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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 September 30, 1998
Commission file number 1-12551
MAIL-WELL, INC.
(Exact name of Registrant as specified in its charter.)
COLORADO 84-1250533
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
23 Inverness Way East, Englewood, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECKMARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
Yes /x/ No / /
As of November 13, 1998, the Registrant had 48,817,173 shares of Common
Stock, $0.01 par value, outstanding.
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1
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<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
- ---------------------------------------------------------------------
Page
----
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . 13
Item 3. Quantitative and Qualitative Disclosures
About Market Risk. . . . . . . . . . . . . . . . . . . 17
Part II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 17
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . 17
Item 3. Defaults upon Senior Securities. . . . . . . . . . . . 17
Item 4. Submission of Matters to a Vote of
Securities Holders . . . . . . . . . . . . . . . . . . 17
Item 5. Other Information. . . . . . . . . . . . . . . . . . . 17
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 18
Signature Page. . . . . . . . . . . . . . . . . . . . . . . . . . 21
2
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS) SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 3,027 $ 40,911
Receivables, net 146,674 64,958
Accounts receivable -- other 9,119 10,307
Securitized interest in accounts receivable 24,003 22,319
Inventories 119,300 86,268
Other current assets 23,310 10,135
---------- --------
Total current assets $ 325,433 $234,898
PROPERTY, PLANT AND EQUIPMENT -- NET 415,159 262,797
GOODWILL -- NET 305,305 153,927
OTHER ASSETS -- NET 25,339 19,789
---------- --------
TOTAL ASSETS $1,071,236 $671,411
========== ========
CURRENT LIABILITIES
Accounts payable $ 91,385 $ 53,641
Accrued compensation and vacation 48,489 37,139
Other current liabilities 45,591 28,143
Current portion of long-term debt and capital leases 8,207 10,533
---------- --------
Total current liabilities $ 193,672 $129,456
BANK BORROWINGS 279,298 90,179
SENIOR SUBORDINATED NOTES 85,000 85,000
CONVERTIBLE SUBORDINATED NOTES 152,050 152,050
OTHER LONG TERM LIABILITIES 57,224 39,406
---------- --------
Total liabilities $ 767,244 $496,091
---------- --------
MINORITY INTEREST $ 3,500 $ 3,500
========== ========
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 25,000 shares
authorized, none issued and outstanding $ - $ -
Common stock, $0.01 par value; 100,000,000 shares
authorized, 48,794,076 and 43,042,959 shares
issued and outstanding, respectively (including
3,896,544 shares held by ESOP) 488 430
Paid-in capital 207,649 102,475
Retained earnings 102,672 72,541
Other (10,317) (3,626)
---------- --------
Total stockholders' equity $ 300,492 $171,820
---------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,071,236 $671,411
========== ========
See notes to unaudited consolidated financial statements.
</TABLE>
3
<PAGE>
<PAGE>
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<CAPTION>
(THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $404,143 $278,794 $1,072,936 $782,708
COST OF SALES 318,521 218,017 847,840 609,347
-------- -------- ---------- --------
GROSS PROFIT $ 85,622 $ 60,777 $ 225,096 $173,361
OTHER OPERATING COSTS
Selling, administrative and other 53,175 37,500 141,234 111,566
Merger costs 284 - 3,286 -
-------- -------- ---------- --------
OPERATING INCOME $ 32,163 $ 23,277 $ 80,576 $ 61,795
OTHER (INCOME) EXPENSE
Interest expense 10,979 7,948 26,132 22,237
Other (49) 326 (1,134) (606)
-------- -------- ---------- --------
INCOME BEFORE INCOME TAXES $ 21,233 $ 15,003 $ 55,578 $ 40,164
PROVISION FOR INCOME TAXES 8,510 6,186 22,023 15,620
-------- -------- ---------- --------
NET INCOME $ 12,723 $ 8,817 $ 33,555 $ 24,544
======== ======== ========== ========
EARNINGS PER BASIC SHARE $ 0.27 $ 0.22 $ 0.73 $ 0.61
EARNINGS PER DILUTED SHARE $ 0.25 $ 0.21 $ 0.67 $ 0.59
WEIGHTED AVERAGE SHARES - BASIC 47,004 40,644 45,772 40,426
WEIGHTED AVERAGE SHARES - DILUTED 56,804 42,626 55,797 41,809
See notes to unaudited consolidated financial statements.
