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________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission file number 0-26692
MAIL-WELL, INC.
(Exact name of Registrant as specified in its charter.)
DELAWARE 84-1250533
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
23 INVERNESS WAY EAST, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(Registrant's telephone number, including area code)
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) or the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [_]
As of August 8, 1996 the Registrant had 12,481,027 shares of Common Stock, $0.01
par value, outstanding.
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MAIL-WELL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Unaudited consolidated balance sheets 3
Unaudited consolidated statements of operations 4
Unaudited consolidated statements of cash flows 5
Notes to unaudited consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in securities 16
Item 3. Defaults upon Senior Securities 16
Item 4. Submission of matters to a Vote of Securities Holders 16
Item 5. Other information 16
Item 6. Exhibits and Reports on Form 8-K 17
</TABLE>
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
June 30, December 31,
1996 1995
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Receivables, net $ 92,151 $ 95,550
Accounts receivable - other 2,805 3,855
Income tax receivable, net 1,506 2,104
Inventories 73,116 67,598
Deferred tax asset 3,846 3,846
Other current assets 2,827 1,330
-------- --------
Total current assets 176,251 174,283
PROPERTY, PLANT AND EQUIPMENT - NET 211,770 205,096
DEFERRED FINANCING COSTS - NET 14,518 15,897
GOODWILL - NET 104,070 101,026
OTHER ASSETS - NET 4,098 4,134
-------- --------
TOTAL $510,707 $500,436
======== ========
CURRENT LIABILITIES
Accounts payable $ 33,171 $ 31,764
Accrued compensation and vacation 19,712 20,216
Accrued interest 3,445 4,497
Other current liabilities 21,888 17,872
Current portion of long-term debt and capital leases 12,880 11,523
-------- --------
Total current liabilities 91,096 85,872
CAPITAL LEASES 3,170 3,399
BANK BORROWINGS 204,064 207,482
SUBORDINATED NOTES 85,000 85,000
DEFERRED INCOME TAXES 16,225 14,853
OTHER LONG TERM LIABILITIES 1,494 1,512
-------- --------
Total liabilities 401,049 398,118
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 25,000 shares
authorized, none issued and outstanding - -
Common stock, $0.01 par value; 15,000,000 shares
authorized, 12,936,435 and 12,928,060 shares issued
and 12,481,027 and 12,472,652 shares (including
1,298,848 shares held by ESOP) outstanding, respectively 130 130
Paid-in capital 97,513 96,958
Unearned ESOP compensation (3,130) (3,530)
Retained earnings 17,083 10,704
Cumulative foreign currency translation adjustment (14) (20)
Pension liability adjustment (211) (211)
Treasury stock - at cost; 455,408 shares (1,713) (1,713)
-------- --------
Total stockholders' equity 109,658 102,318
-------- --------
TOTAL $510,707 $500,436
======== ========
</TABLE>
See notes to unaudited consolidated financial statements.
3
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MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
-----------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES $ 185,110 $ 129,439 $ 378,835 $ 253,838
COST OF SALES:
Materials 84,474 63,865 175,404 122,716
Labor and other 48,838 35,551 102,132 70,470
Manufacturing 10,300 5,439 21,037 10,830
Depreciation 3,993 1,977 7,478 3,887
Waste recovery (1,877) (5,721) (4,292) (11,254)
----------- ---------- ----------- ----------
Total cost of sales 145,728 101,111 301,759 196,649
GROSS PROFIT 39,382 28,328 77,076 57,189
OTHER OPERATING COSTS
Selling 13,629 8,172 27,661 16,725
Administrative 10,112 8,693 20,132 17,047
Loss on disposal of assets 502 - 598 -
Amortization 988 401 1,934 1,133
----------- ---------- ----------- ----------
Total other operating costs 25,231 17,266 50,325 34,905
OPERATING INCOME 14,151 11,062 26,751 22,284
OTHER EXPENSE
Interest expense - debt 7,064 6,134 14,145 12,286
Interest expense - amortization
of deferred financing costs 748 687 1,480 979
Other expense (income) 19 117 (23) 198
----------- ---------- ----------- ----------
INCOME BEFORE INCOME TAXES 6,320 4,124 11,149 8,821
PROVISION FOR INCOME TAXES
Current 2,217 832 3,426 1,965
Deferred 491 905 1,344 1,945
----------- ---------- ----------- ----------
NET INCOME $ 3,612 $ 2,387 $ 6,379 $ 4,911
=========== ========== =========== ==========
NET INCOME PER SHARE $0.30 $0.37 $0.54 $0.77
WEIGHTED AVERAGE SHARES
OUTSTANDING 11,883,062 6,372,744 11,868,188 6,333,454
</TABLE>
See notes to unaudited consolidated financial statements.
4
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MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
-------------------------
<S> <C> <C>
CASH FLOW PROVIDED BY (USED IN) OPERATIONS:
Net income $ 6,379 $ 4,911
Adjustments to reconcile net income (loss) to cash provided by
(used in) operations:
Depreciation 7,478 3,887
Amortization 3,414 2,112
Accretion of original issue discount - 939
Deferred tax provision 1,344 1,945
Loss on disposal of assets 598 -
ESOP compensation expense 1,089 822
Other (125) -
Change in operating assets and liabilities:
Receivables 12,608 (3,036)
Inventories 9,971 (5,097)
Accounts payable (1,489) (1,685)
Accrued interest payable (1,052) -
Current income taxes 597 4,313
Other working capital (4,544) 10,065
Accrued pension, current and long term 115 324
Other assets and other long-term liabilities (192) (21)
--------- --------
Net cash provided by operating activities 36,191 19,479
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of Quality Park Products, Inc. (25,610) -
Capital expenditures (7,133) (3,635)
Proceeds from sale of property, plant and equipment 2,101 -
Purchase of marketable securities - (315)
Maturity of temporary cash investments 250 -
--------- --------
Net cash used in investing activities (30,392) (3,950)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance 15 19
Cash overdrafts (2,734) (7,201)
Proceeds from long-term debt 99,639 11,000
Repayments of long-term debt (102,392) (19,322)
Repayments of capital lease obligations (326) -
Equity issuance costs - (25)
--------- --------
Net cash used in financing activities (5,798) (15,529)
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1) 0
--------- --------
INCREASE (DECREASE) IN CASH - -
--------- --------
BALANCE AT BEGINNING OF PERIOD - -
--------- --------
BALANCE AT END OF PERIOD $ 0 $ 0
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 15,197 $ 10,677
Cash paid for taxes 2,824 -
Issuance of common stock for compensation 51 -
</TABLE>
See notes to unaudited consolidated financial statements.
