunder and in compliance with any applicable
state securities or "blue sky" laws, or (ii) (A) an opinion of counsel to the
Optionholder (which counsel shall be reasonably acceptable to WCP) furnished to
WCP and satisfactory in form and substance to WCP that no such registration is
required because of the availability of an exemption from registration under the
Act and (B) if the Optionholder is a citizen or resident of any country other
than the United States, or the Optionholder desires to effect any Transfer in
any such country, counsel for the Optionholder (which counsel shall be
reasonably satisfactory to WCP) shall have furnished WCP with an opinion or
other advice satisfactory in form and substance to WCP to the effect that such
Transfer will comply with the securities laws of such jurisdiction.
(b) Notwithstanding the foregoing, WCP acknowledges and agrees that any
of the following transfers of Option Shares are deemed to be in compliance with
the Act and this Agreement and no opinion of counsel is required in connection
therewith:
<PAGE>
<PAGE>
(i) A transfer of Option Shares made pursuant to Sections 7 or 8 of
this Agreement;
(ii) A transfer of Option Shares upon the death of the Optionholder
to his or her executors, administrators, testamentary trustees, legatees
or beneficiaries (the "Optionholder's Estate") or a transfer to the
executors, administrators, testamentary trustees, legatees or
beneficiaries of a person who has become a holder of Option Shares in
accordance with the terms of this Agreement; PROVIDED that such transfer
is made expressly subject to this Agreement and that the transferee agrees
in writing to be bound by the terms and conditions of this Agreement as if
such transferee were the Optionholder;
(iii) A transfer of Option Shares made in compliance with the
federal securities laws to a trust or custodianship the beneficiaries of
which, a partnership (general or limited) the partners of which, or a
limited liability company the members of which, may include only the
Optionholder, his or her spouse or his or her lineal descendants by blood
or adoption (the "Optionholder's Trust") or a transfer of Option Shares
made after the third anniversary of the Vesting date to such a trust,
partnership or limited liability corporation by a person who has become a
holder of such Option Shares in accordance with the terms of this
Agreement; PROVIDED that such transfer is made expressly subject to this
Agreement and that the transferee agrees in writing to be bound by the
terms and conditions of this Agreement as if such transferee were the
Optionholder; and
(iv) A pledge or hypothecation by the Optionholder or the
Optionholder's Trust of the Option Shares or his or her or its interest
therein to a bank or other financial institution (a "Pledgee") reasonably
satisfactory to WCP to secure a loan by such Pledgee to the Optionholder
or the Optionholder's Trust, as the case may be, for the purchase of the
Option Shares or the refinancing of any indebtedness incurred for the
purchase of the Option Shares; PROVIDED that (A) such Pledgee agrees in
writing to accept the Option Shares or interest therein subject to all of
the terms and conditions of this Agreement as if such Pledgee were the
Optionholder and to notify WCP upon the happening of any default or event
of default under the terms of the agreement with the Optionholder or the
Optionholder's Trust, as the case may be, relating to such pledge or
hypothecation and (B) the Optionholder or the Optionholder's Trust, as the
case may be, delivers to the Board a copy of all proposed documentation
relating to such pledge or hypothecation at least ten days before the
scheduled date of such pledge or hypothecation, and prior to such scheduled
date WCP has confirmed that such documentation is reasonably satisfactory
to it in form and substance.
<PAGE>
<PAGE>
(c) The certificate (or certificates) representing the Option Shares
shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF STOCK OPTION AGREEMENT
DATED DECEMBER 18, 1998 BETWEEN WORLD COLOR PRESS, INC. ("WCP") AND
THE OPTIONHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICE OF WCP). EXCEPT AS OTHERWISE PROVIDED IN
SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY"
LAWS OR (B) (I) IF WCP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION
OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN
EFFECT THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE PROVISIONS OF
STATE SECURITIES LAWS, AND (II) IF THE HOLDER IS A CITIZEN OR
RESIDENT OF ANY COUNTRY OTHER THAN THE UNITED STATES, OR THE HOLDER
DESIRES TO EFFECT ANY SUCH TRANSACTION IN ANY SUCH COUNTRY, THE
COMPANY HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OR OTHER
ADVICE OF COUNSEL FOR THE HOLDER THAT SUCH TRANSACTION WILL NOT
VIOLATE THE LAWS OF SUCH COUNTRY."
(d) The Optionholder acknowledges that he or she has been advised that
(i) the issuance of the Option Shares upon exercise of the Options will not
have been registered under the Act, (ii) the Option Shares must be held
indefinitely and the Optionholder must continue to bear the economic risk of
the investment in the Option Shares unless they are subsequently registered
under the Act or an exemption from such registration is available, (iii) no
assurance can be given that there will be any public market for the Option
Shares, (iv) no assurance can be given that Rule 144 promulgated under the Act
will be available with respect to the sales of any securities of WCP, and WCP
has made no covenant to make such Rule available, (v) when and if any of the
Option Shares may be disposed of without registration in reliance on Rule 144,
such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule, (vi) if the Rule 144 exemption is not
available, public sale without registration will require compliance with some
other exemption under the Act, (vii) a restrictive legend in the form
heretofore set forth shall be placed on the certificates representing the
Option Shares and (viii) a notation shall be made in the appropriate records of
WCP and/or the transfer agent for the Common Stock indicating that the Option
Shares are subject to restriction on transfer and appropriate stop transfer
restrictions will be issued to WCP's stock transfer agent with respect to the
Option Shares.
<PAGE>
<PAGE>
(e) If any of the Option Shares are to be disposed of in accordance with
Rule 144 under the Act or otherwise, the Optionholder shall promptly notify WCP
of such intended disposition and shall deliver to WCP at or prior to the time
of such disposition such documentation as WCP may reasonably request in
connection with such sale and, in the case of a disposition pursuant to Rule
144, shall deliver to WCP an executed copy of any notice on Form 144 required to
be filed with the Securities and Exchange Commission ("SEC").
(f) The Optionholder agrees that, if any securities of WCP are offered to
the public pursuant to an effective registration statement under the Act, the
Optionholder will not effect any public sale or distribution of any Option
Shares not covered by such registration statement within seven days prior to,
or within 180 days (or in an underwritten public offering, any such lesser
period as the underwriters may agree to) after, the effective date of such
registration statement, unless otherwise agreed to in writing by WCP; PROVIDED
that the Optionholder shall have been notified in writing of such offering.
6. RESTRICTION ON TRANSFER OF OPTION SHARES
(a) Except for transfers otherwise permitted by this Agreement, the
Optionholder agrees that he or she will not transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any Option Shares at any time prior to the
fifth anniversary of the Vesting date. The restrictions on transfer provided
in this Section 6 shall not apply as of any date (the "Calculation Date") to a
number of Option Shares (the "Unrestricted Shares") held in the aggregate by
the Optionholder, the Optionholder's Trust, the Optionholder's Estate and all
Pledgees equal to the excess, if any, of (i) the product of (A) the total
number of Option Shares covered by all Options received by the Optionholder on
the Vesting date and (B) the Vested Percentage as of such date over (ii) the
total number of Option Shares transferred by the Optionholder, the
Optionholder's Trust, the Optionholder's Estate and all Pledgees after the date
hereof, other than pursuant to transfers permitted by clauses (ii), (iii) and
(iv) of Section 5(b) hereof. No transfer of any such shares in violation
hereof shall be made or recorded on the books of WCP (or any transfer agent or
registrar therefor) and any such transfer shall be null and void and of no
force or effect.
(b) For purposes of this Agreement, the "Vested Percentage" with respect
to Option Shares shall be determined as follows:
<TABLE>
<CAPTION>
CALCULATION DATE VESTED PERCENTAGE
<S> <C>
From Vesting date until the first 0%
anniversary of the Vesting date
On and after the first anniversary of 20%
the Vesting date until the second
anniversary of the Vesting date
On and after the second anniversary 40%
of the Vesting date until the third
anniversary of the Vesting date
On and after the third anniversary of 60%
the Vesting date until the fourth
anniversary of the Vesting date
On and after the fourth anniversary 80%
of the Vesting date until the fifth
anniversary of the Vesting date
On and after the fifth anniversary of 100%
the Vesting date
</TABLE>
<PAGE>
<PAGE>
7. OPTIONHOLDER'S RIGHT TO RESELL OPTION SHARES AND OPTIONS TO WCP UPON
DEATH OR DISABILITY
(a) Except as otherwise provided herein, if on or before the fifth
anniversary of the Vesting date, (i) the Optionholder dies or becomes
Permanently Disabled (as hereinafter defined) and (ii) at the time of his or
her death or Permanent Disability, the Optionholder (A) was still in the employ
of the Company, (B) had retired from the Company at age 65 or over (or such
other age as may be approved by the Board) after having been employed by the
Company continuously for at least three years after the Vesting date (a
"Permitted Retirement"), or (C) had terminated employment with Good Reason (as
hereinafter defined), then the Optionholder, the Optionholder's Estate and/or
the Optionholder's Trust, as the case may be, shall have the right for six
months from the date of death or Permanent Disability to elect on one occasion
(x) to sell to WCP, and WCP shall be required to purchase all or any portion of
the Option Shares then held by the Optionholder, the Optionholder's Estate
and/or the Optionholder's Trust, as the case may be, at the Section 7
Repurchase Price, as determined in accordance with Section 9 and/or (y) to
require WCP to pay to the Optionholder an amount equal to the Option Excess
Price (as defined in Section 10(a)) determined on the basis of the Section 7
Repurchase Price as provided in Section 9 with respect to the termination of
all or any portion of outstanding Options held by the Optionholder.
(b) The Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be, shall send written notice to WCP of his, her or its
election to sell such Option Shares and/or to terminate such Options in
exchange for the payment referred to in the preceding subsection (a) (the
"Redemption Notice") within the six-month period referred to in Section 7(a).
The completion of the purchase shall take place at the principal office of WCP
on the 15th business day after the receipt by WCP of a properly given
Redemption Notice. The Section 7 Repurchase Price and any payment with respect
to the Options as described above shall be paid by delivery to the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, of a certified or bank check or checks in the appropriate amount
payable to the order of the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, against delivery of certificates or
other instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, appropriately endorsed or
executed by the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, or his, her or its duly authorized representative.
(c) Notwithstanding any other provision of this Section 7 and subject to
Section 13, if there exists and is continuing a default or any event which
after a notice or lapse of time or both would cause a default under any loan,
guarantee or other agreement under which WCP or any of its Subsidiaries has
borrowed money or such repurchase would result in any default or event of
default on the part of the WCP or any of its Subsidiaries under any such
agreement or if the capital of WCP or any of its Subsidiaries is then impaired
or would be impaired as a result of such repurchase or such repurchase would
otherwise violate the General Corporation Law of the State of Delaware (each
such occurrence being an "Event"), WCP shall not be obligated to repurchase any
of the Option Shares from, or to make any payment with respect to the Options
to, the Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be until the first business day which is five business
days after all of the foregoing Events have ceased to exist (the "Repurchase
Eligibility Date"), PROVIDED that (i) the Section 7 Repurchase Price shall be
calculated as of the time of the delivery of a Redemption Notice in accordance
with Section 7(b) and (ii) the number of Option Shares subject to repurchase
under this Section 7(c) and the number of Exercisable Option Shares (as defined
in Section 10(a)) for purposes of calculating the Option Excess Price payable
under Section 7(a), shall be that number of Option Shares and Exercisable
Option Shares, respectively, held by the Optionholder, the Optionholder's Estate
or the Optionholder's Trust, as the case may be, at the time of the delivery
of a Redemption Notice in accordance with Section 7(b). All Options exercisable
as of the date of a Redemption Notice shall continue to be exercisable until
the repurchase pursuant to such Redemption Notice.
<PAGE>
<PAGE>
(d) Notwithstanding any other provision of this Section 7 to the
contrary, the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, as the case may be, shall have the right to withdraw any Redemption
Notice which has been pending for 120 or more days and which has remained
unsatisfied because of the provisions of Section 7(c).
8. WCP'S RIGHT TO REPURCHASE OPTION SHARES AND TERMINATE OPTIONS OF
OPTIONHOLDER
(a) If on or prior to the fifth anniversary of the Vesting date, (i) the
Optionholder's employment with WCP (and, if applicable, its Subsidiaries) is
voluntarily or involuntarily terminated for any reason whatsoever, with or
without Cause or Good Reason, (ii) the beneficiaries of an Optionholder's Trust
shall include any person or entity other than the Optionholder, his or her
spouse or his or her lineal descendants by blood or adoption, (iii) the
Optionholder shall effect a transfer of any of the Option Shares other than as
permitted by this Agreement or (iv) there shall occur a transfer of Option
Shares then held by the Optionholder pursuant to a bankruptcy proceeding, levy,
property settlement or disposition pursuant to law incident to marital
separation or divorce (alternatively, a "Call Event"), then WCP shall have the
right to purchase all, but not less than all, of the Option Shares then held by
the Optionholder, the Optionholder's Estate, the Optionholder's Trust and all
Pledgees at the Section 8 Repurchase Price determined in accordance with
Section 9 hereof; PROVIDED that the Call Event described in clause (iv) of this
Section 8 shall entitle WCP to repurchase only the number of Option Shares that
are the subject of the transfer resulting in the Call Event; and PROVIDED,
FURTHER, that if the Call Event results from the death, Permanent Disability
or Permitted Retirement of the Optionholder, or the termination of the
Optionholder's employment by the Optionholder with Good Reason or by the
Company without Cause, WCP shall have the right to purchase all, but not less
than all, of the Option Shares held by the Optionholder, the Optionholder's
Estate, the Optionholder's Trust and any Pledgee at the Section 7 Repurchase
Price. WCP shall have a period of 75 days after the date of a Call Event (or
the date of WCP's knowledge that a Call Event described in clause (ii) or (iii)
above has occurred) in which to give notice in writing to the Optionholder of
WCP's exercise of such repurchase election (the "Call Notice"). If (X) the
Optionholder holds Option Shares and Options and WCP exercises its right to
repurchase Option Shares pursuant to this Section 8 or (Y) the Optionholder
holds only Options and WCP elects (in accordance with the requirements of the
Call Notice), WCP shall also pay the Optionholder an amount equal to the Option
Excess Price determined on the basis of the Section 8 Repurchase Price or
Section 7 Repurchase Price, as applicable, with respect to the termination of
(A) if the Call Event is described in clause (i), (ii) or (iii) above, all, but
not less than all, of the then exercisable outstanding Options held by the
Optionholder and (B) if the Call Event is described in clause (iv) above, a pro
rata portion (based on the number of Option Shares that are the subject of the
transfer) of the then exercisable outstanding Options held by the Optionholder.
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(b) Subject to Section 13 hereof, the completion of the purchases pursuant
to Section 8 (a) shall take place at the principal office of WCP on the 15th
business day after the giving of notice of the exercise by WCP of its right to
purchase Option Shares and/or to terminate Options. All payments as described
above shall be made by delivery to the Optionholder, the Optionholder's Estate,
the Optionholder's Trust and/or the Pledgee, as the case may be, of a certified
or bank check or checks in the appropriate amounts payable to the order of the
Optionholder, the Optionholder's Estate, the Optionholder's Trust and/or the
Pledgee, as the case may be, against delivery of certificates or other
instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, in each case appropriately
endorsed or executed by the Optionholder, the Optionholder's Estate, the
Optionholder's Trust, the Pledgee or his or her or its duly authorized
representatives.
(c) Notwithstanding any other provision of this Section 8 to the contrary
and subject to Section 13, if there exists and is continuing any Event, WCP
shall delay the repurchase of any of the Option Shares or the Options (pursuant
to a Call Notice timely given in accordance with Section 8(a) hereof) from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, until the Repurchase Eligibility Date; PROVIDED that (i) the
Section 8 Repurchase Price or the Section 7 Repurchase Price, as the case may
be, shall be calculated as of the time of the delivery of a Call Notice in
accordance with Section 8(a) and (ii) the number of Option Shares subject to
repurchase under this Section 8 and the number of Exercisable Option Shares for
purposes of calculating the Option Excess Price payable under this Section 8,
shall be the number of Option Shares and Exercisable Option Shares,
respectively, held by the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, at the time of the delivery of a Call
Notice in accordance with Section 8(a). All Options exercisable as of the date
of a Call Notice shall continue to be exercisable until the repurchase pursuant
to such Call Notice.
(d) Notwithstanding any other provision of this Section 8 to the
contrary, WCP's right to purchase Option Shares and cancel Options pursuant to
this Section 8 shall terminate with respect to any Option Shares and Options
that have not been so repurchased or cancelled on or before the 120th day after
the date of the Call Notice.
9. DETERMINATION OF REPURCHASE PRICE
(a) The Section 7 Repurchase Price and the Section 8 Repurchase Price are
hereinafter collectively referred to as the "Repurchase Price." The Repurchase
Price shall be calculated on the basis of the unaudited financial statements of
the Company or the Market Price Per Share (as defined in Section 9(e)) as of
the last day of the month preceding the month in which the event giving rise to
the repurchase occurs (the "Repurchase Calculation Date"). The event giving
rise to the repurchase shall be the transfer, death, Permanent Disability,
Permitted Retirement or termination of employment, or other event, as the case
may be, not the giving of any notice required pursuant to Section 7 or 8.
(b) The Section 7 Repurchase Price per Option Share shall be equal to the
greater of the Market Price Per Share and the Option Price Per Share.
(c) (i) If the Call Event results from the occurrence of an event
described in clauses (ii), (iii) or (iv) of Section 8(a), the Section 8
Repurchase Price per Option Share shall be equal to the lesser of (x) the
Market Price Per Share and (y) the Option Price Per Share plus the product
of (I) the Vested Percentage (as defined in Section 6) and (II) the amount,
if any, by which the Market Price Per Share exceeds the Option Price Per
Share.
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(ii) If the Call Event results from the Optionholder's voluntary
termination of employment other than for Good Reason, the Section 8
Repurchase Price per Option Share shall be equal to the Market Price Per
Share.
(iii) If the Call Event results from the Optionholder's
termination of employment by the Company with Cause, the Section 8
Repurchase Price per Option Share shall be equal to the lesser of the
Market Price Per Share and the Option Price Per Share.
(d) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the Securities and Exchange
Commission (other than a registration statement on Form S-8 or any other
similar form) immediately after which sale an active trading market in the
Common Stock exists; PROVIDED that an active trading market in the Common Stock
shall be deemed to exist if the Common Stock is listed on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ National Market System, but
the failure of the Common Stock to be so listed shall not PER SE be
determinative as to whether an active trading market does not exist.
(e) As used herein the term "Market Price Per Share" shall mean the price
per share equal to the average of the last sale price of the Common Stock on
each of the ten trading days prior to the Repurchase Calculation Date on each
exchange on which the Common Stock may at the time be listed and on which the
Common Stock traded on such date or, if there shall have been no sales on any
of such exchanges on any such trading day, the average of the closing bid and
asked prices on each such exchange at the end of each such trading day or, if
there is no such bid and asked price on such trading day, on the next preceding
date when such bid and asked price occurred or, if the Common Stock shall not
be so listed, the average of the closing sales prices as reported by NASDAQ at
the end of each of the ten trading days prior to the Repurchase Calculation
Date in the over-the-counter market. If the Common Stock is not so listed or
reported by NASDAQ, then the Market Price Per Share shall be the fair market
value established by the Board acting in good faith.