</TABLE>
4<PAGE>
<PAGE>
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<CAPTION>
(DOLLARS IN THOUSANDS) NINE MONTHS ENDED
-----------------
SEPTEMBER 30,
-------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 33,555 $ 24,544
Adjustments to reconcile net income to cash
provided by operations
Depreciation and amortization 29,279 21,149
Deferred income taxes 8,882 5,570
Decrease (increase) in receivables (19,595) (9,850)
Decrease (increase) in inventories 2,202 (3,009)
Increase (decrease) in accounts payable (6,610) (1,596)
All other operating activities (6,649) 8,507
--------- --------
Net cash provided by operating activities $ 41,064 $ 45,315
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs, net of cash acquired $(313,431) $(55,882)
Capital expenditures (49,421) (31,360)
Other investing activities 586 20,036
--------- --------
Net cash used in investing activities $(362,266) $(67,206)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from common stock issuance $ 92,476 $ 188
Cash overdrafts 10,445 (391)
Proceeds from long-term debt 372,770 81,023
Repayments of long-term debt and capital lease
obligations (187,015) (52,553)
Other financing activities (3,746) (2,615)
--------- --------
Net cash provided by financing activities $ 284,930 $ 25,652
--------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH $ (1,612) $ (355)
--------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS $ (37,884) $ 3,406
BALANCE AT BEGINNING OF PERIOD 40,911 12,297
--------- --------
BALANCE AT END OF PERIOD $ 3,027 $ 15,703
========= ========
See notes to unaudited consolidated financial statements.
</TABLE>
5<PAGE>
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
NATURE OF OPERATIONS -- Mail-Well, Inc. and subsidiaries (the
"Company") is a leading consolidator in the highly fragmented
printing industry, specializing in customized envelopes, high
impact printing, commercial printing, consumer product labels
and business communications documents.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The Company, headquartered in
Englewood, Colorado, is organized under Colorado law and its
common stock is traded on the New York Stock Exchange. These
financial statements include the accounts of the Company and
its majority owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
INTERIM FINANCIAL INFORMATION -- The interim financial
information contained herein is unaudited and includes all
normal and recurring adjustments which, in the opinion of
management, are necessary to present fairly the information set
forth. The consolidated financial statements should be read in
conjunction with the Notes to the Consolidated Financial
Statements which are included in the Company's Form 8-K dated
May 30, 1998 and its 1997 Form 10-K. The results for interim
periods are not necessarily indicative of results to be
expected for the Company's fiscal year ending December 31,
1998. The Company believes that the report filed on Form 10-Q
is representative of its financial position, its results of
operations and its cash flows for the three and nine months
ended September 30, 1998 and 1997.
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")-- Unearned ESOP
compensation balance is presented in the accompanying financial
statements as a reduction of equity. As the ESOP shares are
allocated to participants, the unearned ESOP compensation
balance will decrease and compensation expense will be
recorded.
RECLASSIFICATION -- Certain amounts in the 1997 financial
statements have been reclassified to conform to the 1998
presentation.