5
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MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
NATURE OF OPERATIONS - Mail-Well, Inc. (the "Company") is the largest
printer and manufacturer of envelopes in the United States and Canada
competing primarily in the higher-margin consumer direct market segment of
the envelope printing industry in which envelopes are designed and
manufactured to customer specifications. The Company is also a leading
high impact color printer specializing in printing advertising literature,
high-end catalogs and annual reports and is recognized as an innovative
provider of quality printed products to leading companies in the United
States.
In September 1995, in connection with an initial public offering of
5,000,000 shares of common stock, the Company converted each share of
common stock into 2.842 shares of common stock. All shares and per share
information have been restated to reflect the conversion.
On July 31, 1995, a wholly-owned subsidiary of the Company, Mail-Well I
Corporation ("M-W Corp."), acquired all of the outstanding shares of common
stock of Supremex, Inc. ("Supremex") a Canadian printer and manufacturer of
envelopes (the "Supremex Acquisition"). On August 25, 1995, M-W Corp.
acquired all of the outstanding shares of common stock of Graphic Arts
Center, Inc. ("GAC"), one of the leading high impact commercial printers in
the United States (the "GAC Acquisition").
In April 1996, M-W Corp. acquired substantially all of the assets of
Quality Park Products, Inc. ("Quality"), a printer and manufacturer of
envelopes (the "Quality Acquisition"). The total consideration for the
Quality Acquisition was approximately $26.6 million. The Quality
Acquisition was financed by amending and restating the current bank credit
agreement to add $20,000,000 in term loans to the current facility and to
allow the use of funds from the revolver facilities to finance the
remainder of the Quality Acquisition.
The Supremex Acquisition, GAC Acquisition and Quality Acquisition were
accounted for as purchases and accordingly, the net purchase prices were
allocated to the various purchased assets according to their fair value at
the date of purchase.
The following table presents the unaudited pro forma results of operations
as if the Supremex Acquisition and the GAC Acquisition had occurred on
January 1, 1994 and the Quality Acquisition (collectively, the
"Acquisitions") had occurred on January 1, 1995. As these Acquisitions were
accounted for as purchases, their results of operations are included in the
Company's statements of operations from the dates of the respective
acquisitions. The summary pro forma results are based on assumptions and
are not necessarily indicative of the results which would have occurred had
the Acquisitions actually taken place on the dates specified above, or of
the future results of operations of the Company.
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
-------- --------
<S> <C> <C>
(in millions, except per share)
Net sales $402.1 $420.1
Net income $ 7.5 $ 8.2
Net income per share $ 0.63 $ 0.70
</TABLE>
6
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements for all
periods presented include the accounts of the Company and its subsidiaries.
All significant intercompany accounts and transactions have been
eliminated.
CASH - Cash is managed using zero balance bank accounts.
INTERIM FINANCIAL INFORMATION - The financial information contained herein
is unaudited and includes all normal and recurring adjustments which, in
the opinion of management, are necessary to present fairly the information
set forth. The consolidated financial statements should be read in
conjunction with the Notes to the Consolidated Financial Statements which
are included in the Company's Form 10-K. The results for interim periods
are not necessarily indicative of results to be expected for the fiscal
year of the Company ending December 31, 1996. The Company believes that
the report filed on Form 10-Q is representative of its financial position,
its results of operations and its cash flow for the quarters and periods
ended June 30, 1996 and 1995.
FISCAL PERIOD - Each fiscal quarter includes thirteen weeks. The Company's
second fiscal quarter ends on the last Saturday in June. For presentation
purposes, however, the fiscal quarter is presented as if it ended on June
30, 1996.
INVENTORIES - Inventories for all entities, except for one wholly-owned
subsidiary, are valued at the lower of first-in, first-out ("FIFO") cost or
market and include the cost of materials, labor and manufacturing overhead.
Pavey inventories are stated at the lower of cost, determined by the last-
in, first-out ("LIFO") method, or market.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is recorded
at cost. Replacements of major units of property are capitalized and the
replaced properties are retired. Replacements of minor units of property
and repair and maintenance costs are charged to expense as incurred.
INCOME TAXES - The provision for income taxes is based on income recognized
for financial statement purposes and includes the effects of temporary
differences between such income and that recognized for tax return
purposes.
EMPLOYEE STOCK OWNERSHIP PLAN - Unearned ESOP compensation balance is
presented in the accompanying financial statements as a reduction of
equity. As the ESOP shares are allocated to participants, the unearned
ESOP compensation balance will decrease and compensation expense will be
recorded.
EARNINGS PER SHARE - Net income per share is computed by dividing net
income by the weighted average number of common shares outstanding and
common stock equivalents. Common shares and common stock equivalents
outstanding excludes unallocated and uncommitted shares held by the ESOP.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
---------------------- -------------------------
<S> <C> <C> <C> <C>
Common shares 11,656,455 6,015,601 11,653,763 5,976,311
Common stock equivalents 226,607 357,143 214,425 357,143
---------- --------- ---------- ---------
Total 11,883,062 6,372,744 11,868,188 6,333,454
========== ========= ========== =========
</TABLE>
FOREIGN CURRENCY TRANSLATION - The balance sheet of Supremex is translated
from Canadian dollars, the functional currency of Supremex, to U.S.
dollars at the period end rates of exchange. Results of operations are
translated at average rates prevailing during the period. The effects of
7
<PAGE>
translation at the balance sheet date are accumulated as the cumulative
foreign currency translation adjustment in stockholders' equity.
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 the 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.