(f) As used herein the term "Aggregate Market Value" shall mean the
product of (i) the number of shares of Common Stock to be applied as payment of
the Exercise Price pursuant to Section 4(b)(iv)(B) and (ii) the Market Value
Per Share as of the payment date.
(g) In determining the Repurchase Price, appropriate adjustments shall be
made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of
outstanding shares of Common Stock.
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10. SHARES ISSUED TO OPTIONHOLDER UPON EXERCISE OF OPTIONS; TERMINATION
OF OPTIONS
(a) All Options, whether or not then exercisable, shall be automatically
terminated to the extent that, pursuant to the provisions of this Agreement,
WCP shall pay the Optionholder an amount equal to the Option Excess Price with
respect to such Options. If the Option Excess Price is zero or a negative
number, all outstanding Options granted to the Optionholder, whether or not
then exercisable, shall be automatically terminated upon the repurchase of any
Option Shares pursuant to Section 7 or Section 8. For purposes hereof, "Option
Excess Price" shall mean the excess, if any, of the Section 7 Repurchase Price
or the Section 8 Repurchase Price, depending on which Repurchase Price is (or
would be) used to repurchase the Option Shares, over the exercise price
applicable to such Options multiplied by the number of Exercisable Option
Shares. For purposes hereof, "Exercisable Option Shares" shall mean the shares
of Common Stock which, at the time of determination, could be purchased by the
Optionholder upon exercise of his or her outstanding exercisable Options.
(b) Except as otherwise provided herein or in the Option Plan, the
Options shall expire and cease to be exercisable to any extent after the first
to occur of the following events:
(i) the tenth anniversary of the Vesting date; or
(ii) the date that is six months after the Optionholder's termination
of employment by reason of death, Permanent Disability or Permitted Retirement;
or
(iii) the first business day which is fifteen calendar days after
the earlier of (A) 75 days after the Optionholder's termination of employment
for any reason other than for Cause, Good Reason, death, Permanent Disability
or Permitted Retirement, or (B) the delivery of notice by WCP that it does not
intend to exercise its call right under Section 8; PROVIDED that in any event
the Options shall remain exercisable under this Section 10 until at least 45
days after termination of the Optionholder's employment for any reason other
than death, Permanent Disability, or Permitted Retirement; or
(iv) upon the occurrence of a Transfer Event (as hereinafter defined)
and upon payment to the Optionholder of an amount in cash equal to the
difference between (i) the product of (A) the Per Share Consideration (as
hereinafter defined) received in such Transfer Event by a holder of Common
Stock multiplied by (B) the number of Option Shares for which the unexercised
Options are then exercisable and (ii) the aggregate Option Price Per Share for
such unexercised Options which are then exercisable. For the purposes of this
Section 10, the term "Per Share Consideration" shall mean the quotient of (x)
the aggregate consideration paid or to be paid (but only as and when received)
in respect of the Transfer Event to the holders of Common Stock of WCP, as
applicable, divided by (y) the number of outstanding shares of Common Stock on
a fully diluted basis (after giving effect to the exercise of all outstanding
options to acquire Common Stock to the extent then exercisable); and the term
"Transfer Event" shall mean any of a merger or consolidation involving WCP, a
sale or exchange of all or substantially all of the assets of WCP, an
acquisition by another corporation or other entity of 80% or more of WCP's
outstanding shares of voting stock or the liquidation or dissolution of WCP.
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11. WCP'S REPRESENTATIONS AND WARRANTIES
(a) WCP represents and warrants to the Optionholder that (i) this
Agreement has been duly authorized, executed and delivered by WCP and (ii) the
Option Shares, when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and nonassessable. (b) WCP shall
file the reports required to be filed by it under the Act and the Exchange Act
to the extent required from time to time to enable the Optionholder to sell
Option Shares without registration under the Act within the limitations of
the exemptions provided by (i) Rule 144 under the Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the SEC. Notwithstanding anything contained in this Section 11(b),
WCP may deregister under Section 12 of the Exchange Act if it is then permitted
to do so pursuant to the Exchange Act and the rules and regulations thereunder,
and, upon such deregistration, shall be relieved of its obligations to file
reports pursuant to this Section 11(b). Nothing in this Section 11(b) shall
be deemed to limit in any manner the restrictions on sales of Option Shares
contained in this Agreement.
12. "PIGGYBACK" REGISTRATION RIGHTS
(a) If WCP, in connection with any Public Offering, plans to register any
shares of Common Stock held by WCP Associates, L.P., APC Associates, L.P., GR
Associates, L.P., KKR Partners II, L.P. or any other KKR Affiliate (as defined
below) (the "Institutional Investors") for public offering pursuant to the Act,
WCP will promptly notify the Optionholder in writing (a "Registration Notice")
of such proposed registration (the "Proposed Registration"). If within ten
business days of the receipt by the Optionholder of such Registration Notice
(and, in any event, within 15 business days after such Registration Notice is
sent by WCP), WCP receives from the Optionholder, the Optionholder's Estate or
the Optionholder's Trust a written request (a "Registration Request") to
register Option Shares held by the Optionholder, the Optionholder's Estate or
the Optionholder's Trust (which Registration Request will be irrevocable unless
otherwise mutually agreed to in writing by the Optionholder and WCP), Option
Shares will be so registered as provided in this Section 12; PROVIDED that for
each such Proposed Registration only one Registration Request, which shall be
executed by the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, as the case may be, may be submitted for all Registrable Securities held
by the Optionholder, the Optionholder's Estate and the Optionholder's Trust,
respectively. All Option Shares acquired by the Optionholder pursuant to the
exercise of Options granted pursuant to this Agreement and held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, including
shares purchased upon the exercise of Options, shall be deemed to be
Registrable Securities.
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(b) The maximum number of Option Shares which will be registered pursuant
to a Registration Request will be the lowest of (i) the number of Option Shares
then held by the Optionholder (which for purposes of this subparagraph (b)
shall include shares held by the Optionholder's Estate or a Optionholder's
Trust), including all Option Shares which the Optionholder is then entitled to
acquire under an unexercised Option to the extent then exercisable (the
"Maximum Shares"), (ii) the Maximum Shares then held by the Optionholder
multiplied by the ratio of (A) the number of shares of Common Stock to be
registered by the Institutional Investors in the Proposed Registration to (B)
the total number of shares of Common Stock beneficially owned by all
Institutional Investors and (iii) the maximum number of shares which the
Optionholder can register in the public offering pursuant to any limits set by
the managing underwriter for inclusion in such public offering and agreed to in
good faith by WCP.
(c) Except as may otherwise be provided in this Section 12, Option Shares
will be registered by WCP and offered to the public pursuant to this Section 12
on the same terms and subject to the same conditions applicable to registration
in the Proposed registration of shares held by an Institutional Investor. Such
terms and conditions shall include, without limitation: the public offering
price; the payment of fees, commissions and expenses; the provision of, and
representation and warranty as to, information requested by WCP; and the
provision of requisite indemnifications.
(d) Upon delivering a Registration Request, the Optionholder will, if
requested by WCP, execute and deliver a Custody Agreement and Power of Attorney
in form and substance satisfactory to WCP with respect to the Option Shares to
be registered pursuant to this Section 12 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, will deliver to and deposit in
custody with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Option Shares (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as the
Optionholder, the Optionholder's Estate's or the Optionholder's Trust's, as the
case may be, agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on behalf of the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, with respect to the matters specified therein. The Optionholder
agrees that he will execute such other agreements as WCP may reasonably request
to further evidence the provisions of this Section 12.
13. CONTINUED EXERCISABILITY OF WCP'S RIGHT OR OBLIGATION TO REPURCHASE.
Notwithstanding anything to the contrary contained in Sections 7 and 8 hereof,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Stock Option Agreements would
result in an Event, then the Company shall make purchases from, and payments
to, the Optionholder and Other Optionholders pro rata (on the basis of the
proportion of the number of Option Shares and the number of Options each such
Optionholder and all Other Optionholders have elected or are required to sell
to the Company) for the maximum number of Option Shares and shall pay the
Option Excess Price for the maximum number of Options permitted without
resulting in an Event (the "Maximum Repurchase Amount"). The provisions of
Section 7(d) and 8(c) shall apply in their entirety to payments and repurchases
with respect to Options and Option Shares which may not be made due to the
limits imposed by the Maximum Repurchase Amount under this Section 13. Until
all of such Options and Option Shares are purchased and paid for by the
Company, the Optionholder and the Other Optionholders whose Options and Option
Shares are not purchased in accordance with this Section 13 shall have
priority, on a pro rata basis, over other purchases of Options and Option
Shares by the Company pursuant to this Agreement and Other Stock Option
Agreements.
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14. RIGHT TO NEGOTIATE PURCHASE PRICE. Nothing contained in this
Agreement shall be deemed to restrict or prohibit WCP from purchasing Option
Shares and the Options from the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, at any time, for such price upon such other terms and
conditions as may be mutually agreed upon between such parties, whether or not
at the time of such purchase circumstances exist which specifically grant WCP
the right to purchase, or the Optionholder, the Optionholder's Estate or the
Optionholder's Trust to sell, Option Shares and the Options under the terms of
this Agreement, and all such purchases shall be deemed to be in accordance with
the terms of this Agreement.
15. COVENANT REGARDING 83(B) ELECTION. EXCEPT AS WCP MAY OTHERWISE AGREE
IN WRITING, THE OPTIONHOLDER HEREBY COVENANTS AND AGREES THAT HE OR SHE WILL
MAKE AN ELECTION UNDER SECTION 83(B) OF THE CODE PURSUANT TO TREASURY
REGULATION SECTION 1.83-2 WITH RESPECT TO ANY OPTION SHARES ISSUED UPON
EXERCISE OF THE OPTIONS. THE OPTIONHOLDER FURTHER COVENANTS AND AGREES THAT HE
OR SHE WILL FURNISH WCP WITH COPIES OF THE FORM OF ELECTION THE OPTIONHOLDER
FILES WITHIN 30 DAYS AFTER EACH EXERCISE OF ANY OF THE OPTIONS AND WITH
EVIDENCE THAT EACH SUCH ELECTION HAS BEEN FILED IN A TIMELY MANNER.
16. NOTICE OF CHANGE OF BENEFICIARY. Immediately prior to any transfer
of Option Shares to the Optionholder's Trust, the Optionholder shall provide
WCP with a copy of the instruments creating the Optionholder's Trust and with
the identity of the beneficiaries of the Optionholder's Trust. The
Optionholder shall notify WCP immediately prior to any change in the identity
of any beneficiary of the Optionholder's Trust.
17. EXPIRATION OF CERTAIN PROVISIONS
(a) The provisions contained in Sections 7 and 8 of this Agreement, and
the portions of other provisions of this Agreement which incorporates the
provisions of Sections 7 and 8, shall terminate and be of no further force or
effect with respect to any Option Shares which are permitted to be sold by the
Optionholder pursuant to this Agreement and which are sold by the Optionholder
(i) pursuant to an effective registration statement filed by the Company under
the Act or (ii) pursuant to Rule 144, as amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
(b) The provisions contained in Sections 5(f), 6, 7, 8 and 15 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of any of such Sections, shall terminate and be of
no further force or effect upon the consummation of a Change of Control. For
purposes of this Section, "Change of Control" means the occurrence of any of
the following: (i) the sale, lease, transfer conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company taken as
a whole to any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) other than the "KKR Affiliates" (as hereinafter
defined), (ii) the adoption of a plan relating to the liquidation or
dissolution of WCP, (iii) the consummation of any transaction (including,
without limitation, any merger or consolidation) the result of which is that
any "person" (as defined above), other than the KKR Affiliates, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the voting stock
of WCP, (iv) the consummation of the first transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as defined above),
directly or indirectly, of more of the voting stock of WCP than is at the time
"beneficially owned" (as defined above) by the KKR Affiliates. For purposes of
this Agreement, "KKR Affiliate" shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, Kohlberg
Kravis Roberts & Co., L.L.P., its successors or assigns; "Person" means an
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature, and "control" shall have the meaning given
such term under Rule 405 of the Act.
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18. RECAPITALIZATION. Except to the extent otherwise provided by Section
17 hereof, the provisions of this Agreement shall apply, to the full extent set
forth herein with respect to the Option Shares and the Options, to any and all
capital stock of WCP and any partnership units, capital stock or other security
evidencing ownership interests in any successor or assign of WCP (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for or in substitution of Option Shares and the
Options, by reason of any dividend, distribution, split, reverse split,
combination, recapitalization, liquidation, reclassification, merger,
consolidation or otherwise.
19. OPTIONHOLDER'S EMPLOYMENT BY THE COMPANY. Nothing contained in this
Agreement or in any other agreement entered into by the Company and the
Optionholder in connection with the execution of this Agreement (i) obligates
the Company to employ the Optionholder in any capacity whatsoever or (ii)
prohibits or restricts the Company from terminating the employment, if any, of
the Optionholder at any time or for any reason whatsoever, with or without
cause, and the Optionholder hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises
whatsoever to the Optionholder concerning the Optionholder's employment or
continued employment by the Company except as otherwise set forth in a separate
written agreement between the Company and the Optionholder.
20. STATE SECURITIES LAWS. WCP hereby agrees to use all reasonable
efforts to comply with all state securities or "blue sky" laws, which might be
applicable to the issuance of the Option Shares to the Optionholder.
21. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and assigns. In the case of a
transferee permitted under Section 5(b) hereof, such transferee shall be deemed
to be the Optionholder hereunder; PROVIDED that no transferee (including,
without limitation, any transferee referred to in Section 5(b) hereof) shall
derive any rights under this Agreement unless and until such transferee has
delivered to WCP a valid undertaking and becomes bound by the terms of this
Agreement.
22. AMENDMENT. This Agreement may be amended only by a written agreement
or instrument signed by the Parties hereto; PROVIDED that WCP may, in its
discretion, amend this Agreement by a written agreement or instrument signed
only by WCP to reduce or eliminate any restriction on the sale, transfer or
other disposition of Option Shares.
23. CLOSING. Except as otherwise provided herein, the closing of each
purchase and sale of Option Shares and any outstanding Options pursuant to this
Agreement shall take place at the principal office of WCP on the 15th business
day following delivery of the notice by either Party to the other of its
exercise of the right to purchase or sell hereunder.
24. APPLICABLE LAW. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
25. ASSIGNABILITY OF CERTAIN RIGHTS BY WCP. WCP shall have the right to
assign any or all of its rights or obligations to purchase Option Shares and
any outstanding Options pursuant to Sections 7 and 8 hereof.
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26. PAYMENT BY WCP. If at any time WCP purchases Option Shares or any
outstanding Options from the Optionholder hereunder, and the Optionholder is
indebted to WCP in any amount whatsoever, WCP, in its sole discretion, may
apply all or any part of such indebtedness to the purchase price.
27. NOTICES. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed delivered when delivered in person or sent by first-class mail
(certified or registered mail, return receipt requested, postage prepaid),
facsimile or overnight air courier guaranteeing next day delivery, addressed as
follows:
(a) If to WCP, to it at the following address:
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Facsimile No.: (203) 532-4371
Attn: Chief Legal Officer
(b) If to the Optionholder, to him or her at the following address:
170 Clapboard Ridge Road
Greenwich, CT 06831
28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
29. SECTION HEADINGS. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
30. REMEDIES FOR VIOLATIONS. The Parties agree that they would be
irreparably damaged and that money damages would not be a sufficient remedy in
the event that the Parties do not follow this Agreement. In the event of any
such breach, the non-breaching Party shall be entitled, without being required
to post a bond or other security, to equitable relief (including, without
limitation, injunction and specific performance) as a remedy for such breach.
Such remedies shall not be deemed to be the exclusive remedies for any such
breach but shall be in addition to all other remedies available at law or
equity to the non-breaching Party.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
WORLD COLOR PRESS, INC.
/s/ Jennifer L. Adams
By: -----------------------------
Jennifer L. Adams
Vice Chairman
/s/ Robert G. Burton
-----------------------------
Robert G. Burton
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EXHIBIT 10.36
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") dated February 26, 1999 is
made by and between World Color Press, Inc., a Delaware corporation ("WCP"), and
Robert G. Burton, an individual with a residence at 170 Clapboard Ridge Road,
Greenwich, CT 06831 (the "Optionholder"). WCP and the Optionholder are sometimes
herein referred to collectively as the "Parties."
RECITALS
A. The Optionholder is a senior management employee of WCP.
B. WCP wishes to grant to the Optionholder certain options (the
"Options") to purchase shares of its common stock, par value $.01 per share (the
"Common Stock"). The term "Options" as used in this Agreement shall include all
Options granted to the Optionholder pursuant to this Agreement. Upon exercise of
Options granted hereunder in accordance with the terms hereof and issuance of
Common Stock upon such exercise the Optionholder will become the holder of
"Option Shares."
C. The Compensation Committee (the "Committee") of the Board of Directors
of WCP (the "Board") has determined that it would be to the advantage and best
interest of WCP and its stockholders to grant the Options provided for herein to
the Optionholder as an inducement to continue to perform services for the
Company (as hereinafter defined) and as an incentive for increased efforts
during such service, and has advised WCP thereof and instructed the undersigned
officer to issue said Options. For the purposes of this Agreement, the
"Company" shall mean WCP, together with its subsidiaries.
D. WCP has entered into and may in the future enter into other agreements
("Other Stock Option Agreements") between WCP and holders of stock options
granted by World Color Press, Inc. (collectively, the "Other Optionholders").
E. WCP has reserved a sufficient amount of treasury shares to cover the
common stock issuable upon the exercise of the options.
AGREEMENTS
1. GRANT OF OPTIONS. In consideration of the Optionholder's agreement to
provide services to the Company and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, WCP irrevocably
grants to the Optionholder on the date hereof an aggregate of 550,000 Options,
each to purchase initially one share of Common Stock (shares issuable upon
exercise of the Options are collectively referred to herein as the "Option
Shares"), upon the terms and conditions set forth in this Agreement. The
Options granted hereby are designated non-qualified stock options (and not
"Incentive Stock Options" under Section 422 of the Internal Revenue Code
("Code")) and are nontransferable except as otherwise expressly set forth
herein.
<PAGE>
<PAGE>
2. EXERCISE PRICE. The purchase price of the Option Shares upon exercise
of any of the Options (the "Exercise Price" or "Option Price Per Share") shall
initially be $24.33 per share, without commission or other charge.