RECLASSIFICATION - Certain amounts in the 1995 financial
statements have been reclassified to conform to 1996 presentation.
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (IN THOUSANDS)
<TABLE>
<CAPTION>
INVENTORY:
June 30, 1996 December 31, 1995
<S> <C> <C>
Raw materials $ 27,853 $ 28,344
Work in process 6,995 11,544
Finished goods 40,819 29,851
Reserve for obsolescence and loss (2,104) (1,694)
Reserve for LIFO (447) (447)
-------- --------
Total $ 73,116 $ 67,598
======== ========
PROPERTY, PLANT AND EQUIPMENT:
June 30, 1996 December 31, 1995
Land and land improvements $ 10,939 $ 10,357
Buildings 44,303 46,860
Leasehold improvements 3,518 2,177
Machinery and equipment 157,980 143,843
Furniture and fixtures 2,707 3,574
Automobiles and trucks 590 468
Computers and software 7,703 6,987
Construction in progress 4,976 4,503
-------- --------
232,716 218,769
Less accumulated depreciation (20,946) (13,673)
-------- --------
Total $211,770 $205,096
======== ========
4. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
June 30, 1996 December 31, 1995
Bank Borrowings:
Revolving Credit Loans $ 41,539 $ 58,159
Term Loans 174,457 160,228
Other 267
Subordinated Notes 85,000 85,000
-------- --------
301,263 303,387
Less current maturities (12,199) (10,905)
-------- --------
Long-term debt $289,064 $292,482
======== ========
</TABLE>
8
<PAGE>
The bank credit agreement of the Company now provides for $174,457,000 in
Term Loans and $90,000,000 of revolving credit loans as well as Canadian
$20,000,000 of revolving credit loans. Borrowings under the bank credit
agreement are collateralized by substantially all assets of the Company.
At June 30, 1996, M-W Corp. had interest rate cap agreements in place for a
notional value of $55,000,000. Agreements for a notional value of
$20,000,000 provide an effective LIBOR interest rate cap of 8.5% and
expire May 16, 1997; agreements for a notional value of $35,000,000 provide
an effective LIBOR interest rate cap of 9.0% and expire March 31, 1997.
At June 30, 1996, M-W Corp. had an outstanding currency rate swap agreement
with a notional amount of $46.0 million which involves the exchange of
floating rate U.S. dollar denominated debt for floating rate Canadian
dollar denominated debt at a contracted exchange rate. At June 30, 1996,
M-W Corp. has recorded a receivable of $33,000 related to this agreement.
This amount represents the difference between the quarter end exchange rate
and the fixed exchange rate multiplied by the notional amount of the
contract.
5. PENDING ACQUISITION
In June, the Company announced that Supremex had signed a letter of intent
to acquire substantially all of the Canadian assets of Pac National Group
Products, Inc. ("PNG"), a Canadian envelope manufacturer based in Ontario.
The Bureau of Competition Policy in Canada has issued approval for the
transaction. In addition, the transaction is subject to negotiation of a
definitive acquisition agreement, due diligence and other closing
conditions.
* * * * *
[The remainder of this page intentionally left blank.]
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
In addition to the historical information contained herein, this report contains
forward-looking statements. The reader of this information should understand
that all such forward-looking statements are subject to various uncertainties
and risks that could affect their outcome. The Company's actual results could
differ materially from those suggested by such forward-looking statements.
Factors which could cause or contribute to such differences include, but are not
limited to, product demand and sales, growth rate, ability to obtain assumed
productivity savings, quality control, availability of acquisition opportunities
and their related costs, cost savings due to integration and synergies
associated with acquisitions, ability to obtain additional financings and bank
restructuring, interest rates, foreign currency exchange rates, paper and raw
material costs, waste paper prices, ability to pass through paper costs to
customers, postage rates, changes in the direct mail industry, competition,
ability to develop new products, labor costs and advertising costs. This
entire report should be read to put such forward-looking statements in context
and to gain a more complete understanding of the uncertainties and risks
involved in the Company's business.
OVERVIEW - The following is a brief discussion of events and industry
conditions that have affected the results of operations and financial condition
of Mail-Well, Inc. (the "Company").
ACQUISITIONS - On July 31, 1995, the Company acquired Supremex, Inc. (Supremex),
a Canadian printer and manufacturer of envelopes. On August 25, 1995, the
Company acquired Graphic Arts Center, Inc. (GAC), a fine color commercial
printer. On April 22, 1996, the Company acquired Quality Park Products, Inc.
("Quality"), a printer and manufacturer of envelopes.
RESULTS OF OPERATIONS
U.S. Envelope Operations
- ------------------------
The following table presents historical financial data for the U.S. envelope
operations of the Company including the operations of Quality since the date of
acquisition.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
---------------------------------- ------------------------------------------
1996 1995 1996 1995
-------- -------- --------- --------
(dollars in thousands) $ % $ % $ % $ %
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $140,679 100.0 $129,439 100.0 $269,356 100.0 $253,838 100.0
Cost of Sales
Materials 65,637 46.7 58,144 44.9 125,715 48.0 111,462 43.9
Labor and other 38,484 27.4 35,551 27.5 73,934 26.8 70,470 27.8
Manufacturing 5,510 3.9 5,439 4.2 10,800 3.7 10,830 4.3
Selling and Administrative 15,504 11.0 15,660 12.1 30,358 11.3 31,362 12.3
-------- ----- -------- ----- -------- ----- -------- -----
EBITDA $ 15,544 11.0 $ 14,645 11.3 $ 28,549 10.6 $ 29,714 11.7
======== ===== ======== ===== ======== ===== ======== =====
Units Sold (in millions) 6,051 6,792 12,391 13,651
</TABLE>
QUARTER ENDED JUNE 30, 1996 TO JUNE 30, 1995
OPERATIONS OF ACQUIRED BUSINESS - Included in the results for the three and six
months ended June 1996 are the operations of Quality since the date of
acquisition. Quality's net sales of $20.4 million for the second quarter of 1996
represents a $3.2 million decline in sales as compared to the same period in
1995. This decline was due to the loss of a major customer (which occurred prior
to the acquisition of Quality by the Company) representing $3.9 million in sales
offset by sales increases to other customers of $0.7 million. The gross margins
for Quality have improved from the prior year due to the discontinuation of
certain discounted pricing programs.
The following discussion does not include the results of Quality's operations.
10
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NET SALES - Net sales decreased 7.1% for the quarter ended June 1996 compared to
June 1995. The average price increased by 4.3% from the average 1995 sales
price. The increase was due to a favorable product mix and maintaining selling
prices despite decreasing paper costs. Total volume for the U.S. envelope
operations decreased 9.7% to 6.0 billion units for the quarter ended June 1996
from 6.6 billion units for quarter ended June 1995. Volume in the second quarter
was negatively impacted by lower demand in the direct mail and merchant markets.
COST OF SALES - The total cost of sales, as a percentage of sales, was
consistent with 1995 at 76.5%. Margin as a percent to sales was consistent
despite lower paper costs due to a fall in proceeds from the sale of waste paper
and increases in other costs as a percentage of sales. Material costs,
exclusive of waste revenue, were 44.2% and 49.3% of net sales for the quarters
ended June 1996 and 1995, respectively. For the quarter ended June 1996, the
average cost of 24# white wove was approximately $36.50 per CWT versus $49.00
for the same period in 1995. Waste paper revenues declined from 4.4% of sales
in the second quarter of 1995 to 1.4% in the second quarter of 1996, as average
hard white waste paper prices dropped from $601 per ton for the quarter ended
June 1995 to $207 per ton for the quarter ended 1996. Labor and other and
manufacturing expenses increased to 33.7% of sales in the second quarter of 1996
compared to 31.7% in the second quarter of 1995 despite cost cutting measures
due to lower sales volumes.
The Company believes that material gross margin per unit (measured on a per
thousand envelope basis) and volume of units sold are better indicators of its
revenue trends than its net sales, since historically the Company has passed on
to its customers changes in its cost of paper. When measured on a unit basis,
material gross margin increased from $10.50 per thousand units in the second
quarter of 1995 to $11.37 per thousand units in the same period in 1996. The
increase in material gross margin on a unit basis is attributable to the
Company's ability to maintain sales price in a period of declining paper prices.
The effect of lower paper prices on material gross margin was partly offset by a
decrease in proceeds from the sale of waste paper. Waste revenue declined from
$0.84 per thousand units in the second quarter 1995 to $0.28 per thousand units
in 1996 (a dollar decline of $4.0 million).
SELLING AND ADMINISTRATIVE - Selling and administrative expenses, as a percent
of sales, decreased to 11.7% from 12.1% due to efficiencies realized in the
consolidation efforts of certain functions when businesses have been acquired.
EBITDA - EBITDA, as a percentage of sales, increased to 11.8% for the period
ended June 1996, from 11.3% for the same period in 1995.
SIX MONTHS ENDED JUNE 30, 1996 TO JUNE 30, 1995
OPERATIONS OF ACQUIRED BUSINESS - Included in the results for the three and six
months ended June 1996 are the operations of Quality since the date of
acquisition. Quality's net sales of $20.4 million for the second quarter of 1996
represents a $3.2 million decline in sales as compared to the same period in
1995. This decline was due to the loss of a major customer (which occurred prior
to the acquisition of Quality by the Company) representing $3.9 million in sales
offset by sales increases to other customers of $0.7 million. The gross margins
for Quality have improved from the prior year due to the discontinuation of
certain discounted pricing programs.
The following discussion does not include the results of Quality's operations.
NET SALES - Net sales decreased 1.9% for the six months ended June 1996 compared
to the same period ended June 1995. The average price increased by 8.1% from
$18.59 per thousand units in the first half of 1995 to $20.09 per thousand units
in 1996. The increase was due to a favorable product mix and maintaining
selling prices despite decreasing paper costs. Total volume for the U.S.
envelope operations decreased 9.2% to 12.4 billion units for the period ended
June 1996 from 13.7 billion units for period
11
<PAGE>
ended June 1995. Volume in the first half of the year was negatively impacted by
lower direct mail and merchant volume combined with adverse weather in the first
quarter.
COST OF SALES - The total cost of sales, as a percentage of sales, increased
from 75.9% in the first half of 1995 to 77.5% in the same period for 1996.
Margin, as a percent of sales, decreased despite lower paper costs due to a fall
in proceeds from the sale of waste paper and increases in other costs as a
percentage of sales. Material costs, exclusive of waste revenue, were 46.5% and
48.3% of net sales for the quarters ended June 1996 and 1995, respectively. For
the six months ended June 1996, the average cost of 24# white wove was
approximately $39.70 per CWT versus $47.00 for the same period in 1995. Waste
paper revenues declined from 4.4% of sales in the first six months of 1995 to
1.6% in 1996, as hard white waste paper prices dropped from an average of $578
per ton in 1995 to $234 per ton in 1996. Labor and other and manufacturing
expenses increased to 32.6% of sales in the first half of 1996 compared to 32.1%
in the first half of 1995.
The Company believes that material gross margin per unit (measured on a per
thousand envelope basis) and volume of units sold are better indicators of its
revenue trends than its net sales, since historically the Company has passed on
to its customers changes in its cost of paper. When measured on a unit basis,
material gross margin increased from $10.42 per thousand units in the first half
of 1995 to $11.09 per thousand units in the same period in 1996. The increase
in material gross margin on a unit basis is attributable to the Company's
ability to maintain sales prices in a period of declining paper prices. The
effect of lower paper prices on material gross margin was partly offset by a
decrease in proceeds from the sale of waste paper. Waste revenue declined from
$0.82 per thousand units in the second quarter 1995 to $0.33 per thousand units
in 1996.
SELLING AND ADMINISTRATIVE - For the six months ended June 1996, selling and
administrative expenses, as a percent of sales, decreased to 11.6% from 12.4%
compared to the same period in 1995. The decrease is due to the reduction or
elimination of certain functions when businesses have been acquired, resulting
in cost savings.