3. EXERCISABILITY. (a) The Options shall become exercisable as follows:
<TABLE>
<CAPTION>
DATE OPTIONS BECOME EXERCISABLE EXERCISABLE PERCENTAGE OF OPTIONS
<S> <C>
From February 3, 1999 ("Vesting 0%
Date") until the first anniversary
of the Vesting Date
On and after the first anniversary 20%
of the Vesting date until the
second anniversary of the Vesting
date
On and after the second 40%
anniversary of the Vesting date
until the third anniversary of the
Vesting date
On and after the third anniversary 60%
of the Vesting date until the
fourth anniversary of the Vesting
date
On and after the fourth 80%
anniversary of the Vesting date
until the fifth anniversary of the
Vesting date
On and after the fifth anniversary 100%
of the Vesting date
</TABLE>
(b) Notwithstanding the foregoing, all Options that are not exercisable at
the time of the termination of employment of the Optionholder for any reason
other than by reason of the Optionholder's death, Permanent Disability or
Permitted Retirement (each as hereinafter defined) shall be automatically and
immediately canceled without any payment or other action by the Company. In the
event of and upon the termination of the Optionholder's employment because of
the Optionholder's death, Permanent Disability or Permitted Retirement, all of
the Optionholder's Options granted hereunder shall immediately become
exercisable.
(c) For purposes of this Agreement the following definitions shall apply:
"Cause" shall mean (i) the Optionholder's failure to render services to the
Company, which failure amounts to a material and flagrant neglect of such
duties, (ii) the Optionholder's willful engagement in conduct that is, or that
he or she intends to be, materially injurious to the Company, (iii) the
Optionholder's commission of an act of fraud, conversion, misappropriation
(including, but not limited to, the unauthorized use or disclosure of
confidential or proprietary information of the Company), embezzlement or felony,
(iv) a conviction of or guilty plea or his or her confession to any fraud,
conversion, misappropriation, embezzlement or felony or (v) the Optionholder's
repeated taking of any action prohibited by the Board, PROVIDED that he or she
has received at least one written notice of having taken an action so
prohibited; "Good Reason" shall mean, in each case without the Optionholder's
consent, (i) a material adverse change, when viewed in the aggregate, in the
Optionholder's duties, responsibilities, base compensation, bonus eligibility
and/or other material matters directly related to his or her employment with the
Company or (ii) the Optionholder's relocation by the Company to a location more
than 100 miles from the Optionholder's immediately prior location.
<PAGE>
<PAGE>
(d) For purposes of this Agreement, the Optionholder shall be deemed to
have a "Permanent Disability" if he or she is unable to engage in the activities
required by employment by reason of any medically determined physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months, as
reasonably determined by the Board in good faith and in its discretion.
4. MANNER OF EXERCISE.
(a) PARTIAL EXERCISE. An exercisable Option may be exercised at any time
prior to the time when the Option becomes unexercisable under Section 10;
PROVIDED that each exercise shall be for not less than 50 Option Shares and
shall be for whole Option Shares only.
(b) MANNER OF EXERCISE. An exercisable Option shall be deemed exercised
upon delivery of all of the following to the Secretary of the Company or his or
her office:
(i) A written notice complying with the applicable rules established
by the Committee stating that the Option is exercised. The Optionholder or
other person then entitled and authorized to exercise the Option shall sign
the notice;
(ii) Such representations and documents as the Committee, in its
discretion, deems necessary, appropriate or advisable to effect compliance
with all applicable provisions of the Securities Act of 1933, as amended
(the "Act"), and any other federal or state securities laws, rules or
regulations. The Committee may, in its discretion, also take whatever
additional actions it deems necessary, appropriate or advisable to effect
such compliance, including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to transfer agents and
registrars;
(iii) In the event that the Option shall be exercised by any
person or persons other than the Optionholder, appropriate proof of the
right of such person or persons to exercise the Option; and
(iv) Full payment (by certified or bank check or by wire transfer of
immediately available funds) to the Secretary of the Company for the Option
Shares with respect to which Options are exercised and any applicable
withholding taxes. In its discretion, however, the Committee may (A) allow
a delay in payment up to thirty (30) days from the date the Option is
exercised; (B) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionholder (including, subject to
Section 4(c), Option Shares issuable upon such exercise), duly endorsed for
transfer to WCP, having an Aggregate Market Value (as hereinafter defined)
on the date of delivery equal to the aggregate Exercise Price of the
Options; (C) allow payment, in whole or in part, through the delivery of
property of any kind which constitutes good and valuable consideration; (D)
allow payment, in whole or in part, through the delivery of a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such
terms as may be prescribed by the Committee; or (E) allow payment through
any combination of the consideration provided in the foregoing
subparagraphs (B), (C) and (D). In the case of a promissory note, the
Committee may also prescribe the form of such note and the security to be
given for such note. No Option may be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or
other extension of credit is prohibited by law.
<PAGE>
<PAGE>
(c) CERTAIN TIMING REQUIREMENTS. At the discretion of the Committee,
shares of Common Stock issuable to the Optionholder upon exercise of the Option
may be used to satisfy the Option Exercise Price or the tax withholding
consequences of such exercise.
(d) RIGHTS AS STOCKHOLDERS. The holders of Options shall not be, nor have
any of the rights or privileges of, stockholders of WCP in respect of any shares
purchasable upon the exercise of any Option unless and until certificates
representing such shares have been issued by the Company to such holders.
(e) CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. WCP may postpone the
time of delivery of the certificates for Option Shares for such additional time
as WCP shall deem necessary or desirable to enable it to comply with the listing
requirements of any securities exchange with which the Common Stock may be
listed or the requirements of the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any rules and regulations of the Securities and
Exchange Commission promulgated thereunder, or the requirements of applicable
state laws relating to the authorization, issuance or sale of securities.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE OPTIONHOLDER.
(a) (1) The Optionholder hereby represents and warrants that he or she is
acquiring the Options and any Option Shares issued upon exercise thereof for
investment for his or her own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof.
(2) The Optionholder acknowledges and agrees that no Option or interest or
right therein or part thereof shall be liable for the debts, contracts or
engagements of the Optionholder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
that nothing in this Section 5 shall prevent transfers by will, by the
applicable laws of descent and distribution or, with the consent of the
Committee, the transfer of Options by gift made in compliance with the federal
securities laws to a family member of the Optionholder or a family trust or for
other estate planning purposes.
<PAGE>
<PAGE>
(3) The Optionholder further agrees and acknowledges that he or she will
not, directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate
or otherwise dispose of (any such act being referred to herein as a "transfer")
any Option Shares unless such transfer complies with Section 6 of this Agreement
and such transfer is pursuant to (i) an effective registration statement under
the Act and the rules and regulations thereunder and in compliance with any
applicable state securities or "blue sky" laws, or (ii) (A) an opinion of
counsel to the Optionholder (which counsel shall be reasonably acceptable to
WCP) furnished to WCP and satisfactory in form and substance to WCP that no such
registration is required because of the availability of an exemption from
registration under the Act and (B) if the Optionholder is a citizen or resident
of any country other than the United States, or the Optionholder desires to
effect any transfer in any such country, counsel for the Optionholder (which
counsel shall be reasonably satisfactory to WCP) shall have furnished WCP with
an opinion or other advice satisfactory in form and substance to WCP to the
effect that such transfer will comply with the securities laws of such
jurisdiction.
(b) Notwithstanding the foregoing, WCP acknowledges and agrees that any of
the following transfers of Option Shares are deemed to be in compliance with the
Act and this Agreement and no opinion of counsel is required in connection
therewith:
(i) A transfer of Option Shares made pursuant to Sections 7 or 8 of
this Agreement;
(ii) A transfer of Option Shares upon the death of the Optionholder to
his or her executors, administrators, testamentary trustees, legatees or
beneficiaries (the "Optionholder's Estate") or a transfer to the executors,
administrators, testamentary trustees, legatees or beneficiaries of a
person who has become a holder of Option Shares in accordance with the
terms of this Agreement; PROVIDED that such transfer is made expressly
subject to this Agreement and that the transferee agrees in writing to be
bound by the terms and conditions of this Agreement as if such transferee
were the Optionholder;
(iii) A transfer of Option Shares made in compliance with the
federal securities laws to a trust or custodianship the beneficiaries of
which, a partnership (general or limited) the partners of which, or a
limited liability company the members of which, may include only the
Optionholder, his or her spouse or his or her lineal descendants by blood
or adoption (the "Optionholder's Trust") or a transfer of Option Shares
made after the third anniversary of the Vesting date to such a trust,
partnership or limited liability corporation by a person who has become a
holder of such Option Shares in accordance with the terms of this
Agreement; PROVIDED that such transfer is made expressly subject to this
Agreement and that the transferee agrees in writing to be bound by the
terms and conditions of this Agreement as if such transferee were the
Optionholder; and
<PAGE>
<PAGE>
(iv) A pledge or hypothecation by the Optionholder or the
Optionholder's Trust of the Option Shares or his or her or its interest
therein to a bank or other financial institution (a "Pledgee") reasonably
satisfactory to WCP to secure a loan by such Pledgee to the Optionholder or
the Optionholder's Trust, as the case may be, for the purchase of the
Option Shares or the refinancing of any indebtedness incurred for the
purchase of the Option Shares; PROVIDED that (A) such Pledgee agrees in
writing to accept the Option Shares or interest therein subject to all of
the terms and conditions of this Agreement as if such Pledgee were the
Optionholder and to notify WCP upon the happening of any default or event
of default under the terms of the agreement with the Optionholder or the
Optionholder's Trust, as the case may be, relating to such pledge or
hypothecation and (B) the Optionholder or the Optionholder's Trust, as the
case may be, delivers to the Board a copy of all proposed documentation
relating to such pledge or hypothecation at least ten days before the
scheduled date of such pledge or hypothecation, and prior to such scheduled
date WCP has confirmed that such documentation is reasonably satisfactory
to it in form and substance.
(c) The certificate (or certificates) representing the Option Shares shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION COMPLIES WITH THE PROVISIONS OF STOCK OPTION AGREEMENT
DATED FEBRUARY 26, 1999 BETWEEN WORLD COLOR PRESS, NC. ("WCP") AND THE
OPTIONHOLDER NAMED ON THE FACE HEREOF (A COPY OF WHICH IS ON FILE AT
THE PRINCIPAL OFFICE OF WCP). EXCEPT AS OTHERWISE PROVIDED N SUCH
AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE
MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN COMPLIANCE
WITH ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS OR (B) (I) IF
WCP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER, AND IN
COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE SECURITIES LAWS, AND
(II) IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY COUNTRY OTHER THAN
THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY SUCH
TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY HAS BEEN FURNISHED WITH A
SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
<PAGE>
<PAGE>
(d) The Optionholder acknowledges that he or she has been advised that (i)
the issuance of the Option Shares upon exercise of the Options will not have
been registered under the Act, (ii) the Option Shares must be held indefinitely
and the Optionholder must continue to bear the economic risk of the investment
in the Option Shares unless they are subsequently registered under the Act or an
exemption from such registration is available, (iii) no assurance can be given
that there will be any public market for the Option Shares, (iv) no assurance
can be given that Rule 144 promulgated under the Act will be available with
respect to the sales of any securities of WCP, and WCP has made no covenant to
make such Rule available, (v) when and if any of the Option Shares may be
disposed of without registration in reliance on Rule 144, such disposition can
be made only in limited amounts in accordance with the terms and conditions of
such Rule, (vi) if the Rule 144 exemption is not available, public sale without
registration will require compliance with some other exemption under the Act,
(vii) a restrictive legend in the form heretofore set forth shall be placed on
the certificates representing the Option Shares and (viii) a notation shall be
made in the appropriate records of WCP and/or the transfer agent for the Common
Stock indicating that the Option Shares are subject to restriction on transfer
and appropriate stop transfer restrictions will be issued to WCP's stock
transfer agent with respect to the Option Shares.
(e) If any of the Option Shares are to be disposed of in accordance with
Rule 144 under the Act or otherwise, the Optionholder shall promptly notify WCP
of such intended disposition and shall deliver to WCP at or prior to the time of
such disposition such documentation as WCP may reasonably request in connection
with such sale and, in the case of a disposition pursuant to Rule 144, shall
deliver to WCP an executed copy of any notice on Form 144 required to be filed
with the Securities and Exchange Commission ("SEC").
(f) The Optionholder agrees that, if any securities of WCP are offered to
the public pursuant to an effective registration statement under the Act, the
Optionholder will not effect any public sale or distribution of any Option
Shares not covered by such registration statement within seven days prior to, or
within 180 days (or in an underwritten public offering, any such lesser period
as the underwriters may agree to) after, the effective date of such registration
statement, unless otherwise agreed to in writing by WCP; PROVIDED that the
Optionholder shall have been notified in writing of such offering.
6. RESTRICTION ON TRANSFER OF OPTION SHARES.
(a) Except for transfers otherwise permitted by this Agreement, the
Optionholder agrees that he or she will not transfer, sell, assign, pledge,
hypothecate or otherwise dispose of any Option Shares at any time prior to the
fifth anniversary of the Vesting Date. The restrictions on transfer provided in
this Section 6 shall not apply as of any date (the "Calculation Date") to a
number of Option Shares (the "Unrestricted Shares") held in the aggregate by the
Optionholder, the Optionholder's Trust, the Optionholder's Estate and all
Pledgees equal to the excess, if any, of (i) the product of (A) the total number
of Option Shares covered by all Options received by the Optionholder on the
Vesting Date and (B) the Vested Percentage as of such date over (ii) the total
number of Option Shares transferred by the Optionholder, the Optionholder's
Trust, the Optionholder's Estate and all Pledgees after the date hereof, other
than pursuant to transfers permitted by clauses (ii), (iii) and (iv) of Section
5(b) hereof. No transfer of any such shares in violation hereof shall be made
or recorded on the books of WCP (or any transfer agent or registrar therefor)
and any such transfer shall be null and void and of no force or effect.
<PAGE>
<PAGE>
(b) For purposes of this Agreement, the "Vested Percentage" with respect
to Option Shares shall be determined as follows:
<TABLE>
<CAPTION>
CALCULATION DATE VESTED PERCENTAGE
<S> <C>
From Vesting Date until the first 0%
anniversary of the Vesting Date
On and after the first anniversary of 20%
the Vesting Date until the second
anniversary of the Vesting Date
On and after the second anniversary of 40%
the Vesting Date until the third
anniversary of the Vesting Date
On and after the third anniversary of 60%
the Vesting Date until the fourth
anniversary of the Vesting Date
On and after the fourth anniversary of 80%
until the fifth anniversary of the
Vesting Date
On and after the fifth anniversary of 100%
the Vesting Date
</TABLE>
7. OPTIONHOLDER'S RIGHT TO RESELL OPTION SHARES AND OPTIONS TO WCP UPON
DEATH OR DISABILITY.
(a) Except as otherwise provided herein, if on or before the fifth
anniversary of the Vesting Date, (i) the Optionholder dies or becomes
Permanently Disabled and (ii) at the time of his or her death or Permanent
Disability, the Optionholder (A) was still in the employ of the Company, (B) had
retired from the Company at age 65 or over (or such other age as may be approved
by the Board) after having been employed by the Company continuously for at
least three years after the Vesting Date (a "Permitted Retirement"), or (C) had
terminated employment with Good Reason, then the Optionholder, the
Optionholder's Estate and/or the Optionholder's Trust, as the case may be, shall
have the right for six months from the date of death or Permanent Disability to
elect on one occasion (x) to sell to WCP, and WCP shall be required to purchase
all or any portion of the Option Shares then held by the Optionholder, the
Optionholder's Estate and/or the Optionholder's Trust, as the case may be, at
the Section 7 Repurchase Price, as determined in accordance with Section 9
and/or (y) to require WCP to pay to the Optionholder an amount equal to the
Option Excess Price (as defined in Section 10(a)) determined on the basis of the
Section 7 Repurchase Price as provided in Section 9 with respect to the
termination of all or any portion of outstanding Options held by the
Optionholder.
<PAGE>
<PAGE>
(b) The Optionholder, the Optionholder's Estate and/or the Optionholder's
Trust, as the case may be, shall send written notice to WCP of his, her or its
election to sell such Option Shares and/or to terminate such Options in exchange
for the payment referred to in the preceding subsection (a) (the "Redemption
Notice") within the six-month period referred to in Section 7(a). The completion
of the purchase shall take place at the principal office of WCP on the 15th
business day after the receipt by WCP of a properly given Redemption Notice. The
Section 7 Repurchase Price and any payment with respect to the Options as
described above shall be paid by delivery to the Optionholder, the
Optionholder's Estate or the Optionholder's Trust, as the case may be, of a
certified or bank check or checks in the appropriate amount payable to the order
of the Optionholder, the Optionholder's Estate or the Optionholder's Trust, as
the case may be, against delivery of certificates or other instruments
representing the Option Shares so purchased and appropriate documents canceling
the Options so terminated, appropriately endorsed or executed by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, or his, her
or its duly authorized representative.
(c) Notwithstanding any other provision of this Section 7 and subject to
Section 13, if there exists and is continuing a default or any event which after
a notice or lapse of time or both would cause a default under any loan,
guarantee or other agreement under which WCP or any of its subsidiaries, as
defined in Section 424(f) of the Code ("Subsidiaries"), has borrowed money or
such repurchase would result in any default or event of default on the part of
WCP or any of its Subsidiaries under any such agreement or if the capital of WCP
or any of its Subsidiaries is then impaired or would be impaired as a result of
such repurchase or such repurchase would otherwise violate the General
Corporation Law of the State of Delaware (each such occurrence being an
"Event"), WCP shall not be obligated to repurchase any of the Option Shares
from, or to make any payment with respect to the Options to, the Optionholder,
the Optionholder's Estate and/or the Optionholder's Trust, as the case may be
until the first business day which is five business days after all of the
foregoing Events have ceased to exist (the "Repurchase Eligibility Date"),
PROVIDED that (i) the Section 7 Repurchase Price shall be calculated as of the
time of the delivery of a Redemption Notice in accordance with Section 7(b) and
(ii) the number of Option Shares subject to repurchase under this Section 7(c)
and the number of Exercisable Option Shares (as defined in Section 10(a)) for
purposes of calculating the Option Excess Price payable under Section 7(a),
shall be that number of Option Shares and Exercisable Option Shares,
respectively, held by the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, at the time of the delivery of a
Redemption Notice in accordance with Section 7(b). All Options exercisable as of
the date of a Redemption Notice shall continue to be exercisable until the
repurchase pursuant to such Redemption Notice.
(d) Notwithstanding any other provision of this Section 7 to the contrary,
the Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the
case may be, shall have the right to withdraw any Redemption Notice which has
been pending for 120 or more days and which has remained unsatisfied because of
the provisions of Section 7(c).
<PAGE>
<PAGE>
8. WCP'S RIGHT TO REPURCHASE OPTION SHARES AND TERMINATE OPTIONS OF
OPTIONHOLDER.