EBITDA - EBITDA, as a percentage of sales, decreased to 10.9% for the period
ended June 1996, from 11.7% for the same period in 1995. This EBITDA decline
represents the lower demand in the direct mail and merchant markets.
Supremex, Inc.
- --------------
The following table presents financial information with respect to the acquired
Supremex operations for the quarters and periods ended June 30, 1996 and 1995.
Information for the 1995 quarter and period is derived from historical financial
statements prior to the acquisition of Supremex by the Company.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
----------------------- --------------------------
1996 1995 1996 1995
------- ----------- --------------------- --------------------
(dollars in thousands) $ % $ % $ % $ %
------- ---------- ----------- ------ ------- ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $20,176 100.0 $22,089 100.0 $42,326 100.0 $42,707 100.0
Cost of Sales
Materials 8,881 44.0 10,372 47.0 19,566 46.2 20,078 47.0
Labor and other 3,628 17.9 3,525 15.9 7,390 17.5 7,115 16.7
Manufacturing 1,224 6.1 1,152 5.2 2,533 6.0 2,425 5.7
Selling and Administrative 2,942 14.6 3,154 14.3 5,926 14.0 6,531 15.3
------- ----- ------- ----- ------- ----- ------- -----
EBITDA $ 3,501 17.4 $ 3,886 17.6 $ 6,911 16.3 $ 6,558 15.3
======= ===== ======= ===== ======= ===== ======= =====
Units sold (in millions) 1,001 1,066 2,033 2,200
</TABLE>
QUARTER ENDED JUNE 30, 1996 COMPARED TO THE QUARTER ENDED JUNE 30, 1995
12
<PAGE>
NET SALES - Net sales in the three months ended June 1996 decreased by 8.7%.
The units sold in the quarter ended June 1996 decreased by 6.1% compared to the
same period in 1995. The decline in units sold is due to the weak demand in the
direct mail segment of the envelope market. The average selling price decreased
to $20.16 per thousand units sold in the second quarter of 1996 compared to
$20.72 in the second quarter of 1995. The decrease in selling price is due to
passing on to customers the reduction in raw material costs of 14.4% as compared
to the quarter ended 1995.
COST OF SALES - Cost of sales for the quarters ended June 1996 and 1995 remained
steady at 68.0% of sales. Total raw material costs decreased 14.4% to $8.8
million for the quarter ended June 1996. This reduction is due to the lower
paper prices in 1996; the average cost per CWT of paper used decreased by 17.6%
from the same quarter in 1995. The total gross profit (calculated as net sales
less cost of goods sold) per thousand units decreased to $6.44 per thousand
units for the second quarter of 1996 from $6.60 per thousand units for the
comparable period in 1995. This decrease was due to the lower sales prices and
decreased volume as total cost of sales (as a percentage of sales) did not
fluctuate for the period.
SELLING AND ADMINISTRATIVE - For the quarter ended June 1996, selling and
administrative expenses decreased by $0.2 million from the comparable period in
1995. The decrease is mainly the result of the shutdown of the Brantford
manufacturing facility.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995
NET SALES - Net sales decreased by 1.0% from the first half of 1996 compared to
1995. The average selling price increased by 7.3% from $19.41 per thousand
units in the first half of 1995 to $20.82 per thousand units in 1996. The
increase was due to a favorable product mix and maintaining average selling
prices despite decreasing paper costs. Total volume for Canadian envelope
operations decreased by 7.6% to 2.0 billion units for the period ended June 1996
from 2.2 billion units for the period ended June 1995. Volume in the first half
of the year was negatively impacted by a weak Canadian economy in 1996.
COST OF SALES - Cost of sales remained steady at approximately 69.7% as a
percentage of sales for the first half of 1996 as compared to the same period in
1995. The cost of raw materials, which is mainly paper, decreased 2.6% from
1995. This reduction was due to the lower paper prices in 1996; the average
cost by CWT of paper used is down 12.8% from 1995. The product mix changed such
that products with a higher paper content were sold in 1996 thus increasing the
selling price. Waste revenue decreased from 2.5% of sales in 1995 to 1.0% of
sales in 1996 due to the weaker market for waste paper. Additionally, there was
a higher gross profit contribution on units sold in 1996 compared to 1995 due to
signed contracts for envelopes at the higher paper prices. The total gross
profit, calculated as net sales less cost of goods sold, per thousand units
increased by 6.1% to $6.31 per thousand units in 1996 from $5.95 per thousand
units in 1995.
SELLING AND ADMINISTRATIVE - The decline in selling and administrative expenses,
as a percentage of sales, is primarily due to a reduction of professional fees
and to the shutdown of the Brantford manufacturing facility. The sales force
has been reduced and administrative responsibilities combined with other
regions.
13
<PAGE>
Graphic Arts Center, Inc.
- -------------------------
The following table presents financial information with respect to the acquired
GAC operations for the quarters and periods ended June 30, 1996 and 1995.
Information for the 1995 quarter and period reflects the historical results of
GAC prior to the acquisition by the Company.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months ENDED JUNE 30,
----------------------- --------------------------
1996 1995 1996 1995
------- ----------- --------------------- --------------------
(dollars in thousands) $ % $ % $ % $ %
------- ---------- ----------- ------ ------- ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales $24,255 100.0 $36,030 100.0 $67,153 100.0 $75,285 100.0
Cost of Sales
Materials 8,079 33.3 14,956 41.5 25,831 38.4 30,181 40.1
Labor and other 6,726 27.7 9,051 25.1 20,808 31.0 19,714 26.2
Manufacturing 3,566 14.7 4,014 11.1 7,704 11.5 7,556 10.0
Selling and Administrative 3,934 16.2 5,104 14.2 8,976 13.4 11,205 14.9
------- ----- ------- ----- ------- ----- ------- -----
EBITDA $ 1,950 8.1 $ 2,905 8.1 $ 3,834 5.7 $ 6,629 8.8
======= ===== ======= ===== ======= ===== ======= =====
</TABLE>
QUARTER ENDED JUNE 30, 1996 COMPARED TO THE QUARTER ENDED JUNE 30, 1995
NET SALES AND COST OF SALES - Net sales of $24.3 million for the three months
ended June 1996 decreased 32.7% over the same period in the prior year. The
decline in sales consisted almost entirely of decreased web sales, which were
down from the prior year by $11.5 million. The decrease in web sales reflects
the competitive market for web sales as well as an overall drop in catalog and
other long run web work used for general advertising. The latter was reflected
in a drop in advertising insert work related to new car introductions. Finally,
GAC continues to shift its product mix from catalogs to advertising and
commercial work, which is generally shorter run, sheetfed work. Gross margin
was 24.3% for the three month period ended June 1996 as compared to 22.2% for
the period ended June 1995. This improvement reflects lower material costs.
The lower material costs are primarily the result of the disproportionate
decline in paper intensive web sales noted above. Production efficiency has
improved and fixed manufacturing expenses have been reduced but the more
competitive print market continues to drive down margins.
SELLING AND ADMINISTRATIVE - GAC's selling and administrative expenses increased
as a percentage of sales from 14.2% to 16.2% as a result of the decline in
volume. Cost reductions have been and continue to be made which include
reductions in spoilage, production supplies, employee counts and travel and
entertainment expenses.
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995
NET SALES AND COST OF SALES - Of the $8.1 million decline in net sales, $11.8
million is due to the poor web sales in the second quarter. For the first
quarter of 1996, net sales increased $3.7 million on unit growth in the annual
reports segment of the market. GAC is also beginning to generate volume from
its Northern California facility in the sheetfed market. GAC's gross margin was
19.1% for the six month period ended June 1996 compared to 23.7% for the six
months ended June 1995. The overall decline reflects the continuing competitive
market for printing services in GAC's markets.
SELLING AND ADMINISTRATIVE - The decline in year to date selling and
administrative expenses is as expected given the cost reduction efforts which
include reductions in spoilage, production supplies, employee counts and travel
and entertainment expenses.
14
<PAGE>
Consolidated Information
- ------------------------
The following table presents historical financial information for the Company
and includes the operations of Supremex, GAC and Quality from the dates of their
respective acquisitions.
<TABLE>
<CAPTION>
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
1996 1995 1996 1995
-------- -------- ------ ------
(dollars in thousands) $ % of sales $ % of sales $ % of sales $ % of sales
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Depreciation $3,993 2.2 $1,977 1.5 $ 7,478 2.0 $ 3,887 1.5
Amortization 988 0.5 401 0.3 1,934 0.5 1,133 0.5
Interest 7,812 4.2 6,821 5.3 15,625 4.1 13,265 5.2
Other Expense (Income) 19 - 117 - (23) - 198 -
Corporate Selling
and Administrative 1,361 0.7 1,205 0.9 2,533 0.7 2,410 0.9
Loss on Disposal of Assets 502 0.3 598 -
Income Taxes 2,708 1.5 1,737 1.3 4,770 1.3 3,910 1.5
</TABLE>
DEPRECIATION EXPENSE - The depreciation expense increased for the quarter and
six months ended June 1996 compared to the quarter and year-to-date period in
the prior year due to the depreciation of the property acquired in the
acquisitions of Supremex, GAC and Quality.
AMORTIZATION EXPENSE - The amortization expense increased due to the
amortization of the intangibles acquired in the acquisitions of Supremex, GAC
and Quality.
INTEREST EXPENSE - The interest expense increase for the quarter and six months
ended June 1996 was the result of larger debt balances as compared to the same
period in 1995 due to the debt incurred in the acquisitions of Supremex, GAC and
Quality. Included in the interest expense amount is the amortization of
deferred financing costs. The 1995 interest amount also includes the accretion
of the discount on the deferred coupon notes which were repurchased in the
second half of 1995.
CORPORATE SELLING AND ADMINISTRATIVE EXPENSES - These expenses are those
incurred to run the corporate office of the Company. They include, primarily,
the salaries and benefits of corporate staff, investor relations, professional
fees and certain insurance policies. The increases from the same periods in
1995 represent the additional expenses incurred with resources devoted to
corporate communications with investors and acquisition activities.
LOSS ON DISPOSAL OF ASSETS - This loss primarily represents the loss on the
disposal of certain assets when consolidating the Texas facilities and
relocating the Philadelphia facility.
INCOME TAXES - The effective tax rate for the year to date period ended June
1996 is 42.8% as compared to an effective tax rate of 44.3% for the year to date
period ended June 1995. The effective tax rate for both periods is higher than
the federal statutory rate due to state and provincial income taxes. The rate
is less than that in the prior year due to significant tax planning including
the reorganization of the U.S. envelope divisions to minimize state income
taxes.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL CASH FLOW - Net cash provided by operating activities was $36.2
million for the six months ended June 30, 1996; net cash provided by operating
activities totaled $19.5 million for the six months ended June 30, 1995. the
acquisition of Quality required the use of $25.6 million of cash of which $22.5
million was borrowed under the Company's bank credit agreement. Other investing
activities for both periods include capital expenditures of $7.1 million for
1996 and $3.6 million for 1995. Proceeds of $2.1 million in 1996 represent the
sale of a manufacturing building in Denver. The 1996 expenditures were
15
<PAGE>
offset by the proceeds of $0.25 million from the maturity of temporary cash
investments. The repurchase of deferred coupon notes in 1995 consumed $0.3
million of cash.
DEBT OBLIGATIONS - As of June 30, 1996, the Company had borrowed $46.6 million
(including $5.1 million in letters of credit) under the revolving credit
facility of the Bank Credit Agreement. After giving effect to borrowing base
limitations, $55.3 million was available for additional borrowings. Interest
rates on the Company's bank debt ranged from 7.50% to 8.4375% as of June 30,
1996. The average interest rate was 8.1%.
CAPITAL REQUIREMENTS - The Company estimates that, based on current utilization
of its existing equipment and expected demand, it will spend $15.0 to $20.0
million per year on capital expenditures exclusive of acquisitions.
EFFECTS OF INFLATION - The effects of inflation have not been material to the
Company. However, due to the competitive nature of its business, it may not
always be able to continue to pass on inflationary cost increases in the future.