(a) If on or prior to the fifth anniversary of the Vesting date, (i) the
Optionholder's employment with WCP (and, if applicable, its Subsidiaries) is
voluntarily or involuntarily terminated for any reason whatsoever, with or
without Cause or Good Reason, (ii) the beneficiaries of an Optionholder's Trust
shall include any person or entity other than the Optionholder, his or her
spouse or his or her lineal descendants by blood or adoption, (iii) the
Optionholder shall effect a transfer of any of the Option Shares other than as
permitted by this Agreement or (iv) there shall occur a transfer of Option
Shares then held by the Optionholder pursuant to a bankruptcy proceeding, levy,
property settlement or disposition pursuant to law incident to marital
separation or divorce (alternatively, a "Call Event"), then WCP shall have the
right to purchase all, but not less than all, of the Option Shares then held by
the Optionholder, the Optionholder's Estate, the Optionholder's Trust and all
Pledgees at the Section 8 Repurchase Price determined in accordance with Section
9 hereof; PROVIDED that the Call Event described in clause (iv) of this Section
8 shall entitle WCP to repurchase only the number of Option Shares that are the
subject of the transfer resulting in the Call Event; and PROVIDED, FURTHER, that
if the Call Event results from the death, Permanent Disability or Permitted
Retirement of the Optionholder, or the termination of the Optionholder's
employment by the Optionholder with Good Reason or by the Company without Cause,
WCP shall have the right to purchase all, but not less than all, of the Option
Shares held by the Optionholder, the Optionholder's Estate, the Optionholder's
Trust and any Pledgee at the Section 7 Repurchase Price. WCP shall have a period
of 75 days after the date of a Call Event (or the date of WCP's knowledge that a
Call Event described in clause (ii) or (iii) above has occurred) in which to
give notice in writing to the Optionholder of WCP's exercise of such repurchase
election (the "Call Notice"). If (X) the Optionholder holds Option Shares and
Options and WCP exercises its right to repurchase Option Shares pursuant to this
Section 8 or (Y) the Optionholder holds only Options and WCP elects (in
accordance with the requirements of the Call Notice), WCP shall also pay the
Optionholder an amount equal to the Option Excess Price determined on the basis
of the Section 8 Repurchase Price or Section 7 Repurchase Price, as applicable,
with respect to the termination of (A) if the Call Event is described in clause
(i), (ii) or (iii) above, all, but not less than all, of the then exercisable
outstanding Options held by the Optionholder and (B) if the Call Event is
described in clause (iv) above, a PRO RATA portion (based on the number of
Option Shares that are the subject of the transfer) of the then exercisable
outstanding Options held by the Optionholder.
(b) Subject to Section 13 hereof, the completion of the purchases pursuant
to Section 8 (a) shall take place at the principal office of WCP on the 15th
business day after the giving of notice of the exercise by WCP of its right to
purchase Option Shares and/or to terminate Options. All payments as described
above shall be made by delivery to the Optionholder, the Optionholder's Estate,
the Optionholder's Trust and/or the Pledgee, as the case may be, of a certified
or bank check or checks in the appropriate amounts payable to the order of the
Optionholder, the Optionholder's Estate, the Optionholder's Trust and/or the
Pledgee, as the case may be, against delivery of certificates or other
instruments representing the Option Shares so purchased and appropriate
documents canceling the Options so terminated, in each case appropriately
endorsed or executed by the Optionholder, the Optionholder's Estate, the
Optionholder's Trust, the Pledgee or his or her or its duly authorized
representatives.
<PAGE>
<PAGE>
(c) Notwithstanding any other provision of this Section 8 to the contrary
and subject to Section 13, if there exists and is continuing any Event, WCP
shall delay the repurchase of any of the Option Shares or the Options (pursuant
to a Call Notice timely given in accordance with Section 8(a) hereof) from the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the case
may be, until the Repurchase Eligibility Date; PROVIDED that (i) the Section 8
Repurchase Price or the Section 7 Repurchase Price, as the case may be, shall be
calculated as of the time of the delivery of a Call Notice in accordance with
Section 8(a) and (ii) the number of Option Shares subject to repurchase under
this Section 8 and the number of Exercisable Option Shares for purposes of
calculating the Option Excess Price payable under this Section 8, shall be the
number of Option Shares and Exercisable Option Shares, respectively, held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, as the case
may be, at the time of the delivery of a Call Notice in accordance with Section
8(a). All Options exercisable as of the date of a Call Notice shall continue to
be exercisable until the repurchase pursuant to such Call Notice.
(d) Notwithstanding any other provision of this Section 8 to the contrary,
WCP's right to purchase Option Shares and cancel Options pursuant to this
Section 8 shall terminate with respect to any Option Shares and Options that
have not been so repurchased or canceled on or before the 120th day after the
date of the Call Notice.
9. DETERMINATION OF REPURCHASE PRICE.
(a) The Section 7 Repurchase Price and the Section 8 Repurchase Price are
hereinafter collectively referred to as the "Repurchase Price." The Repurchase
Price shall be calculated on the basis of the unaudited financial statements of
the Company or the Market Price Per Share (as defined in Section 9(e)) as of the
last day of the month preceding the month in which the event giving rise to the
repurchase occurs (the "Repurchase Calculation Date"). The event giving rise to
the repurchase shall be the transfer, death, Permanent Disability, Permitted
Retirement or termination of employment, or other event, as the case may be, not
the giving of any notice required pursuant to Section 7 or 8.
(b) The Section 7 Repurchase Price per Option Share shall be equal to the
greater of the Market Price Per Share and the Option Price Per Share.
(c) (i) If the Call Event results from the occurrence of an event
described in clauses (ii), (iii) or (iv) of Section 8(a), the Section 8
Repurchase Price per Option Share shall be equal to the lesser of (x) the
Market Price Per Share and (y) the Option Price Per Share plus the product
of (I) the Vested Percentage (as defined in Section 6) and (II) the amount,
if any, by which the Market Price Per Share exceeds the Option Price Per
Share.
(ii) If the Call Event results from the Optionholder's voluntary
termination of employment other than for Good Reason, the Section 8
Repurchase Price per Option Share shall be equal to the Market Price Per
Share.
<PAGE>
<PAGE>
(iii) If the Call Event results from the Optionholder's
termination of employment by the Company with Cause, the Section 8
Repurchase Price per Option Share shall be equal to the lesser of the
Market Price Per Share and the Option Price Per Share.
(d) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the Securities and Exchange
Commission (other than a registration statement on Form S-8 or any other similar
form) immediately after which sale an active trading market in the Common Stock
exists; PROVIDED that an active trading market in the Common Stock shall be
deemed to exist if the Common Stock is listed on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market System, but the
failure of the Common Stock to be so listed shall not PER SE be determinative as
to whether an active trading market does not exist.
(e) As used herein the term "Market Price Per Share" shall mean the price
per share equal to the average of the last sale price of the Common Stock on
each of the ten trading days prior to the Repurchase Calculation Date on each
exchange on which the Common Stock may at the time be listed and on which the
Common Stock traded on such date or, if there shall have been no sales on any of
such exchanges on any such trading day, the average of the closing bid and asked
prices on each such exchange at the end of each such trading day or, if there is
no such bid and asked price on such trading day, on the next preceding date when
such bid and asked price occurred or, if the Common Stock shall not be so
listed, the average of the closing sales prices as reported by NASDAQ at the end
of each of the ten trading days prior to the Repurchase Calculation Date in the
over-the-counter market. If the Common Stock is not so listed or reported by
NASDAQ, then the Market Price Per Share shall be the fair market value
established by the Board acting in good faith.
(f) As used herein the term "Aggregate Market Value" shall mean the
product of (i) the number of shares of Common Stock to be applied as payment of
the Exercise Price pursuant to Section 4(b)(iv)(B) and (ii) the Market Value Per
Share as of the payment date.
(g) In determining the Repurchase Price, appropriate adjustments shall be
made for any future issuances of rights to acquire and securities convertible
into Common Stock and any stock dividends, splits, combinations,
recapitalizations or any other adjustment in the number of shares of outstanding
shares of Common Stock.
10. SHARES ISSUED TO OPTIONHOLDER UPON EXERCISE OF OPTIONS; TERMINATION OF
OPTIONS.
(a) All Options, whether or not then exercisable, shall be automatically
terminated to the extent that, pursuant to the provisions of this Agreement, WCP
shall pay the Optionholder an amount equal to the Option Excess Price with
respect to such Options. If the Option Excess Price is zero or a negative
number, all outstanding Options granted to the Optionholder, whether or not then
exercisable, shall be automatically terminated upon the repurchase of any Option
Shares pursuant to Section 7 or Section 8. For purposes hereof, "Option Excess
Price" shall mean the excess, if any, of the Section 7 Repurchase Price or the
Section 8 Repurchase Price, depending on which Repurchase Price is (or would be)
used to repurchase the Option Shares, over the exercise price applicable to such
Options multiplied by the number of Exercisable Option Shares. For purposes
hereof, "Exercisable Option Shares" shall mean the shares of Common Stock which,
at the time of determination, could be purchased by the Optionholder upon
exercise of his or her outstanding exercisable Options.
<PAGE>
<PAGE>
(b) Except as otherwise provided herein, the Options shall expire and
cease to be exercisable to any extent after the first to occur of the following
events:
(i) the tenth anniversary of the Vesting date; or
(ii) the date that is six months after the Optionholder's termination
of employment by reason of death, Permanent Disability or Permitted
Retirement; or
(iii) the first business day which is fifteen calendar days after the
earlier of (A) 75 days after the Optionholder's termination of employment
for any reason other than for Cause, Good Reason, death, Permanent
Disability or Permitted Retirement, or (B) the delivery of notice by WCP
that it does not intend to exercise its call right under Section 8;
PROVIDED that in any event the Options shall remain exercisable under this
Section 10 until at least 45 days after termination of the Optionholder's
employment for any reason other than death, Permanent Disability, or
Permitted Retirement; or
(iv) upon the occurrence of a Transfer Event (as hereinafter defined)
and upon payment to the Optionholder of an amount in cash equal to the
difference between (i) the product of (A) the Per Share Consideration (as
hereinafter defined) received in such Transfer Event by a holder of Common
Stock multiplied by (B) the number of Option Shares for which the
unexercised Options are then exercisable and (ii) the aggregate Option
Price Per Share for such unexercised Options which are then exercisable.
For the purposes of this Section 10, the term "Per Share Consideration"
shall mean the quotient of (x) the aggregate consideration paid or to be
paid (but only as and when received) in respect of the Transfer Event to
the holders of Common Stock of WCP, as applicable, divided by (y) the
number of outstanding shares of Common Stock on a fully diluted basis
(after giving effect to the exercise of all outstanding options to acquire
Common Stock to the extent then exercisable); and the term "Transfer Event"
shall mean any of a merger or consolidation involving WCP, a sale or
exchange of all or substantially all of the assets of WCP, an acquisition
by another corporation or other entity of 80% or more of WCP's outstanding
shares of voting stock or the liquidation or dissolution of WCP.
<PAGE>
<PAGE>
11. WCP'S REPRESENTATIONS AND WARRANTIES.
(a) WCP represents and warrants to the Optionholder that (i) this
Agreement has been duly authorized, executed and delivered by WCP and (ii) the
Option Shares, when issued and delivered in accordance with the terms hereof,
will be duly and validly issued, fully paid and nonassessable.
(b) WCP shall file the reports required to be filed by it under the Act
and the Exchange Act to the extent required from time to time to enable the
Optionholder to sell Option Shares without registration under the Act within the
limitations of the exemptions provided by (i) Rule 144 under the Act, as such
Rule may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC. Notwithstanding anything contained in this Section
11(b), WCP may deregister under Section 12 of the Exchange Act if it is then
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder, and, upon such deregistration, shall be relieved of its obligations
to file reports pursuant to this Section 11(b). Nothing in this Section 11(b)
shall be deemed to limit in any manner the restrictions on sales of Option
Shares contained in this Agreement.
12. "PIGGYBACK" REGISTRATION RIGHTS.
(a) If WCP, in connection with any Public Offering, plans to register any
shares of Common Stock held by WCP Associates, L.P., APC Associates, L.P., GR
Associates, L.P., KKR Partners II, L.P. or any other KKR Affiliate (as defined
below) (the "Institutional Investors") for public offering pursuant to the Act,
WCP will promptly notify the Optionholder in writing (a "Registration Notice")
of such proposed registration (the "Proposed Registration"). If within ten
business days of the receipt by the Optionholder of such Registration Notice
(and, in any event, within 15 business days after such Registration Notice is
sent by WCP), WCP receives from the Optionholder, the Optionholder's Estate or
the Optionholder's Trust a written request (a "Registration Request") to
register Option Shares held by the Optionholder, the Optionholder's Estate or
the Optionholder's Trust (which Registration Request will be irrevocable unless
otherwise mutually agreed to in writing by the Optionholder and WCP), Option
Shares will be so registered as provided in this Section 12; PROVIDED that for
each such Proposed Registration only one Registration Request, which shall be
executed by the Optionholder, the Optionholder's Estate or the Optionholder's
Trust, as the case may be, may be submitted for all Registrable Securities held
by the Optionholder, the Optionholder's Estate and the Optionholder's Trust,
respectively. All Option Shares acquired by the Optionholder pursuant to the
exercise of Options granted pursuant to this Agreement and held by the
Optionholder, the Optionholder's Estate or the Optionholder's Trust, including
shares purchased upon the exercise of Options, shall be deemed to be Registrable
Securities.
(b) The maximum number of Option Shares which will be registered pursuant
to a Registration Request will be the lowest of (i) the number of Option Shares
then held by the Optionholder (which for purposes of this subparagraph (b) shall
include shares held by the Optionholder's Estate or a Optionholder's Trust),
including all Option Shares which the Optionholder is then entitled to acquire
under an unexercised Option to the extent then exercisable (the "Maximum
Shares"), (ii) the Maximum Shares then held by the Optionholder multiplied by
the ratio of (A) the number of shares of Common Stock to be registered by the
Institutional Investors in the Proposed Registration to (B) the total number of
shares of Common Stock beneficially owned by all Institutional Investors and
(iii) the maximum number of shares which the Optionholder can register in the
public offering pursuant to any limits set by the managing underwriter for
inclusion in such public offering and agreed to in good faith by WCP.
<PAGE>
<PAGE>
(c) Except as may otherwise be provided in this Section 12, Option Shares
will be registered by WCP and offered to the public pursuant to this Section 12
on the same terms and subject to the same conditions applicable to registration
in the Proposed Registration of shares held by an Institutional Investor. Such
terms and conditions shall include, without limitation: the public offering
price; the payment of fees, commissions and expenses; the provision of, and
representation and warranty as to, information requested by WCP; and the
provision of requisite indemnifications.
(d) Upon delivering a Registration Request, the Optionholder will, if
requested by WCP, execute and deliver a Custody Agreement and Power of Attorney
in form and substance satisfactory to WCP with respect to the Option Shares to
be registered pursuant to this Section 12 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, as the case may be, will deliver to and deposit in custody
with the custodian and attorney-in-fact named therein a certificate or
certificates representing such Option Shares (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as the
Optionholder, the Optionholder's Estate's or the Optionholder's Trust's, as the
case may be, agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on behalf of the Optionholder,
the Optionholder's Estate or the Optionholder's Trust, as the case may be, with
respect to the matters specified therein. The Optionholder agrees that he will
execute such other agreements as WCP may reasonably request to further evidence
the provisions of this Section 12.
13. CONTINUED EXERCISABILITY OF WCP'S RIGHT OR OBLIGATION TO REPURCHASE.
Notwithstanding anything to the contrary contained in Sections 7 and 8 hereof,
if at any time consummation of all purchases and payments to be made by the
Company pursuant to this Agreement and the Other Stock Option Agreements would
result in an Event, then the Company shall make purchases from, and payments to,
the Optionholder and Other Optionholders pro rata (on the basis of the
proportion of the number of Option Shares and the number of Options each such
Optionholder and all Other Optionholders have elected or are required to sell to
the Company) for the maximum number of Option Shares and shall pay the Option
Excess Price for the maximum number of Options permitted without resulting in an
Event (the "Maximum Repurchase Amount"). The provisions of Section 7(d) and 8(c)
shall apply in their entirety to payments and repurchases with respect to
Options and Option Shares which may not be made due to the limits imposed by the
Maximum Repurchase Amount under this Section 13. Until all of such Options and
Option Shares are purchased and paid for by the Company, the Optionholder and
the Other Optionholders whose Options and Option Shares are not purchased in
accordance with this Section 13 shall have priority, on a pro rata basis, over
other purchases of Options and Option Shares by the Company pursuant to this
Agreement and Other Stock Option Agreements.
<PAGE>
<PAGE>
14. RIGHT TO NEGOTIATE PURCHASE PRICE. Nothing contained in this
Agreement shall be deemed to restrict or prohibit WCP from purchasing Option
Shares and the Options from the Optionholder, the Optionholder's Estate or the
Optionholder's Trust, at any time, for such price upon such other terms and
conditions as may be mutually agreed upon between such parties, whether or not
at the time of such purchase circumstances exist which specifically grant WCP
the right to purchase, or the Optionholder, the Optionholder's Estate or the
Optionholder's Trust to sell, Option Shares and the Options under the terms of
this Agreement, and all such purchases shall be deemed to be in accordance with
the terms of this Agreement.
15. COVENANT REGARDING 83(B) ELECTION. EXCEPT AS WCP MAY OTHERWISE AGREE
IN WRITING, THE OPTIONHOLDER HEREBY COVENANTS AND AGREES THAT TO THE EXTENT (IF
ANY) APPLICABLE TO THE GRANT OR EXERCISE OF OPTIONS HEREUNDER, HE OR SHE WILL
MAKE AN ELECTION UNDER SECTION 83(B) OF THE CODE PURSUANT TO TREASURY REGULATION
SECTION 1.83-2 WITH RESPECT TO ANY OPTION SHARES ISSUED UPON EXERCISE OF THE
OPTIONS. THE OPTIONHOLDER FURTHER COVENANTS AND AGREES THAT HE OR SHE WILL
FURNISH WCP WITH COPIES OF THE FORM OF ANY SUCH ELECTION THE OPTIONHOLDER FILES
WITHIN 30 DAYS AFTER EACH EXERCISE OF ANY OF THE OPTIONS AND WITH EVIDENCE THAT
EACH SUCH ELECTION (IF ANY) HAS BEEN FILED IN A TIMELY MANNER.
16. NOTICE OF CHANGE OF BENEFICIARY. Immediately prior to any transfer of
Option Shares to the Optionholder's Trust, the Optionholder shall provide WCP
with a copy of the instruments creating the Optionholder's Trust and with the
identity of the beneficiaries of the Optionholder's Trust. The Optionholder
shall notify WCP immediately prior to any change in the identity of any
beneficiary of the Optionholder's Trust.
17. EXPIRATION OF CERTAIN PROVISIONS.
(a) The provisions contained in Sections 7 and 8 of this Agreement, and
the portions of other provisions of this Agreement which incorporates the
provisions of Sections 7 and 8, shall terminate and be of no further force or
effect with respect to any Option Shares which are permitted to be sold by the
Optionholder pursuant to this Agreement and which are sold by the Optionholder
(i) pursuant to an effective registration statement filed by the Company under
the Act or (ii) pursuant to Rule 144, as amended from time to time, or any
similar rule or regulation hereafter adopted by the SEC.
(b) The provisions contained in Sections 5(f), 6, 7, 8 and 15 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporate the provisions of any of such Sections, shall terminate and be of no
further force or effect upon the consummation of a Change of Control. For
purposes of this Section, "Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company taken as
a whole to any "person" or "group" (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act) other than the "KKR Affiliates" (as hereinafter
defined), (ii) the adoption of a plan relating to the liquidation or dissolution
of WCP, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the KKR Affiliates, becomes the
"beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), directly or indirectly, of more than 50% of the voting stock
of WCP, (iv) the consummation of the first transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the "beneficial owner" (as defined above),
directly or indirectly, of more of the voting stock of WCP than is at the time
"beneficially owned" (as defined above) by the KKR Affiliates. For purposes of
this Agreement, "KKR Affiliate" shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, Kohlberg
Kravis Roberts & Co., L.L.P., its successors or assigns; "Person" means an
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature, and "control" shall have the meaning given such
term under Rule 405 of the Act.
<PAGE>
<PAGE>
18. RECAPITALIZATION. (a) Except as otherwise provided herein, in the
event that the outstanding shares of the stock subject to Options are changed
into or exchanged for a different number or kind of shares of the Company or
other securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend or
combination of shares, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which all outstanding Options,
or portions thereof then unexercised, shall be exercisable, to the end that
after such event the Optionholder's proportionate interest shall be maintained
as before the occurrence of such event. Such adjustment in an outstanding
Option shall be made without change in the total price applicable to the Option
or the unexercised portion of the Option (except for any change in the aggregate
price resulting from rounding-off of share quantities or prices) and with any
necessary corresponding adjustment in Option price per share. Any such
adjustment made by the Committee shall be final and binding upon the
Optionholder, the Company and all other interested persons.
(b) Except to the extent otherwise provided by Section 17 hereof, the
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Option Shares and the Options, to any and all capital stock
of WCP and any partnership units, capital stock or other security evidencing
ownership interests in any successor or assign of WCP (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in exchange for or in substitution of Option Shares and the Options, by reason
of any dividend, distribution, split, reverse split, combination,
recapitalization, liquidation, reclassification, merger, consolidation or
otherwise.
19. OPTIONHOLDER'S EMPLOYMENT BY THE COMPANY. Nothing contained in this
Agreement or in any other agreement entered into by the Company and the
Optionholder in connection with the execution of this Agreement (i) obligates
the Company to employ the Optionholder in any capacity whatsoever or (ii)
prohibits or restricts the Company from terminating the employment, if any, of
the Optionholder at any time or for any reason whatsoever, with or without
cause, and the Optionholder hereby acknowledges and agrees that neither the
Company nor any other person has made any representations or promises whatsoever
to the Optionholder concerning the Optionholder's employment or continued
employment by the Company except as otherwise set forth in a separate written
agreement between the Company and the Optionholder.
<PAGE>
<PAGE>
20. STATE SECURITIES LAWS. WCP hereby agrees to use all reasonable
efforts to comply with all state securities or "blue sky" laws, which might be
applicable to the issuance of the Option Shares to the Optionholder.
21. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns. In the case of a transferee
permitted under Section 5(b) hereof, such transferee shall be deemed to be the
Optionholder hereunder; PROVIDED that no transferee (including, without
limitation, any transferee referred to in Section 5(b) hereof) shall derive any
rights under this Agreement unless and until such transferee has delivered to
WCP a valid undertaking and becomes bound by the terms of this Agreement.
22. AMENDMENT. This Agreement may be amended only by a written agreement
or instrument signed by the Parties hereto; PROVIDED that WCP may, in its
discretion, amend this Agreement by a written agreement or instrument signed
only by WCP to reduce or eliminate any restriction on the sale, transfer or
other disposition of Option Shares.
23. CLOSING. Except as otherwise provided herein, the closing of each
purchase and sale of Option Shares and any outstanding Options pursuant to this
Agreement shall take place at the principal office of WCP on the 15th business
day following delivery of the notice by either Party to the other of its
exercise of the right to purchase or sell hereunder.
24. APPLICABLE LAW. The laws of the State of Delaware shall govern the
interpretation, validity and performance of the terms of this Agreement,
regardless of the law that might be applied under principles of conflicts of
law.
25. ASSIGNABILITY OF CERTAIN RIGHTS BY WCP. WCP shall have the right to
assign any or all of its rights or obligations to purchase Option Shares and any
outstanding Options pursuant to Sections 7 and 8 hereof.
26. PAYMENT BY WCP. If at any time WCP purchases Option Shares or any
outstanding Options from the Optionholder hereunder, and the Optionholder is
indebted to WCP in any amount whatsoever, WCP, in its sole discretion, may apply
all or any part of such indebtedness to the purchase price.
27. NOTICES. All notices and other communications necessary or
contemplated under this Agreement shall be in writing and shall be delivered in
the manner specified herein or, in the absence of such specification, shall be
deemed delivered when delivered in person or sent by first-class mail (certified
or registered mail, return receipt requested, postage prepaid), facsimile or
overnight air courier guaranteeing next day delivery, addressed as follows:
<PAGE>
<PAGE>
(a) If to WCP, to it at the following address:
World Color Press, Inc.
The Mill
340 Pemberwick Road
Greenwich, Connecticut 06831
Facsimile No.: (203) 532-4371
Attn: Chief Legal Officer
(b) If to the Optionholder, to him or her at the following address:
Robert G. Burton
170 Clapboard Ridge Road
Greenwich, Connecticut 06831
28. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
29. SECTION HEADINGS. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect any
provision hereof
30. REMEDIES FOR VIOLATIONS. The Parties agree that they would be
irreparably damaged and that money damages would not be a sufficient remedy in
the event that the Parties do not follow this Agreement. In the event of any
such breach, the non-breaching Party shall be entitled, without being required
to post a bond or other security, to equitable relief (including, without
limitation, injunction and specific performance) as a remedy for such breach.
Such remedies shall not be deemed to be the exclusive remedies for any such
breach but shall be in addition to all other remedies available at law or equity
to the non-breaching Party.
<PAGE>
<PAGE>
31. DUTIES AND POWERS OF COMMITTEE. It shall be the duty of the Committee
to administer this Agreement in accordance with its provisions. The Committee
shall have the power to interpret this Agreement and the terms of the Options
granted hereunder. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the
Optionholder, Company, and all other interested persons.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
WORLD COLOR PRESS, INC.
/s/ Jennifer L. Adams
By: ---------------------------------------------
Jennifer L. Adams
Vice Chairman
/s/ Robert G. Burton
---------------------------------------------
Robert G. Burton
<PAGE>
<PAGE>
EXHIBIT 13.0
PORTIONS OF THE ANNUAL REPORT
[Page 19 of the Annual Report]
SELECTED FINANCIAL DATA
(Dollars in thousands, except per share data)
The following selected financial data for the five fiscal years ended December
27, 1998 have been derived from the Company's audited consolidated financial
statements. The data presented below should be read in conjunction with, and is
qualified in its entirety by reference to, the Company's consolidated financial
statements and the notes thereto appearing elsewhere in this report.
<TABLE>
<CAPTION>
FISCAL YEAR (1)
---------- ---------- ---------- ---------- --------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales $2,356,885 $1,981,225 $1,641,412 $1,295,582 $971,627
Cost of sales 1,927,790 1,613,938 1,349,130 1,074,785 817,934
---------- ---------- ---------- ---------- --------
Gross profit 429,095 367,287 292,282 220,797 153,693
Selling, general
and administrative
expenses 214,862 188,688 153,071 125,539 90,312
Streamlining -- -- -- 40,900 --
charge(2) ---------- ---------- ---------- ---------- --------
Operating income 214,233 178,599 139,211 54,358 63,381
Interest expense
and securitization
fees 88,589 80,039 58,417 37,897 23,825
Income tax
provision 52,054 41,341 33,533 6,584 15,822
---------- ---------- ---------- ---------- --------
Net income $ 73,590 $ 57,219 $ 47,261 $ 9,877 $ 23,734
========== ========== ========== ========== ========
Net income per
common share (3):
Basic $ 1.92 $ 1.65 $ 1.40 $ 0.31 $ 0.74
Diluted 1.84 1.60 1.35 0.29 0.69
OTHER OPERATING DATA:
Depreciation and
amortization $ 140,725 $ 131,710 $ 104,493 $ 74,668 $ 62,898
Capital
expenditures (4) 95,533 93,145 70,639 120,339 83,875
Gross profit margin 18.2% 18.5% 17.8% 17.0% 15.8%
Adjusted operating
income margin (5) 9.1 9.0 8.5 7.4 6.5
BALANCE SHEET DATA
(AT PERIOD END):
Working capital $ 239,428 $ 168,752 $ 227,068 $ 160,835 $113,144
Property, plant
and equipment, net 885,999 857,195 818,157 480,421 363,929
Total assets 2,433,886 1,933,571 1,822,432 1,150,728 837,417
Long-term debt
(including current
maturities) 1,255,920 819,113 897,867 487,106 293,515
Stockholders' equity 668,647 599,769 414,932 358,766 274,113
</TABLE>
(1) The fiscal years shown each represent the 52 or 53 week period ending on
the last Sunday in December. Fiscal year 1995 consisted of 53 weeks. Fiscal
years 1994, 1996, 1997 and 1998 each consisted of 52 weeks.
(2) Operating income in 1995 was reduced by $40,900 of a nonrecurring
streamlining charge. This charge reflects the Company's strategy in 1995
to realign certain business operations. The major components of this
realignment plan were to close a facility and to consolidate certain
digital prepress operations and functions.
(3) In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share," the Company has calculated net income per common
share - basic and diluted based on the weighted average shares and dilutive
common equivalent shares outstanding, as applicable, during each period
after giving effect to the change in the Company's capital structure
pursuant to the Merger and the Options Adjustments (as defined in the Notes
to the Company's consolidated financial statements).
(4) 1998 capital expenditures are net of proceeds of approximately $88,500 from
the sale and leaseback of certain equipment.
(5) Adjusted operating income represents operating income before a nonrecurring
streamlining charge. Adjusted operating income is not intended to represent
cash flows for the period, is not presented as an alternative to operating
income as an indicator of operating performance, may not be comparable to
other similarly titled measures of other companies and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with generally accepted accounting principles. See
the Company's consolidated financial statements.
<PAGE>
<PAGE>
[Page 20 - 24 of the Annual Report]
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
(Dollars in thousands, except per share data)
GENERAL
We are a diversified commercial printer serving customers in the commercial,
magazine, catalog, direct mail, book and directory markets. We operate in one
business segment, the management and distribution of print and digital
information. Our revenues are derived primarily from the sale of services and
materials to our customers, including digital and prepress services, press and
binding services and distribution and logistics services.
There continues to be significant pricing pressure on all printers, including
us. Our net sales include sales to certain customers of paper we purchased.
The price of paper, our primary raw material, is volatile over time and may
cause significant swings in net sales and cost of sales. We generally are able
to pass on increases in the cost of paper to our customers, while declines in
paper costs result in lower prices to our customers. During 1996, paper prices
decreased significantly from the prior year and availability was at normal
levels. The paper market firmed in pricing from early 1997 to late 1997. The
paper market in 1998 softened from late 1997 and prices continued to decline
throughout 1998, as availability became plentiful for most grades of paper. We
anticipate that this trend will continue in 1999. Our contracts with our
customers generally provide for price adjustments to reflect price changes for
other materials, wages and outside services.
ACQUISITIONS
In the first quarter of fiscal year 1999, we acquired two businesses serving
customers in the commercial market for an aggregate purchase price of
approximately $60,000, including assumed indebtedness. These acquisitions will
be accounted for as purchases and are not expected to have a material effect,
either individually or in the aggregate, on our results of operations.
In the first four months of 1998, we acquired four businesses serving customers
in the commercial, direct mail and book markets for an aggregate purchase price
of approximately $200,000. These companies have been included in results of
operations since their respective acquisition dates and have not had a material
effect on our results of operations, nor are they expected to on a continuing
basis. These acquisitions were accounted for as purchases.
In January 1997, we purchased Rand McNally Book Services Group ("Book
Services"), an operating unit of Rand McNally, for approximately $155,000. Book
Services was the third largest producer of hardcover books in the United States
and provided manufacturing and other value-added services to book club, trade,
professional, educational, reference and mail-order publishers. In addition, we
acquired another business in 1997 whose contribution was not significant to our
results of operations for the periods presented, nor is it expected to have a
material effect on our results on a continuing basis. These acquisitions were
accounted for as purchases.
In June 1996, we acquired from Ringier A.G. all of the issued and outstanding
capital stock of Krueger Acquisition Corporation, including all of the issued
and outstanding capital stock of Ringier Holdings, Inc., Ringier America, Inc.,
Krueger Ringier, Inc., Ringier Print U.S., Inc. and W.A. Krueger Co. Olathe
(collectively, "Ringier America"), for approximately $128,000. In addition, we
assumed approximately $287,000 of Ringier America's indebtedness, of which
approximately $281,000 was liquidated upon consummation of the acquisition. This
acquisition was accounted for as a purchase. Ringier America was a leading
diversified commercial printer whose business included the printing of catalogs,
magazines and mass-market, racksize books. We acquired certain other businesses
in 1996 whose contributions were not significant to our results of operations
for the periods presented, nor are they expected to have a material effect on
our results on a continuing basis.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 27, 1998 COMPARED TO YEAR ENDED DECEMBER 28, 1997
Net sales increased $375,660 or 19.0% to $2,356,885 in 1998 from $1,981,225 in
1997. The increase was due to the inclusion of both a full year of results from
the acquisitions in 1997 and results from the acquisitions in 1998, higher paper
prices and volume and improved sales in our base business.
<PAGE>
<PAGE>
Gross profit increased $61,808 or 16.8% to $429,095 in 1998 from $367,287 in
1997, due primarily to the inclusion of the 1997 and 1998 acquisitions and
improved operating efficiencies in our base business. Gross profit margin
decreased to 18.2% in 1998 from 18.5% in 1997 due to increased sales resulting
from higher paper prices and volume, slightly offset by the benefits of certain
cost reduction initiatives and other synergies resulting from the integration of
the acquired businesses.
Selling, general and administrative expenses increased $26,174 or 13.9% to
$214,862 in 1998 from $188,688 in 1997. The increase was due to the 1997 and
1998 acquisitions, including the related additional amortization expense for
goodwill, offset by benefits derived from cost saving initiatives and a
decrease in the 1998 provision for bad debts. The 1997 provision for bad debts
was higher than usual because of bad debts related to a customer that entered
into bankruptcy.
Interest expense and securitization fees increased $8,550 or 10.7% to $88,589 in
1998 from $80,039 in 1997. The increase was due to higher average borrowings
incurred to fund acquisitions, capital expenditures and working capital
requirements, offset by a lower average cost of funds. The 1998 and 1997 amounts
included $11,888 and $5,133, respectively, of fees resulting from the asset
securitization agreement entered into in June 1997.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 41.4% for 1998 and 42.0% for 1997.
YEAR ENDED DECEMBER 28, 1997 COMPARED TO YEAR ENDED DECEMBER 29, 1996
Net sales increased $339,813 or 20.7% to $1,981,225 in 1997 from $1,641,412 in
1996. The increase was due to the inclusion of both a full year of results from
the 1996 acquisitions and results from the 1997 acquisitions, as well as
improved sales in our base business.
Gross profit increased $75,005 or 25.7% to $367,287 in 1997 from $292,282 in
1996, due primarily to the inclusion of the 1996 and 1997 acquisitions. Gross
profit margin improved to 18.5% in 1997 from 17.8% in 1996. This improvement
was a result of the 1996 and 1997 acquisitions, including the benefits of
certain cost reduction initiatives and other synergies resulting from the
integration of the acquired businesses.
Selling, general and administrative expenses increased $35,617 or 23.3% to
$188,688 in 1997 from $153,071 in 1996. The increase was due to the 1996 and
1997 acquisitions, including the related additional amortization expense for
goodwill, offset by benefits derived from cost saving initiatives. In addition,
in 1997 we incurred a higher than usual provision for bad debts related to a
customer that entered into bankruptcy.
Interest expense and securitization fees increased $21,622 or 37.0% to $80,039
in 1997 from $58,417 in 1996. The increase was due to higher average borrowings
incurred to fund acquisitions, capital expenditures and working capital
requirements. The 1997 amount included $5,133 of fees resulting from the asset
securitization agreement entered into in June 1997.
The effective tax rate, primarily composed of the combined federal and state
statutory rates, was approximately 42.0% for 1997 and 41.5% for 1996.
LIQUIDITY AND CAPITAL RESOURCES
On February 22, 1999, we issued Senior Subordinated Notes in the aggregate
principal amount of $300,000, receiving net proceeds of approximately $294,000.
Interest on the notes is payable semi-annually at the annual rate of 7.75%. The
notes do not have required principal payments prior to maturity on February 15,
2009. The net proceeds from the notes issuance were used to repay certain
indebtedness under the credit agreement. In connection with the issuance of
these notes, we amended our credit agreement resulting in, among other
modifications, a $95,000 permanent reduction as of March 9, 1999 in borrowings
and commitments under the credit agreement. As a result, aggregate total
commitments decreased from $920,000 to $825,000. The amendment and related
permanent reduction in total borrowings and commitments resulted in a
substantial modification of the terms under the credit agreement. Accordingly,
we will recognize an extraordinary charge for the early extinguishment of debt
of approximately $5,900, net of tax, in the first quarter of fiscal year 1999.
In November 1998, we issued Senior Subordinated Notes in the aggregate
principal amount of $300,000 for net proceeds of approximately $291,700.
Interest on the notes is payable semi-annually at the annual rate of 8.375%.
Principal payments on the notes are not required prior to maturity on November
15, 2008. We used a portion of the net proceeds to repay certain indebtedness
incurred under the credit agreement. The remaining net proceeds were invested in
money market securities through December 27, 1998. In the beginning of fiscal
year 1999, we used the remaining net proceeds to redeem all of our outstanding
9.125% Senior Subordinated Notes due 2003 (the "Notes") in an aggregate
principal amount of $150,000. The Notes were redeemed for approximately
$160,800, including the redemption premium and accrued interest. This early
extinguishment of debt generated an extraordinary charge in the first quarter of
fiscal year 1999 of approximately $6,000, net of tax. The Notes were included in
current maturities of long-term debt at December 27, 1998.
<PAGE>
<PAGE>
In July and October 1998, we entered into agreements for the sale and leaseback
of certain printing equipment for which we received approximately $88,500 of
proceeds. The equipment used for the sale and leaseback transaction was
primarily composed of 1998 capital expenditures. The lease expires in July 2010
and has been classified as an operating lease. The proceeds were used to repay
certain indebtedness incurred under the credit agreement.
In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of our common stock. The repurchase of shares commenced in
August 1998 and may occur over the next three years in the open market at
prevailing market prices or in negotiated transactions, depending on market
conditions. We will repurchase shares to satisfy commitments under certain
employee benefit plans. As of December 27, 1998, we had repurchased 486,501
shares at a weighted average cost of $30.80 and reissued 466,255 shares.
In October 1997, we issued 4,600,000 shares of our common stock, receiving net
proceeds of approximately $127,600. Concurrent with the stock offering, we
issued $151,800 aggregate principal amount of Convertible Senior Subordinated
Notes, receiving net proceeds of approximately $147,900. Interest on the
convertible notes is payable semi-annually at the annual rate of 6%. The
convertible notes have no required principal payments prior to maturity on
October 1, 2007. The convertible notes in the aggregate are convertible into
3,660,477 shares of our common stock at $41.47 per share, subject to adjustment
upon the occurrence of certain events. We used the net proceeds from the stock
offering and convertible notes offering to repay certain indebtedness incurred
under the credit agreement.