Manufacturing costs are affected by inflation and the effects of inflation may
be experienced by the Company in future periods.
EFFECTS OF FOREIGN CURRENCY - The effects of foreign currency exchange have not
been material to the Company to date. The Company recognized a net foreign
exchange gain of $43,000 in the first six months of 1996 which relates,
primarily, to U.S. dollar denominated debt borrowed by the Canadian subsidiary.
Term loans with a face value of $50,000,000 were borrowed in U.S. dollars and
are included in the balance sheet of Supremex. Supremex entered into a currency
rate swap agreement which involves the exchange of floating U.S. dollar
denominated debt for floating rate Canadian dollar denominated debt at a
contracted exchange rate. This swap agreement is intended to minimize the
exchange rate risk to the Company.
SEASONALITY AND ENVIRONMENTAL - The effects of seasonality and environmental
matters had no material financial impact on the historical operations of the
Company and are not expected to have an effect on the Company's liquidity and
capital resources.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is currently involved in legal proceedings with Skrudland Photo,
Inc. ("Skrudland"). On March 14, 1995, Skrudland filed a lawsuit, Skrudland
---------
Photo, Inc. v. Mail-Well Corporation, d/b/a Mail-Well Envelope, in the District
- ---------------------------------------------------------------
of Travis County, Texas, 345th Judicial District (Cause No. 94-15915), alleging
that the Company manufactured and distributed to Skrudland defective envelopes.
Skrudland is seeking monetary damages for actual and consequential damages,
costs and expenses of the action, and such other relief as the court may order.
The Company has filed a counter-claim against Skrudland for failure to pay, plus
interest and attorney's fees.
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - NONE
ITEM 5. OTHER INFORMATION - NONE
16
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Certificate of Incorporation of the Company, as amended - incorporated
by reference from Exhibit 3.1 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company dated December 8, 1994 - incorporated by reference from
Exhibit 3.1 of the Company's Registration Statement on Form S-1 dated
May 9, 1995.
3.3 Certificate of Amendment of Certificate of Incorporation of the
Company -incorporated by reference from Exhibit 3.3 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
3.4 Bylaws of the Company - incorporated by reference from Exhibit 3.4 of
the Company's Registration Statement on Form S-1 dated September 21,
1995.
4.1 Form of Certificate representing the Common Stock, par value $0.01 per
share, of the Company - incorporated by reference from Exhibit 4.1 of
the Company's Registration Statement on Form S-1 dated March 25, 1994.
4.2 Indenture dated February 24, 1994 by and between the Company and
Shawmut Bank, National Association, as Trustee, with respect to the
$39,500,000 in aggregate principal amount of Original Senior Deferred
Coupon Notes and Exchange Senior Deferred Coupon Notes due 2006,
including the form of Deferred Coupon Note - incorporated by reference
from Exhibit 4.2 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
4.3 Indenture dated as of February 24, 1994 by and between M-W Corp. and
Shawmut Bank, National Association, as Trustee, with respect to the
10-1/2% Original Senior Subordinated Notes and the 10-1/2% Exchange
Senior Subordinated Notes due 2004, including the form of Note and the
guarantees of the Company, Wisco and Pavey - incorporated by reference
from Exhibit 4.3 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
4.3.1 Supplemental Indenture dated July 31, 1995 to the Indenture identified
in Exhibit 4.3 - incorporated by reference from Exhibit 4.4.1 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.3.2 Form of Second Supplemental Indenture to the Indenture identified in
Exhibit 4.3 -incorporated by reference from Exhibit 4.4.2 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.4 Form of Stockholders Agreement among the Company and certain holders
of the Common Stock effective as of February 24, 1994 and Amendment
No. 1 thereto - incorporated by reference from Exhibit 4.4 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
4.5 Form of Employee Stockholders Agreement among the Company and certain
employee holders of the Common Stock effective as of February 24, 1994
- incorporated by reference from Exhibit 4.5 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
4.6 Form of American Mail-Well Employee Stockholders Agreement among the
Company and certain holders of the Common Stock - incorporated by
reference from Exhibit 10.44 of the Company's Registration Statement
on Form S-1 dated May 9, 1995.
4.7 Form of Registration Rights Agreement among the Company and certain
holders of the Common Stock effective as of February 24, 1994 -
incorporated by reference from Exhibit 4.6 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
17
<PAGE>
4.8 Form of Registration Rights Agreement among M-W Corp., the Company and
Merrill Lynch effective as of February 24, 1994 - incorporated by
reference from Exhibit 4.7 of the Company's Registration Statement on
Form S-1 dated March 25, 1994.
10.1 Asset Purchase Agreement dated December 7, 1993 by and among GP
Envelope, G-P, M- W Corp. and the Company, as amended - incorporated
by reference from Exhibit 10.1 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.2 Letter Agreement dated December 13, 1993 by and between Sterling, M-W
Corp. and the Company relating to compensation payable by M-W Corp.
and the Company to Sterling for services performed in connection with
the Acquisition and the financing thereof - incorporated by reference
from Exhibit 10.2 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
10.3 Letter Agreement dated December 13, 1993 by and between The Unicorn
Group and Sterling regarding engagement of The Unicorn Group by
Sterling -incorporated by reference from Exhibit 10.3 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.4 Letter Agreement dated December 13, 1993 from Saddle River Capital to
Sterling regarding engagement of Saddle River Capital by Sterling -
incorporated by reference from Exhibit 10.4 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.5 Communications Paper Supply Agreement dated February 24, 1994 between
G-P and M-W Corp. - incorporated by reference from Exhibit 10.11 of
the Company's Registration Statement on Form S-1 dated March 25, 1994.
10.6 Computer Services Agreement dated February 24, 1994 between G-P and M-
W Corp. -incorporated by reference from exhibit 10.12 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.7 Trademark License Agreement dated February 24, 1994 by and among G-P,
Great Northern Nekoosa Corporation and M-W Corp. - incorporated by
reference from Exhibit 10.13 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.8 Securities Exchange Agreement dated February 22, 1994 by and among the
Company First Sterling, Unicorn, The Unicorn Group and Gerald F.