In June 1997, we entered into an agreement to sell, on a revolving basis for a
period of up to five years, certain of our accounts receivable to a wholly-owned
subsidiary, which entered into an agreement to transfer, on a revolving basis,
an undivided percentage ownership interest in a designated pool of accounts
receivable to a maximum of $204,000. In 1997, we received the proceeds from the
sale of $200,000 of accounts receivable. Accordingly, accounts receivable was
reduced by $200,000 at December 27, 1998 and December 28, 1997. We used the net
proceeds primarily to repay certain indebtedness incurred under the credit
agreement. Fees associated with the asset securitization vary based on
commercial paper rates plus a margin, providing a lower effective rate than that
available from our traditional funding sources.
Net income plus depreciation and amortization and deferred income taxes was
$232,212 in 1998 compared to $203,201 in 1997, an increase of $29,011 or 14.3%.
Cash flow from operations was primarily used to fund working capital
requirements, capital expenditures and acquisitions.
Working capital was $239,428 at December 27, 1998 and $168,752 at December 28,
1997. Working capital increased $70,676 or 41.9% primarily due to the 1998
acquisitions and an increase in inventory levels. Capital expenditures
totaled $95,533, net of the proceeds from the sale and leaseback transaction,
and $93,145 in 1998 and 1997, respectively. These capital expenditures
reflect the purchase of additional press and bindery equipment which
increased our capacity and are part of our ongoing program to maintain
modern, efficient plants and continually increase productivity. We expect
capital expenditures in 1999 to approximate 4% to 5% of net sales. Additional
expenditures in 1999 are possible in line with growth in earnings and cash
flows, or expansion opportunities in certain markets.
Our capital expenditures and acquisitions have been funded in part through
operations and borrowings under our Second Amended and Restated Credit Agreement
dated as of June 6, 1996, as amended. At the beginning of 1997, aggregate total
commitments under the credit agreement were $975,000. During 1997, concurrent
with the liquidation of certain indebtedness, we amended the credit agreement to
provide aggregate total commitments of $920,000, comprised of $95,000 in term
loan commitments, $250,000 of revolving loan commitments and $575,000 in
acquisition term loan commitments. The credit agreement provides for varying
semi-annual reductions in commitments through maturity on December 31, 2002, and
the borrowings bear interest at rates that fluctuate with the prime rate and the
Eurodollar rate. As of December 27, 1998, the weighted average borrowing rate
was 6.1%, and $70,200 of acquisition term loan commitments and $227,020 of
revolving loan commitments were unused. As discussed above, in the first quarter
of fiscal year 1999, the aggregate total commitments under the credit agreement
were reduced by $95,000.
<PAGE>
<PAGE>
At December 27, 1998, we had net operating loss carryforwards from business
acquisitions for federal income tax purposes of $7,643 available to reduce
future taxable income, expiring from 2007 to 2010. We also had federal tax
credits of $1,177 expiring primarily from 1999 to 2002 and state tax credits of
$3,893 expiring from 2001 to 2013. In addition, we had alternative minimum tax
carryover credits of $20,801 which do not expire and may be applied against
regular tax in the future, in the event that the regular tax expense exceeds the
alternative minimum tax.
Concentrations of credit risk with respect to accounts receivable are limited
due to our diverse operations and large customer base. As of December 27, 1998,
we had no significant concentrations of credit risk.
In the normal course of business, we are exposed to changes in interest rates.
However, we manage this exposure by having a balanced variety of debt maturities
as well as a combination of fixed and variable rate obligations. In addition, we
have entered into interest rate cap and swap agreements in order to further
reduce the exposure on our variable rate obligations. Our interest rate cap
agreements have a notional value of $400,000 and expire in the third quarter of
fiscal year 1999. Our interest rate swap agreements have a notional value of
$75,000 and exchange floating rate for fixed interest payments periodically over
five years. The swap agreements are cancelable by the respective counterparties
in September and December 1999. These agreements did not have a material impact
on the consolidated financial statements for the periods presented. While the
counterparties of these agreements expose us to credit loss in the event of
nonperformance, we believe that the possibility of incurring such a loss is
remote due to the creditworthiness of the counterparties. We do not hold or
issue any derivative financial instruments for trading purposes.
We believe that our liquidity, capital resources and cash flows from operations
are sufficient to fund planned capital expenditures, working capital
requirements and interest and principal payments for the foreseeable future.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This SOP requires certain
costs related to computer software developed or obtained for internal use to be
expensed or capitalized depending on the stage of development and the nature of
the costs. We will adopt this SOP in the first quarter of fiscal year 1999. We
do not expect the adoption of SOP 98-1 to have a material effect on our
consolidated financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-Up
Activities," which requires costs of start-up activities and organization costs
to be expensed as incurred. We will adopt this SOP in the first quarter of
fiscal year 1999. We estimate that the adoption of this SOP will result in the
recognition of a charge of approximately $10,500, net of tax, as the cumulative
effect of a change in accounting principle in the first quarter of fiscal year
1999.
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement requires companies to
recognize all derivatives as either assets or liabilities and measure those
instruments at fair value. We would account for gains or losses resulting from
changes in the values of those derivatives depending on the use of the
derivative and whether it qualifies for hedge accounting. We plan to adopt this
statement in the first quarter of fiscal year 2000. Based on our current
portfolio of derivative financial instruments, we do not expect the adoption of
SFAS No. 133 to have a material impact on our consolidated financial statements.
YEAR 2000
The Year 2000 issue, which affects virtually all corporations, arises due to the
inability of certain computer software and hardware and embedded chips found in
manufacturing and other equipment to properly recognize dates beyond 1999. This
inability may cause errors in information and/or system failures. We have a
comprehensive effort underway to address the Year 2000 issue. As discussed
below, we are, among other things, evaluating our present information technology
and non-information technology systems (i.e. equipment with embedded chips),
monitoring and addressing our vendor and customer Year 2000 issues and engaging
in remediative measures as necessary.
<PAGE>
<PAGE>
In connection with our readiness program, we have endeavored to inventory and
assess the state of compliance of all information systems and non-information
systems. We commenced remediation of our information systems in 1994. As a
result, the majority of our information systems, including our financial, human
resources and payroll functions, are Year 2000 compliant. We estimate that all
of our information systems will be substantially compliant by mid-1999. With
respect to our non-information systems, we have substantially completed an
inventory of facilities (HVAC, safety and security) and manufacturing (press,
bindery and finishing) systems. We are working with the outside suppliers of
such systems as well as with an outside consultant to identify and remediate
non-compliant components. We have targeted mid-1999 for substantial completion
of our readiness efforts with respect to our non-information systems, including
selective testing procedures.
As part of our readiness program, we are communicating with our major customers
and vendors to assess such parties' respective efforts to identify and remediate
their own Year 2000 issues in a timely and comprehensive manner. We are also
requesting our vendors to certify to the compliancy of their systems and
equipment that we currently own or lease. We intend to follow up with non-
compliant vendors through 1999 in order to continually assess the extent of such
third parties' Year 2000 exposure and to adjust our contingency plans
accordingly.
The costs incurred to date solely related to our Year 2000 efforts have not been
material to us, and based upon current estimates, we do not believe that the
total cost of our Year 2000 readiness programs will have a material adverse
effect upon our operating results or financial condition. While we cannot make
assurances as to the impact of the Year 2000 issue on our operations, we
currently anticipate that any adverse consequences of the Year 2000 issue on our
systems will not create a significant disruption to our operations. However,
the failure or delay by us, our customers and/or vendors to identify and
remediate each respective instance of Year 2000 non-compliance could result in a
material adverse effect on our results of operations, liquidity or financial
condition.
Our readiness program includes the development of contingency plans addressing
potential business interruptions arising from Year 2000-related disruptions.
Such plans include assessing the movement of work among our facilities. In
1999, we will hone our contingency plans, taking into account, among other
things, the state of readiness of our vendors, including, without limitation,
utility suppliers, as well as our major customers.
The statements set forth herein concerning Year 2000 issues which are not
historical facts are forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those in
the forward-looking statements. In particular, the costs associated with our
Year 2000 programs, the time-frame in which we plan to complete Year 2000
modifications and the potential impact of the Year 2000 issues on us are based
upon our best estimates. These estimates were derived from internal assessments
and numerous assumptions of future events. These estimates may be adversely
affected by, among other things, the continued availability of personnel and
system resources, the accurate identification of all relevant computer codes,
the success of remediation efforts, the effectiveness of our contingency plans
and by the failure of significant third parties to properly address Year 2000
issues. Therefore, we cannot guarantee that any estimates or other forward-
looking statements will be achieved and actual results could differ
significantly from those contemplated.
SEASONALITY
The operations of our business are seasonal with approximately two-thirds of
historical operating income recognized in the second half of the fiscal year,
primarily due to the higher number of magazine pages, new product launches and
back-to-school and holiday catalog promotions.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the statements in this
document are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties, which may cause our actual
results in future periods to differ materially from forecasted results. Those
risks include, among others, changes in customers' demand for our products,
changes in raw material and equipment costs and availability, seasonal changes
in customer orders, pricing actions by our competitors, changes in estimates of
our readiness or the readiness of our vendors and customers with regard to Year
2000 issues and the significance of costs thereof, and general changes in
economic condition.
<PAGE>
<PAGE>
[Page 25 of the Annual Report]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
World Color Press, Inc.:
We have audited the accompanying consolidated balance sheets of World Color
Press, Inc. and subsidiaries as of December 27, 1998 and December 28, 1997, and
the related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 27, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of World Color Press, Inc. and
subsidiaries at December 27, 1998 and December 28, 1997, and the results of
their operations and their cash flows for each of the three years in the period
ended December 27, 1998 in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
New York, New York
February 3, 1999
(except for the last paragraph of Note 14,
as to which the date is February 26, 1999,
and except for Note 18, as to which the date is
March 9, 1999)
<PAGE>
<PAGE>
[Page 26 of the Annual Report]
<TABLE>
<CAPTION>
WORLD COLOR PRESS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 27, 1998 AND DECEMBER 28, 1997
(Dollars in thousands, except per share data)
- ----------------------------------------------------------------------
ASSETS 1998 1997
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 199,932 $ 37,676
Accounts receivable - net of allowances
for doubtful accounts of $10,638 and
$9,287, respectively 229,209 166,747
Inventories 276,111 204,889
Deferred income taxes 16,986 31,297
Other 63,729 33,625
---------- ----------
Total current assets 785,967 474,234
Property, plant and equipment - net 885,999 857,195
Goodwill - net 647,085 535,416
Other 114,835 66,726
---------- ----------
TOTAL ASSETS $2,433,886 $1,933,571
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 171,683 $ 163,710
Accrued expenses 149,525 132,802
Current maturities of long-term debt 225,331 8,970
---------- ----------
Total current liabilities 546,539 305,482
Long-term debt 1,030,589 810,143
Deferred income taxes 94,793 100,045
Other long-term liabilities 93,318 118,132
---------- ----------
Total liabilities 1,765,239 1,333,802
========== ==========
Stockholders' equity:
Common stock, $.01 par value - authorized,
100,000,000 shares in 1998 and 1997;
shares outstanding,38,639,642
in 1998 and 38,353,853 in 1997 386 384
Additional paid-in capital 721,913 711,292
Accumulated deficit (49,310) (111,907)
Treasury stock, at cost: 20,246 shares (613) --
Unamortized restricted stock compensation (3,729) --
---------- ----------
Total stockholders' equity 668,647 599,769
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,433,886 $1,933,571
========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE>
[Page 27 of the Annual Report]
<TABLE>
<CAPTION>
WORLD COLOR PRESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 27, 1998, DECEMBER 28, 1997 AND DECEMBER 29, 1996
(In thousands, except per share data)
- --------------------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
Net sales $2,356,885 $1,981,225 $1,641,412
Cost of sales 1,927,790 1,613,938 1,349,130
---------- ---------- ----------
Gross profit 429,095 367,287 292,282
Selling, general and administrative
expenses 214,862 188,688 153,071
---------- ---------- ----------
Operating income 214,233 178,599 139,211
Interest expense and securitization
fees 88,589 80,039 58,417
---------- ---------- ----------
Income before income taxes 125,644 98,560 80,794
Income tax provision 52,054 41,341 33,533
---------- ---------- ----------
Net income $ 73,590 $ 57,219 $ 47,261
========== ========== ==========
Net income per common share - basic $ 1.92 $ 1.65 $ 1.40
Net income per common share - diluted $ 1.84 $ 1.60 $ 1.35
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE>
[Page 28 of the Annual Report]
<TABLE>
<CAPTION>
WORLD COLOR PRESS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 27, 1998, DECEMBER 28, 1997 AND DECEMBER 29, 1996
(In thousands)
- --------------------------------------------------------------------------------
UNAMORTIZED
ADDITIONAL RESTRICTED
COMMON PAID-IN ACCUMULATED TREASURY STOCK
STOCK CAPITAL DEFICIT STOCK COMPENSATION
<S> <C> <C> <C> <C> <C>
BALANCE
DECEMBER 31, 1995 $ 322 $ 574,831 $ (216,387) $ -- $ --
Net income -- -- 47,261 -- --
Common stock issued 15 8,890 -- -- --
-------- ---------- ---------- -------- ------------
BALANCE
DECEMBER 29, 1996 337 583,721 (169,126) -- --
Net income -- -- 57,219 -- --
Common stock issued 47 127,571 -- -- --
-------- ---------- ---------- -------- -----------
BALANCE
DECEMBER 28, 1997 384 711,292 (111,907) -- --
Net income -- -- 73,590 -- --
Common stock issued 1 6,544 (10,993) 14,371 --
Common stock
repurchased -- -- -- (14,984) --
Restricted stock
issued 1 4,077 -- -- (4,078)
Amortization of
restricted stock -- -- -- -- 349
-------- ---------- ---------- -------- ------------
BALANCE
DECEMBER 27, 1998 $ 386 $ 721,913 $ (49,310) $ (613) $ (3,729)
======== ========== ========== ======== ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE>
[Page 29 of the Annual Report]
<TABLE>
<CAPTION>
WORLD COLOR PRESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 27, 1998, DECEMBER 28, 1997 AND DECEMBER 29, 1996
(In thousands)
- -----------------------------------------------------------------------
1998 1997 1996
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 73,590 $ 57,219 $ 47,261
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 140,725 131,710 104,493
Deferred income tax provision 17,897 14,272 13,573
Changes in operating assets and abilities:
Proceeds from sale of accounts receivable -- 200,000 --
Other changes in accounts receivable - net (16,031) (13,812) (30,062)
Inventories (58,029) (53,936) 29,495
Accounts payable and accrued expenses (26,700) (43,577) 35,178
Other assets and liabilities - net (119,567) (52,571) (53,355)
--------- ---------- ---------
Net cash provided by operating
activities 11,885 239,305 146,583
--------- ---------- ---------
INVESTING ACTIVITIES:
Additions to property, plant and
equipment (184,004) (93,145) (70,639)
Proceeds from sale and leaseback of
equipment 88,471 -- --
Proceeds from sale of property, plant
and equipment 9,533 2,006 1,345
Acquisitions of businesses, net of cash
acquired (190,095) (172,539) (167,283)
--------- ---------- ---------
Net cash used in investing activities (276,095) (263,678) (236,577)
--------- ---------- ---------
FINANCING ACTIVITIES:
Proceeds from borrowings 451,553 285,775 562,120
Payments on long-term debt (20,026) (384,526) (456,751)
Proceeds from issuance of common stock 6,545 127,618 8,905
Repurchases of common stock - net (11,606) -- --
--------- ---------- ---------
Net cash provided by financing
activities 426,466 28,867 114,274
--------- ---------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 162,256 4,494 24,280
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR 37,676 33,182 8,902
--------- ---------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 199,932 $ 37,676 $ 33,182
========= ========== =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<PAGE>
[Page 30 - 40 of the Annual Report]
WORLD COLOR PRESS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 27, 1998, DECEMBER 28, 1997 AND DECEMBER 29, 1996
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
1. ORGANIZATION
World Color Press, Inc. and subsidiaries (the "Company") specializes in the
production and distribution of data for customers in the commercial,
magazine, catalog, direct mail, book and directory markets.
Prior to November 20, 1995, the Company was wholly-owned by Printing
Holdings, L.P. ("PHLP"), a nonoperating affiliate of Kohlberg Kravis Roberts
& Co. L.P. ("KKR"), whose holdings consisted solely of the Company. On
November 20, 1995, PHLP was merged with and into the Company, with the
Company as the survivor (the "Merger"). In connection with the Merger, PHLP
partnership units (aggregating approximately 65,500,000 units) were
converted into approximately 32,200,000 shares of the Company's common
stock, principally at a ratio of one PHLP partnership unit to 0.50 shares of
common stock. Accordingly, the common stock and additional paid-in capital
amounts presented on the consolidated statements of stockholders' equity
have been restated to reflect the change in the Company's capital structure
pursuant to the Merger. Also pursuant to the Merger, the shares of the
Company's common stock owned by PHLP immediately prior to the Merger were
canceled. On November 20, 1995, the Company also amended and restated its
Certificate of Incorporation increasing the authorized number of shares of
common stock to 100,000,000 shares and newly authorizing 50,000,000 shares
of preferred stock, par value $0.01 per share. At December 27, 1998 and
December 28, 1997, there were no shares of preferred stock issued or
outstanding.
On January 25, 1996, 15,861,568 shares of the Company's common stock were
sold at $19 per share in an initial public equity offering (the "Offering").
All of the shares in the Offering were sold by existing stockholders. The
Company did not receive any of the proceeds from the sale of the shares,
except that certain members of former management elected to participate in
the Offering by exercising certain stock options granted to them by the
Company. An aggregate of 1,531,290 shares underlying such options were
sold in the Offering, generating proceeds to the Company of approximately
$8,900. These proceeds were used to pay expenses of the Offering and for
general corporate purposes.
On October 8, 1997, the Company issued 4,600,000 common shares through a
public offering, resulting in net proceeds of approximately $127,600. These
proceeds were utilized to repay certain indebtedness incurred under the
Credit Agreement (as defined in Note 2).
2. BUSINESS ACQUISITIONS
In the first four months of 1998, the Company acquired four businesses
serving customers in the commercial, direct mail and book markets for an
aggregate purchase price of approximately $200,000. These acquisitions were
funded using proceeds from the Company's acquisition term loans under the
Second Amended and Restated Credit Agreement dated as of June 6, 1996, as
amended (the "Credit Agreement"). These acquisitions were accounted for as
purchases and the consolidated financial statements include the results of
their operations from the respective acquisition dates. The excess of
purchase cost over estimated fair value of net assets acquired was
approximately $130,000 and is being amortized using the straight-line method
over 35 years.
In 1997, the Company acquired two businesses operating in the book, magazine
and catalog markets. These companies were acquired for an aggregate purchase
price of approximately $173,000, which was funded using proceeds from the
Company's acquisition term loans under the Credit Agreement. The Company
liquidated approximately $20,000 of the acquired companies' indebtedness.
These acquisitions were accounted for as purchases and the consolidated
financial statements include the results of their operations from the
respective acquisition dates. The excess of purchase cost over estimated
fair value of net assets acquired was approximately $126,000 and is being
amortized using the straight-line method over 35 years.
In June 1996, the Company acquired from Ringier A.G. all of the issued and
outstanding capital stock of Krueger Acquisition Corporation, including all
of the issued and outstanding capital stock of Ringier Holdings, Inc.,
Ringier America, Inc., Krueger Ringier, Inc., Ringier Print U.S., Inc. and
W.A. Krueger Co. Olathe (collectively, "Ringier America"), for approximately
$128,000 (the "Acquisition"). In addition, the Company assumed
approximately $287,000 of Ringier America's indebtedness, of which
approximately $281,000 was liquidated upon consummation of the Acquisition.
Ringier America was a leading diversified commercial printer whose business
included the printing of catalogs, magazines and mass-market, racksize
books. The Acquisition and liquidation of certain indebtedness were funded
using proceeds from acquisition term loans under the Credit Agreement. The
Acquisition was accounted for as a purchase and the consolidated financial
statements include the results of Ringier America's operations from the
acquisition date. The excess of purchase cost over estimated fair value of
net assets acquired was approximately $160,000, and is being amortized using
the straight-line method over 35 years.
During 1996 the Company acquired certain other businesses whose
contributions were not significant to the Company's results of operations
for the periods presented, nor are they expected to have a material effect
on the Company's results on a continuing basis.
<PAGE>
<PAGE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
the accounts of World Color Press, Inc. and its subsidiaries. Intercompany
transactions have been eliminated.
CASH AND CASH EQUIVALENTS - Cash equivalents consist of highly liquid
instruments with original maturities of three months or less.
ACCOUNTING PERIOD - The Company's fiscal year is the 52 or 53-week period
ending on the last Sunday in December. Fiscal years 1998, 1997 and 1996
each included 52 weeks.
CONSOLIDATED STATEMENTS OF CASH FLOWS - During 1998, 1997 and 1996, the
Company borrowed and repaid $599,100, $563,200 and $407,200, respectively,
pursuant to the terms of credit agreements. See also Note 7. Such amounts
have not been reflected in the consolidated statements of cash flows because
of the short-term nature of the borrowings.
Cash paid for interest by the Company during the years 1998, 1997 and 1996
was $82,392, $75,738 and $54,037, respectively, net of capitalized interest
of $2,374, $941 and $252, respectively. Cash paid for taxes during the years
1998, 1997 and 1996 was $35,145, $28,266 and $18,068, respectively.
REVENUE RECOGNITION - In accordance with trade practice, sales are
recognized by the Company on the basis of production and service activity at
the pro rata billing value of work completed.
INVENTORIES - The Company's raw materials of paper and ink and the related
raw material component of work-in-process are valued at the lower of cost,
as determined using the first-in, first-out ("FIFO") method, or market. The
remainder of the work-in-process is valued at the pro rata billing value of
work completed.
DEPRECIATION AND AMORTIZATION - Property, plant and equipment is stated at
cost. Depreciation is recorded principally on the straight-line method over
the estimated useful lives of the assets. Leasehold improvements are
amortized on the straight-line method over the lesser of the useful life of
the improvement or the lease term. Estimated useful lives used in computing
depreciation and amortization expense are 3 to 15 years for machinery and
equipment and 15 to 40 years for buildings and leasehold improvements.
GOODWILL - Goodwill is amortized using the straight-line method primarily
over 35 years. Amortization of goodwill for the years 1998, 1997 and 1996
was $20,008, $16,424 and $10,757, respectively, and is included in selling,
general and administrative expenses. Accumulated amortization of goodwill
was $71,236, and $51,228 as of year-end 1998 and 1997, respectively. The
Company evaluates goodwill by reviewing current and estimated undiscounted
cash flows whenever significant events or changes occur indicating the asset
may not be recoverable.
NET INCOME PER COMMON SHARE - In February 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS")
No. 128, "Earnings Per Share," which establishes new standards for computing
and presenting net income per common share. The Company adopted SFAS No. 128
in the fourth quarter of 1997, and has calculated "net income per common
share - basic" based on the weighted average common shares outstanding
during each period and "net income per common share - diluted" based on the
weighted average common and dilutive common equivalent shares outstanding
during each period. Weighted average shares were adjusted to give effect to
the change in the Company's capital structure pursuant to the Merger and the
Options Adjustments, as described in Notes 1 and 12.
RECLASSIFICATIONS - Certain reclassifications have been made to prior years'
amounts to conform with the current presentation.
<PAGE>
<PAGE>
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
ACCOUNTING FOR STOCK-BASED COMPENSATION - In October 1995, the Financial
Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 encourages companies to account for stock
compensation awards based on their fair value at the date they are granted.
The resulting compensation cost would be shown as an expense on the income
statement. Companies choosing not to apply the new accounting method are
permitted to continue following current accounting requirements, however,
they are required to disclose in the notes to the financial statements the
effect on net income and earnings per share had the new accounting method
been applied. The Company has adopted only the disclosure provisions of
SFAS No. 123. Accordingly, the Company has disclosed in Note 12 the pro
forma effect on net income and net income per common share - basic and
diluted.
INTEREST RATE SWAP AGREEMENTS - The Company enters into interest rate swap
agreements from time to time to reduce exposures to market risks resulting
from fluctuations in interest rates. The Company does not hold or issue any
derivative financial instruments for trading purposes. Gains and losses on
interest rate agreements are recognized through income and offset the
transactions which they are intended to hedge.
RECENT ACCOUNTING PRONOUNCEMENTS - In June 1997, the Financial Accounting
Standards Board issued SFAS No. 130, "Reporting Comprehensive Income," which
establishes standards for reporting and display of comprehensive income and
its components in the financial statements. The Company adopted this
statement in the first quarter of fiscal year 1998. The adoption of SFAS
No. 130 did not have a material effect on the Company's consolidated
financial statements.
In June 1997, the Financial Accounting Standards Board also issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 establishes standards for reporting information on operating
segments in the financial statements. The Company adopted this statement for
the fiscal year ended 1998. In accordance with this standard, the Company
has determined that, while it offers services to a diverse group of
customers in different industries, the Company itself operates in one
business segment, the management and distribution of print and digital
information. In accordance with the management approach prescribed in the
statement, there are no discernable operating segments that management
evaluates separately on a regular basis.
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits," which standardizes the disclosure requirements for pensions and
other postretirement benefits. The Company has adopted this statement for
the fiscal year ended 1998. See Note 11.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
statement requires companies to recognize all derivatives as either assets
or liabilities and measure those instruments at fair value. Gains or losses
resulting from changes in the values of those derivatives would be accounted
for depending on the use of the derivative and whether it qualifies for
hedge accounting. The Company plans to adopt this statement in the first
quarter of fiscal year 2000. Based on the Company's current portfolio of
derivative financial instruments, it does not expect the adoption of SFAS
No. 133 to have a material impact on its consolidated financial statements.
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use." This
SOP requires certain costs related to computer software developed or
obtained for internal use to be expensed or capitalized depending on the
stage of development and the nature of the costs. The Company will adopt
this SOP in the first quarter of fiscal year 1999. The Company does not
expect the adoption of SOP 98-1 to have a material effect on its
consolidated financial statements.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-
Up Activities," which requires costs of start-up activities and organization
costs to be expensed as incurred. The Company will adopt this SOP in the
first quarter of fiscal year 1999. The Company estimates that the adoption
of SOP 98-5 will result in the recognition of a charge of approximately
$10,500, net of tax, as the cumulative effect of a change in accounting
principle in the first quarter of fiscal year 1999.
<PAGE>
<PAGE>
4. INVENTORIES
<TABLE>
<CAPTION>
Inventories are summarized as follows: 1998 1997
<S> <C> <C>
Work-in-process $ 139,259 $ 111,326
Raw materials 136,852 93,563
----------- -----------
Total $ 276,111 $ 204,889
=========== ===========
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
Property, plant and equipment is as
follows:
1998 1997
<S> <C> <C>
Land $ 17,041 $ 16,252
Buildings and leasehold improvements 303,051 292,092
Machinery and equipment 1,291,658 1,180,297
Leased property under capitalized
leases 1,924 6,692
------------ ------------
1,613,674 1,495,333
Accumulated depreciation and
amortization 727,675 638,138
------------ ------------
Total $ 885,999 $ 857,195
============ ============
</TABLE>
Depreciation expense related to property, plant and equipment was $120,250,
$114,819 and $91,186 for the years 1998, 1997 and 1996, respectively.
6. ACCRUED EXPENSES
<TABLE>
<CAPTION>
Accrued expenses are as follows:
1998 1997
<S> <C> <C>
Compensation $ 55,727 $ 50,239
Employee health and welfare benefits 9,858 9,696
Deferred revenue 12,408 10,956
Interest 14,794 10,368
Other 56,738 51,543
----------- -----------
Total $ 149,525 $ 132,802
=========== ===========
</TABLE>
7. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt is summarized as follows:
1998 1997
<S> <C> <C>
8.375% Senior Subordinated Notes $ 300,000 $ --
Convertible Senior Subordinated Notes 151,800 151,800
9.125% Senior Subordinated Notes 150,000 150,000
Borrowings under credit agreements 599,800 450,500
Notes payable, average of 9.16% due
2004 - 2005 33,008 36,729
Capitalized lease obligations,
weighted average imputed interest
rate of 9.60% due 1999 - 2002 527 3,540
Other debt, average of 7.88% due
2001 - 2008 20,785 26,544
------------ ------------
Total 1,255,920 819,113
Less current maturities 225,331 8,970
------------ ------------
Noncurrent portion $ 1,030,589 $ 810,143
============ ============
</TABLE>
8.375% SENIOR SUBORDINATED NOTES - On November 20, 1998, the Company issued
Senior Subordinated Notes in the aggregate principal amount of $300,000,
receiving net proceeds of approximately $291,700. Interest on the Senior
Subordinated Notes is payable semi-annually at the annual rate of 8.375%.
The notes do not have required principal payments prior to maturity on
November 15, 2008. The fair value of the notes approximated carrying value
at December 27, 1998. The Company utilized a portion of the net proceeds
from the issuance of these notes to repay revolving loan commitments
incurred under the Credit Agreement. On December 28, 1998 the Company
utilized the remainder of the net proceeds to redeem all of its outstanding
9.125% Senior Subordinated Notes.
CONVERTIBLE SENIOR SUBORDINATED NOTES - On October 8, 1997, the Company
issued $151,800 aggregate principal amount of Convertible Senior
Subordinated Notes (the "Convertible Notes"), receiving net proceeds of
approximately $147,900. Interest on the Convertible Notes is payable semi-
annually at the annual rate of 6.00%. The Convertible Notes have no required
principal payments prior to maturity on October 1, 2007. The Convertible
Notes in the aggregate are convertible into 3,660,477 shares of the
Company's common stock at $41.47 per share, subject to adjustment upon the
occurrence of certain events. The Convertible Notes are redeemable at the
option of the holder at any time and at the option of the Company, at
specified prices, subsequent to October 4, 2000. The net proceeds from the
Convertible Notes offering were utilized to repay certain indebtedness
incurred under the Credit Agreement.
The fair value of the notes was approximately $149,000 and $146,000 at
December 27, 1998 and December 28, 1997, respectively, based on quoted
market prices.
<PAGE>
<PAGE>
9.125% SENIOR SUBORDINATED NOTES - On May 10, 1993, the Company issued
Senior Subordinated Notes in the aggregate principal amount of $150,000.
Interest on the Senior Subordinated Notes was payable semi-annually at the
annual rate of 9.125%. The notes did not have required principal payments
prior to maturity on March 15, 2003.
The fair value of the notes was approximately $157,000 and $156,000 at
December 27, 1998 and December 28, 1997, respectively, based on quoted
market prices.
The Company redeemed the 9.125% Senior Subordinated Notes on December 28,
1998 for approximately $160,800, including the redemption premium and
accrued interest. This early extinguishment of the notes generated an
extraordinary charge in the first quarter of fiscal year 1999 of
approximately $6,000, net of tax. The redemption of the notes was financed
by the net proceeds of the 8.375% Senior Subordinated Notes issued on
November 20, 1998. The 9.125% Senior Subordinated Notes were classified as
current maturities of long-term debt in the December 27, 1998 consolidated
balance sheet.
BORROWINGS UNDER CREDIT AGREEMENTS - In June and October 1997, concurrent
with the liquidation of indebtedness utilizing proceeds from the Asset
Securitization (as defined in Note 8), equity offering and Convertible Notes
offering, the Credit Agreement was amended to provide and subsequently
maintain the aggregate total commitments of $920,000, comprised of $95,000
in term loan commitments, $250,000 of revolving loan commitments and
$575,000 in acquisition term loan commitments. All other significant
financial provisions of the Credit Agreement remained substantially
unchanged. The Credit Agreement provides for varying semi-annual reductions
in commitments, and the borrowings bear interest at rates that fluctuate
with the prime rate and the Eurodollar rate which ranged from 5.69% to 8.50%
in 1998 and 6.25% to 8.63% in 1997. The Credit Agreement includes a
commitment fee of .25% per annum based on the daily average unutilized
revolving credit commitment. Borrowings under the Credit Agreement mature at
December 31, 2002. At December 27, 1998, $70,200 of acquisition term loan
commitments and $227,020 of the revolving loan commitments were unutilized.
The amount unutilized under the revolving loan commitments has been reduced
by outstanding letters of credit of $22,980, not reflected in the
accompanying consolidated financial statements, for which the Company was
contingently liable under the Credit Agreement. Such letters of credit
primarily guarantee various insurance reserves.
Borrowings under the terms of the Credit Agreement are secured by pledges of
various assets of the Company. The Credit Agreement has covenants which,
among other things, restrict the incurrence of additional indebtedness by
the Company and limit its ability to make payments to affiliated parties.
The Credit Agreement also restricts the repurchase amount of treasury stock
and the payment of dividends or other distributions of capital. The Company
was in compliance with these covenants as of December 27, 1998.
The fair value of the Company's remaining debt approximated its carrying
value, based upon the Company's current incremental borrowing rates for
similar types of borrowing arrangements.
Aggregate annual maturities of long-term debt subsequent to December 27,
1998 are as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
<S> <C>
1999 $ 225,331
2000 125,630
2001 146,370
2002 287,067
2003 9,557
2004 and thereafter 461,807
-----------
1,255,762
Noncurrent portion of
capitalized lease obligations 158
-----------
Total $ 1,255,920
===========
</TABLE>
8. ASSET SECURITIZATION
In conjunction with the amended Credit Agreement described in Note 7, on
June 30, 1997, the Company entered into an agreement to sell, on a revolving
basis for a period of up to five years, certain of its accounts receivable
to a wholly-owned subsidiary, which entered into an agreement to transfer,
on a revolving basis, an undivided percentage ownership interest in a
designated pool of accounts receivable to a maximum of $204,000 (the "Asset
Securitization"). At December 27, 1998 and December 28, 1997, accounts
receivable was reduced by $200,000 for amounts sold. Fees arising from the
securitization transaction of $11,888 and $5,133 are included in interest
expense and securitization fees in the consolidated statements of operations
for the years ended December 27, 1998 and December 28, 1997, respectively.
These fees vary based on commercial paper rates plus a margin, providing a
lower effective rate than that available under the Company's Credit
Agreement. The Company maintains an allowance for doubtful accounts based on
the expected collectibility of all accounts receivable, including
receivables sold.
<PAGE>
<PAGE>
9. LEASES
CAPITAL LEASES - The Company is a lessee under several noncancellable
capital lease agreements for certain fixed assets. The leases extend for
periods up to 4 years and contain purchase provisions.
OPERATING LEASES - The Company leases certain equipment, warehouse
facilities and office space under noncancellable operating leases which
expire over the next 12 years. Most of these operating leases provide the
Company with the option, after the initial lease term, either to purchase
the equipment or renew its lease based upon the fair value of the property
at the option date.
In 1998, the Company entered into interest rate swap agreements to exchange
floating rate for fixed interest payments. The agreements effectively
convert a notional principal amount of $75,000 variable rate, quarterly
operating lease payments into fixed. The net cash amount paid or received on
the agreement is accrued and recognized as an adjustment to lease expense.
The variable interest rates are based on LIBOR. At December 27, 1998, the
weighted average variable interest rate was 5.22% and the fixed swap rate
was 4.84%. The swap agreements have a maximum life of five years and are
cancelable by the counterparties in September and December 1999.
The fair value of the swap agreements was not recognized in the consolidated
financial statements since the agreements are accounted for as hedges. The
estimated fair value of the interest rate swap agreements, which was based
on quotes from brokers, was not material to the consolidated financial
statements at December 27, 1998. While the Company is exposed to credit loss
in the event of nonperformance by the counterparties of these agreements,
management believes that the possibility of incurring such a loss is remote
due to the creditworthiness of the counterparties.
SALE AND LEASEBACK OF EQUIPMENT - In 1998, the Company entered into
agreements for the sale and leaseback of certain printing equipment for
which it received approximately $88,500 of proceeds. The lease, which
expires in July 2010, has been classified as an operating lease. The
proceeds were utilized to repay revolving loan commitments incurred under
the Credit Agreement.
Future minimum rental payments required under noncancellable leases at
December 27, 1998 were as follows:
<TABLE>
<CAPTION>
YEAR CAPITAL OPERATING
<S> <C> <C>
1999 $ 473 $ 49,739
2000 64 46,337
2001 64 42,199
2002 48 37,866
2003 -- 32,386
2004 and thereafter -- 128,286
--------- ----------
Total minimum lease payments 649 $ 336,813
Less imputed interest 122 ==========
---------
Capitalized lease obligations 527
Less current maturities 369
---------
Noncurrent portion $ 158
=========
</TABLE>
Rental expense for operating leases was $49,697, $44,703 and $36,299 for the
years 1998, 1997 and 1996, respectively. Assets recorded under capital
leases amounted to $1,567 and $4,828, net of accumulated amortization of
$357 and $1,864 at the end of 1998 and 1997, respectively.
10.INCOME TAXES
The provision (benefit) for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Current:
Federal $ 27,429 $ 21,178 $ 16,542
State 6,728 5,891 3,418
------------ ----------- ------------
34,157 27,069 19,960
------------ ----------- ------------
Deferred:
Federal 17,450 14,525 12,491
State 447 (253) 1,082
------------ ----------- ------------
17,897 14,272 13,573
------------ ----------- ------------
Total $ 52,054 $ 41,341 $ 33,533
============ =========== ============
</TABLE>
<PAGE>
<PAGE>
The tax effects of significant items comprising the Company's net deferred
tax liability as of December 27, 1998 and December 28, 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Deferred tax assets:
Operating loss carryforwards $ 6,422 $ 8,219
Tax credit carryforwards 25,871 39,602
Employee health and welfare benefits 10,917 16,328
Postretirement benefits other
than pensions 16,213 15,445
Pension accrual 4,533 7,232
Vacation accrual 9,232 7,172
Other differences 12,603 10,119
------------ ------------
Gross deferred tax assets 85,791 104,117
------------ ------------
Deferred tax liabilities:
Differences between book and tax
bases of property (125,184) (138,066)
Other differences (33,319) (27,959)
------------ ------------
Gross deferred tax liabilities (158,503) (166,025)
------------ ------------
Deferred tax asset valuation
allowance (5,095) (6,840)
------------ ------------
Net deferred tax liability (77,807) (68,748)
Less current deferred tax asset 16,986 31,297
------------ ------------
Noncurrent deferred tax liability $ (94,793) $ (100,045)
============ ============
</TABLE>
The 1998 and 1997 amounts above include a valuation allowance of $5,095 and
$6,840, respectively, relating to a capital loss carryforward that
potentially may not be realized for tax purposes and for the limitations of
certain state net operating loss carryforwards.