Mahoney, including the form of Escrow Agreement by and among the
parties to the Securities Exchange Agreement - incorporated by
reference from Exhibit 10.14 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.9 Tax Sharing Agreement dated February 24, 1994 among the Company, M-W
Corp., Wisco and Pavey - incorporated by reference from Exhibit 10.15
of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.10 General Indemnity Agreement between M-W Corp. and Amwest Surety
Insurance Company together with form of Letter of Credit -
incorporated by reference from Exhibit 10.16 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.11 Form of Indemnity Agreement between the Company and each of its
officers and directors - incorporated by reference from Exhibit 10.17
of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.12 Form of Indemnity Agreement between M-W Corp. and each of its officers
and directors - incorporated by reference from Exhibit 10.18 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.13 Form of M-W Corp. Employee Stock Ownership Plan effective as of
February 23, 1994 and related Employee Stock Ownership Plan Trust
Agreement -incorporated by reference from Exhibit 10.19 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.14 Form of M-W Corp. 401(k) Savings Retirement Plan - incorporated by
reference from Exhibit 10.20 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.15 Company 1994 Stock Option Plan, as amended - incorporated by reference
from Exhibit 10.15 of the Company's Registration Statement on Form S-1
dated September 21, 1995.
18
<PAGE>
10.16 Form of the Company Incentive Stock Option Agreement - incorporated by
reference from Exhibit 10.22 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.17 Form of the Company Nonqualified Stock Option Agreement - incorporated
by from Exhibit 10.23 of the Company's Registration Statement on Form
S-1 dated March 25, 1994.
10.18 Asset Purchase Agreement dated October 31, 1994 by and between
American and M-W Corp., as amended - incorporated by reference from
Exhibit 10.30 of the Company's Registration Statement on Form S-1
dated May 9, 1995.
10.19 Transition Services Agreement dated December 19, 1994 by and among CC
Industries or American and M-W Corp. - incorporated by reference from
Exhibit 10.31 of the Company's Registration Statement on Form S-1
dated May 9, 1995.
10.20 Guaranty dated December 19, 1994, executed by CC Industries in favor
of M-W Corp. - incorporated by reference from Exhibit 10.33 of the
Company's Registration Statement on Form S-1 dated May 9, 1995.
10.21 Commitment Letter dated December 19, 1994, from Henry Crown & Company
to M-W Corp. - incorporated by reference from Exhibit 10.34 of the
Company's Registration Statement on Form S-1 dated May 9, 1995.
10.22 Second Amended and Restated Credit Agreement dated as of July 31, 1995
by and among M-W Corp., the banks parties thereto and Banque Paribas,
as Agent - incorporated by reference from Exhibit 10.22 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
10.23 Credit Agreement dated as of July 31, 1995 by and among Supremex, M-W
Corp., the banks parties thereto and Bank Paribas, as Agent -
incorporated by reference from Exhibit 10.23 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.24 Second Amended and Restated Guaranty Agreement dated as of July 31,
1995, executed by the Company in favor of Banque Paribas, as Agent -
incorporated by reference from Exhibit 10.24 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.25 Share Purchase Agreement dated July 20, 1995, by and among the
shareholders of Supremex, 3159051 Canada Inc. and Schroder Investment
Canada Limited and Schroder Venture Managers (North America) Inc. -
incorporated by reference from Exhibit 10.25 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.26 Indemnification Escrow Agent dated July 31, 1995, by and among 3159051
Canada Inc., Royal Trust Company of Canada and Schroder Investment
Canada Limited and Schroder Venture Mangers (North America) Inc. -
incorporated by reference from Exhibit 10.26 of the Company's'
Registration Statement on Form S-1 dated September 21, 1995.
10.27 Guaranty dated July 31, 1995, executed by M-W Corp. in favor of
Schroder Investment Canada Limited and Schroder Venture Mangers (North
America) Inc., as Agents - incorporated by reference from Exhibit
10.27 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.28 Securities Purchase Agreement dated as of August 2, 1995, as amended,
by and among GAC Acquisition Company, Inc., GAC and the
securityholders of GAC and McCown De Leeuw & Co., as Agents -
incorporated by reference from Exhibit 10.28 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.29 Escrow Agreement dated as of August 2, 1995, by and among GAC
Acquisition Company, Inc., GAC and securityholders of GAC and McCown
De Leeuw & Co., as Agents - incorporated by reference from Exhibit
10.29 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.30 Guaranty dated as of August 2, 1995, by M-W Corp. in favor of McCown
De Leeuw & Co., as Agents - incorporated by reference from Exhibit
10.30 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
19
<PAGE>
10.31 Asset Purchase Agreement dated as of March 31, 1996 by and between
Quality Park Products, Inc. and Mail-Well I Corporation - incorporated
by reference from Exhibit 1 of the Company's Current Report on Form 8-
K dated May 2, 1996.
10.31 Second Amendment to Second Amended and Restated Credit Agreement.
(B) REPORTS ON FORM 8-K
A report on Form 8-K was filed on July 1, 1996 to provide information
under Item 7 of Form 8-K regarding the acquisition by Mail-Well I
Corporation of Quality Park Products, Inc.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MAIL-WELL, INC.
(Registrant)
By /s/ PAUL V. REILLY
-------------------------
Paul V. Reilly
Vice President, Chief Financial Officer
August 9, 1996
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 92,151
<ALLOWANCES> 0
<INVENTORY> 73,116
<CURRENT-ASSETS> 176,251
<PP&E> 232,716
<DEPRECIATION> 20,946
<TOTAL-ASSETS> 510,707
<CURRENT-LIABILITIES> 91,096
<BONDS> 0
0
0
<COMMON> 130
<OTHER-SE> 109,528
<TOTAL-LIABILITY-AND-EQUITY> 510,707
<SALES> 378,835
<TOTAL-REVENUES> 378,835
<CGS> 301,759
<TOTAL-COSTS> 352,084
<OTHER-EXPENSES> 23
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,625
<INCOME-PRETAX> 11,149
<INCOME-TAX> 4,770
<INCOME-CONTINUING> 6,379
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,379
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54
</TABLE>