The following table reconciles the difference between the U.S. federal
statutory tax rates and the rates used by the Company in the determination
of net income:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Income tax provision, at 35% $ 43,975 $ 34,496 $ 28,278
State and local income taxes, net of
federal income tax benefit 4,664 3,665 2,941
Release of deferred tax asset
valuation allowance (1,745) -- --
Other, primarily goodwill amortization 5,160 3,180 2,314
--------- -------- ---------
Total $ 52,054 $ 41,341 $ 33,533
========= ========= =========
</TABLE>
At December 27, 1998, the Company had net operating loss carryforwards
from business acquisitions for federal income tax purposes of $7,643
available to reduce future taxable income, expiring from 2007 to 2010. The
Company also had federal tax credits of $1,177 expiring primarily from
1999 to 2002 and state tax credits of $3,893 expiring from 2001 to 2013.
In addition, the Company had alternative minimum tax carryover credits of
$20,801 which do not expire and may be applied against regular tax in the
future, in the event that the regular tax expense exceeds the alternative
minimum tax.
11.EMPLOYEE BENEFIT PLANS
In February 1998, the Financial Accounting Standards Board issued SFAS No.
132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits," which standardizes the disclosure requirements for pensions and
other postretirement benefits. The Company has adopted this statement for
the fiscal year ended 1998 and as required by SFAS No. 132, has restated the
prior year disclosure for comparative purposes.
PENSION PLANS - The Company has defined benefit pension plans in effect
which cover certain employees who meet minimum eligibility requirements. The
Company contributes annually amounts sufficient to satisfy the government's
minimum standards.
Net periodic pension cost is determined based upon years of service and
compensation levels, using the projected unit credit method. Prior year
service costs and unrecognized gains and losses are amortized over the
estimated future service periods of active employees in the respective plan.
Effective January 1, 1997, several of the Company's defined benefit plans
were merged into the World Color Press, Inc. Retirement Plan, which was then
amended to form the World Color Press Cash Balance Plan (the "Cash Balance
Plan"), which provides for a new benefit formula applicable to all
participants. Under the Cash Balance Plan, each participant's account is
credited with both interest and a fixed percentage of the participant's
annual compensation.
POSTRETIREMENT PLANS - The Company provides postretirement medical benefits
to eligible employees. The Company's postretirement health care plans are
unfunded.
As of January 1, 1998, the Company amended employer subsidized coverage for
postretirement benefits for certain active participants in a company
acquired in 1997.
<PAGE>
<PAGE>
The following table provides a reconciliation of the changes in the plans'
benefit obligations and fair value of plan assets for the fiscal years ended
December 27, 1998 and December 28, 1997 and a statement of the funded status
as of December 27, 1998 and December 28, 1997:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
---------------- -----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT
OBLIGATION
Benefit obligation at
beginning of year $ 191,849 $ 144,864 $ 44,665 $ 27,362
Service cost 5,603 5,201 945 1,365
Interest cost 14,568 14,066 2,946 3,158
Plan participants'
contributions -- -- 329 369
Plan amendments -- -- (2,345) --
Acquisitions -- 28,832 741 11,881
Curtailment gain -- -- (740) --
Actuarial (gain) or
loss 8,932 14,103 (815) 3,080
Benefits paid (15,107) (15,217) (2,651) (2,550)
---------- ---------- --------- ---------
Benefit obligation at
end of year $ 205,845 $ 191,849 $ 43,075 $ 44,665
========== ========== ========= =========
CHANGE IN PLAN ASSETS
Fair value of plan
assets at beginning
of year $ 168,625 $ 135,899 $ -- $ --
Actual return on plan
assets 22,089 14,947 -- --
Employer
contributions 5,058 5,663 2,322 2,181
Plan participants'
contributions -- -- 329 369
Acquisitions -- 27,333 -- --
Benefits paid (15,107) (15,217) (2,651) (2,550)
---------- ---------- --------- ---------
Fair value of plan
assets at end of year $ 180,665 $ 168,625 $ -- $ --
========== ========== ========= =========
RECONCILIATION OF
FUNDED STATUS
Funded status $ (25,180) $ (23,224) $ (43,075) $ (44,665)
Unrecognized
actuarial loss 20,417 15,474 2,539 3,162
Unrecognized net
transition asset (182) (408) -- --
Unrecognized prior
service cost (11,962) (11,125) (3,327) (2,578)
---------- ---------- --------- ---------
Net amount recognized $ (16,907) $ (19,283) $ (43,863) $ (44,081)
========== ========== ========= =========
</TABLE>
The unrecognized net transition asset is being amortized over the average
expected future service periods of employees. Plan assets consist
principally of common stocks and U.S. government and corporate obligations.
The plans' assets included common stock of the Company totaling $8,934 and
$4,614 at December 27, 1998 and December 28, 1997, respectively.
The following table provides the amounts recognized in the consolidated
balance sheets as of December 27, 1998 and December 28, 1997:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
---------------- -----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Accrued benefit
liability $ (22,621) $ (22,767) $(43,863) $(44,081)
Intangible asset 5,714 3,484 -- --
--------- --------- -------- --------
Net amount recognized $ (16,907) $ (19,283) $(43,863) $(44,081)
========= ========= ======== ========
</TABLE>
The following table provides the components of net periodic benefit cost for
the fiscal years ended December 27, 1998 and December 28, 1997:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
---------------- -----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Service cost $ 5,603 $ 5,201 $ 945 $ 1,365
Interest cost 14,568 14,066 2,946 3,158
Expected return on
plan assets (16,584) (15,616) -- --
Amortization of prior
service cost (1,015) (866) (1,596) (1,289)
Amortization of
transitional asset (226) (226) -- --
Curtailment gain -- -- (740) --
Recognized actuarial
loss 336 49 136 --
---------- ---------- --------- ---------
Net periodic cost $ 2,682 $ 2,608 $ 1,691 $ 3,234
========== ========== ========= =========
</TABLE>
The weighted average assumptions used in the measurement of the Company's
benefit obligation are as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS POSTRETIREMENT BENEFITS
---------------- -----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Discount rate 7.25% 7.50% 7.25% 7.50%
Expected return on
plan assets 10.25% 10.00% -- --
Rate of compensation
increase 3.50% 3.50% -- --
</TABLE>
<PAGE>
<PAGE>
At December 27, 1998 and December 28, 1997, accumulated benefit obligations
exceeded plan assets for all pension plans. The market value of plan assets
was used to calculate the expected return on plan assets.
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 5% at the end of 1997 and 1998, and is
expected to remain constant at that rate for future periods. A one
percentage point increase in the assumed health care cost trend rate would
increase the accumulated postretirement benefit obligation as of
December 27, 1998 by $4,083 and the annual postretirement benefit expense by
approximately $491. A one percentage point decrease in the assumed health
care cost trend rate would decrease the accumulated postretirement benefit
obligation as of December 27, 1998 by $3,715 and the annual postretirement
benefit expense by approximately $406.
Certain union employees of the Company participate in multiemployer plans.
Amounts charged to benefit expense relating to the multiemployer plans for
1998, 1997 and 1996 totaled $3,685, $3,352 and $3,185, respectively. In
addition, the Company has various deferred savings and profit sharing plans
for certain employees who meet eligibility requirements. Amounts charged to
benefit expense related to these plans for 1998, 1997 and 1996 totaled
$2,993, $1,977 and $1,044, respectively.
12.STOCK-BASED COMPENSATION PLANS
STOCK OPTION PLANS - Upon consummation of the Merger described in Note 1,
the Stock Option Committee of the Board of Directors (the "Stock Option
Committee") adjusted all of the outstanding options so that each option
became exercisable for five times the number of shares of common stock for
which it had been exercisable immediately prior to the Merger at an exercise
price per share equal to one-fifth of the exercise price per share
immediately prior to the Merger (the "Options Adjustments"). Accordingly,
the following stock option data has been presented on a post-Merger basis.
The Company has stock option plans that permit the Stock Option Committee to
grant up to an aggregate of 7,750,000 options to purchase shares of the
Company's common stock to certain key employees of the Company. Options
granted under the plans generally vest ratably over a five-year period.
Vested options may generally be exercised up to ten years from the date of
grant. Information related to the Company's stock option plans is presented
below.
<TABLE>
<CAPTION>
NUMBER
OF OPTIONS OPTION PRICE
<S> <C> <C>
Outstanding at December 31,
1995 3,815,320 $5.49 to $15.00
Granted 354,000 $22.00
Exercised (1,532,290) $5.49 to $6.95
Rescinded/Canceled (74,725) $8.97 to $15.00
---------
Outstanding at December 29,
1996 2,562,305 $5.49 to $22.00
---------
Granted 804,000 $23.75 to $26.75
Exercised (12,000) $6.89
Rescinded/Canceled (45,365) $11.20 to $22.00
---------
Outstanding at December 28,
1997 3,308,940 $5.49 to $26.75
---------
Granted 937,500 $29.13 to $32.56
Exercised (617,044) $5.49 to $26.75
Rescinded/Canceled (166,500) $15.00 to $32.56
---------
Outstanding at December 27,
1998 3,462,896 $5.49 to $30.75
---------
<CAPTION>
EXERCISABLE RESERVED FOR
FUTURE GRANTS
<S> <C> <C>
December 27, 1998 1,600,600 2,009,800
December 28, 1997 1,861,934 396,770
December 29, 1996 1,655,640 1,155,405
</TABLE>
As permitted by SFAS No. 123, the Company has not recorded compensation
expense for stock options granted to employees, but rather has determined
the pro forma net income and net income per common share - basic and diluted
amounts for fiscal years 1998, 1997 and 1996, had compensation expense been
recorded for options granted during those years under the applicable fair
value method described in the statement.
For options granted during 1998, 1997 and 1996, the fair value at the date
of grant was estimated using the Black-Scholes option pricing model. Under
the Black-Scholes model, a volatility factor of .281, .310 and .312 was used
for 1998, 1997 and 1996, respectively.
The following weighted average assumptions were used in calculating the fair
value of the options granted in 1998, 1997 and 1996, respectively: risk-free
interest rates of 5.13%, 6.33% and 6.80%; an assumed dividend yield of zero;
and an expected life of the options of ten years.
For purposes of the pro forma disclosures, the estimated fair value of the
options granted is amortized to compensation expense over the options'
vesting period. The Company's pro forma information is as follows:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Net income:
As reported $ 73,590 $ 57,219 $ 47,261
Pro forma $ 71,319 $ 55,893 $ 46,668
Net income per common share
- basic:
As reported $ 1.92 $ 1.65 $ 1.40
Pro forma $ 1.86 $ 1.61 $ 1.39
Net income per common share
- diluted:
As reported $ 1.84 $ 1.60 $ 1.35
Pro forma $ 1.79 $ 1.57 $ 1.34
Weighted average fair value
of options granted during
the year $ 15.00 $ 14.39 $ 12.81
</TABLE>
RESTRICTED STOCK - Restricted shares of the Company's stock have been issued
in 1998 to certain key employees under a restricted stock plan. The stock
vests ratably over five years and is contingent upon employment. The
market value of the stock at the time of grant is recorded as unamortized
restricted stock compensation in stockholders' equity and is amortized to
expense over the five year vesting period. In 1998, the Company issued
135,000 restricted shares of common stock at a weighted average price of
$30.21 per share. The fair value of the restricted shares was $3,662 at
December 27, 1998. Compensation expense resulting from the amortization of
the restricted stock totaling $349 is included in the 1998 consolidated
statement of operations.
13.TREASURY STOCK
In August 1998, the Board of Directors authorized the repurchase of up to
1,800,000 shares of the Company's common stock. The repurchase of shares
commenced in August 1998 and may occur over the next three years in the open
market at prevailing market prices or in negotiated transactions, depending
on market conditions. The shares are being repurchased to satisfy
commitments under certain employee benefit plans. When treasury shares are
reissued, the Company uses the weighted average cost method and the excess
of repurchase cost over reissuance price is treated as a reduction of
retained earnings. As of December 27, 1998, the Company had repurchased
486,501 shares at a weighted average cost of $30.80 and reissued 466,255
shares.
14.NET INCOME PER COMMON SHARE
The following represents the reconciliation between net income per common
share - basic and diluted:
(In thousands, except per share data)
<TABLE>
<CAPTION>
NET PER
INCOME SHARES SHARE
<S> <C> <C> <C>
FOR THE YEAR ENDED 1998:
Net income per common share
- basic $ 73,590 38,378 $ 1.92
Effect of dilutive securities:
Stock options -- 967
Convertible debt 5,569 3,660
--------- --------
Net income per common share
- diluted $ 79,159 43,005 $ 1.84
========= ========
FOR THE YEAR ENDED 1997:
Net income per common share
- basic $ 57,219 34,773 $ 1.65
Effect of dilutive securities:
Stock options -- 863
Convertible debt 1,264 815
--------- --------
Net income per common share
- diluted $ 58,483 36,451 $ 1.60
========= ========
FOR THE YEAR ENDED 1996:
Net income per common share
- basic $ 47,261 33,642 $ 1.40
Effect of dilutive securities:
Stock options -- 1,361
--------- --------
Net income per common share
- diluted $ 47,261 35,003 $ 1.35
========= ========
</TABLE>
Options to purchase 429,000 shares of common stock were outstanding in 1997,
but were not included in the computation of net income per common share -
diluted because the exercise price of the options was greater than the
average market price of the common shares.
In February 1999, the Company issued options to purchase 875,000 shares of
its common stock. At the date of grant the exercise price of the options
equaled the fair market value of the Company's common stock.
15.TRANSACTIONS WITH AFFILIATES
The Company has incurred expenses of $750 in each of the fiscal years ending
1998, 1997 and 1996 for management services provided by affiliated
companies.
16.COMMITMENTS AND CONTINGENT LIABILITIES
The Company is subject to legal proceedings and other claims arising in the
ordinary course of operations. In the opinion of management, ultimate
resolution of proceedings currently pending will not have a material effect
on the results of operations or financial position of the Company.
<PAGE>
<PAGE>
17.UNAUDITED QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NET NET
INCOME INCOME
PER PER
COMMON COMMON
GROSS SHARE SHARE
QUARTER ENDED NET SALES PROFIT NET INCOME -BASIC -DILUTED
------------- --------- ------ ---------- ------ --------
<S> <C> <C> <C> <C> <C>
March 29, 1998 $ 550,407 $ 87,573 $ 9,358 $ 0.24 $ 0.24
June 28, 1998 546,503 94,211 9,772 0.25 0.25
September 27, 1998 635,980 127,037 28,987 0.76 0.71
December 27, 1998 623,995 120,274 25,473 0.66 0.63
---------- -------- ----------
$2,356,885 $429,095 $ 73,590 1.92 1.84
========== ======== ==========
March 30, 1997 $ 458,351 $ 75,315 $ 6,903 $ 0.20 $ 0.20
June 29, 1997 425,647 76,052 6,580 0.19 0.19
September 28, 1997 557,268 110,701 22,873 0.68 0.66
December 28, 1997 539,959 105,219 20,863 0.55 0.53
---------- -------- ----------
$1,981,225 $367,287 $ 57,219 1.65 1.60
========== ======== ==========
</TABLE>
18.SUBSEQUENT EVENT
On February 22, 1999, the Company issued Senior Subordinated Notes in the
aggregate principal amount of $300,000, receiving net proceeds of
approximately $294,000. Interest on the notes is payable semi-annually at
the annual rate of 7.75%. The notes do not have required principal payments
prior to maturity on February 15, 2009. The net proceeds from the notes
issuance were utilized to repay certain indebtedness under the Credit
Agreement. In connection with the issuance of these notes, the Company
amended its Credit Agreement resulting in, among other modifications, a
$95,000 permanent reduction as of March 9, 1999 in borrowings and
commitments under the Credit Agreement. As a result, aggregate total
commitments decreased from $920,000 to $825,000. The amendment and related
permanent reduction in total borrowings and commitments resulted in a
substantial modification of the terms under the Credit Agreement.
Accordingly, the Company will recognize an extraordinary charge for the early
extinguishment of debt of approximately $5,900, net of tax, in the first
quarter of fiscal year 1999.
<PAGE>
<PAGE>
EXHIBIT 21.0
SUBSIDIARIES
(AS OF 3/26/99)
Northeast Graphics Inc.
The Wessel Company, Inc.
The Lanman Companies, Inc.
Lanman Lithotech, Inc.
Central Florida Press, L.C.
RAI, Inc.
KRI, Inc.
World Color Book Services, Inc.
Shea Communications Company
The Johnson & Hardin Co.
Magna Graphic, Inc.
Century Graphics Corporation
Dittler Brothers, Incorporated
Acme Printing Company, Inc.
Great Western Publishing, Inc.
Infiniti Graphics, Inc.
World Color Systems, Inc.
WCP TN L.P.
WCX, L.L.C.
WCY, L.L.C.
WCZ, L.L.C.
KRI TN, L.P.
KRI Dresden, Inc.
<PAGE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the previously filed
Registration Statement No. 333-74087 of World Color Press, Inc. on Form S-4 and
the previously filed Registration Statement No. 333-47743 on Form S-8 of our
reports dated February 3, 1999, appearing in, and incorporated by reference in,
this Annual Report on Form 10-K of World Color Press, Inc. for the year ended
December 27, 1998.
/s/ Deloitte & Touche LLP
New York, New York
March 25, 1999
<TABLE> <S> <C>
<PAGE>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 27, 1998 AND THE CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 27, 1998 OF WORLD COLOR
PRESS, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-END> DEC-27-1998
<CASH> 199,932
<SECURITIES> 0
<RECEIVABLES> 239,847
<ALLOWANCES> 10,638
<INVENTORY> 276,111
<CURRENT-ASSETS> 785,967
<PP&E> 1,613,674
<DEPRECIATION> 727,675
<TOTAL-ASSETS> 2,433,886
<CURRENT-LIABILITIES> 546,539
<BONDS> 1,030,589
0
0
<COMMON> 386
<OTHER-SE> 668,261
<TOTAL-LIABILITY-AND-EQUITY> 2,433,886
<SALES> 2,356,885
<TOTAL-REVENUES> 2,356,885
<CGS> 1,927,790
<TOTAL-COSTS> 1,927,790
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 88,589
<INCOME-PRETAX> 125,644
<INCOME-TAX> 52,054
<INCOME-CONTINUING> 73,590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,590
<EPS-PRIMARY> 1.92
<EPS-DILUTED> 1.84
</TABLE>