INVENTORIES -- Detail of inventories, in thousands
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ -----------------
<S> <C> <C>
Raw materials $ 46,298 $34,656
Work in process 24,778 12,428
Finished goods 52,172 42,132
Reserve for obsolescence and loss (3,948) (2,948)
-------- -------
$119,300 $86,268
======== =======
</TABLE>
6
<PAGE>
<PAGE>
OTHER COMPREHENSIVE INCOME -- Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income",
was adopted January 1, 1998. This statement requires reporting
of changes in stockholders' equity that do not result directly
from transactions with share owners. A summary of these
changes is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
(in thousands)
<S> <C> <C>
Net income $12,723 $8,817
Foreign currency translation adjustments, net (4,129) (55)
Unrealized loss on investment securities, net (723) (55)
------- ------
Total $ 7,871 $8,707
======= ======
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
<S> <C> <C>
Net income $33,555 $24,544
Foreign currency translation adjustments, net (5,871) (198)
Unrealized loss on investment securities, net (686) (55)
------- -------
Total $26,998 $24,291
======= =======
</TABLE>
EARNINGS PER SHARE -- In June 1997, the Company's common
stock split 3:2 and in June 1998 the Company's common stock
split 2:1; all share and per share information has been
retroactively restated to reflect these splits. The unallocated
shares issued under the Employee Stock Ownership Plan are
excluded from both the basic and diluted earnings per share
calculations.
<TABLE>
<CAPTION>
INCOME SHARES PER-SHARE
(in thousands, except per share amounts) (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998,
EARNINGS PER BASIC SHARE
Income available to common stockholders $12,723 47,004 $0.27
EARNINGS PER DILUTED SHARE
Stock options - 1,452
Convertible subordinated notes $ 1,313 8,003
Other - 345
Income available to common stockholders including
assumed conversions $14,036 56,804 $0.25
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997,
EARNINGS PER BASIC SHARE
Income available to common stockholders $ 8,817 40,644 $0.22
EARNINGS PER DILUTED SHARE
Stock options - 1,838
Other - 144
Income available to common stockholders including
assumed conversions $ 8,817 42,626 $0.21
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998,
EARNINGS PER BASIC SHARE
Income available to common stockholders $33,555 45,772 $0.73
EARNINGS PER DILUTED SHARE
Stock options - 1,702
Convertible subordinated notes $ 3,940 8,003
Other - 320
Income available to common stockholders including
assumed conversions $37,495 55,797 $0.67
7<PAGE>
<PAGE>
<CAPTION>
INCOME SHARES PER-SHARE
(in thousands, except per share amounts) (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997,
EARNINGS PER BASIC SHARE
Income available to common stockholders $24,544 40,426 $0.61
EARNINGS PER DILUTED SHARE
Stock options - 1,298
Other - 85
Income available to common stockholders including
assumed conversions $24,544 41,809 $0.59
</TABLE>
3. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
INTEREST RATE AT
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998 DECEMBER 31, 1997
------------------ ------------------ -----------------
<S> <C> <C> <C>
Bank borrowings:
Unsecured line of credit, due March 31, 2003 6.31% $247,295 $ -
Unsecured loan, due June 9, 2003 6.88% 27,067 -
Demand note - 55,393
Senior Subordinated Notes, due 2004 10.50% 85,000 85,000
Convertible Subordinated Notes, due 2002 5.00% 152,050 152,050
Other 11,188 44,709
-------- --------
$522,600 $337,152
Less current maturities (6,252) (9,923)
-------- --------
Long-term debt $516,348 $327,229
======== ========
</TABLE>
On March 18,1998, the Company closed a new bank facility
totaling $300 million with Bank of America, the lead agent for
its syndicate of banks. The new bank facility consists of a
five-year unsecured line of credit. Proceeds from the
unsecured line of credit were used to repay the Demand Note
outstanding at December 31, 1997.
On June 9, 1998, Supremex (the Company's Canadian subsidiary)
and the Company entered into a Canadian dollar denominated loan
agreement of C$ 43,044 maturing over five years.
4. COMMON STOCK ISSUANCE
On February 11, 1998, the Company completed the sale of
6,000,000 shares of its Common Stock at a price of $19.625 per
share through a group of underwriters led by Prudential
Securities Incorporated. Of these shares, 4,864,600 were sold
by the Company and 1,135,400 were sold by a group of
shareholders. Net proceeds from the sale of common stock by
the Company and from the exercise of stock options of $92.50
million were used for general corporate purposes.
5. STOCK OPTIONS
On February 4, 1998, the Company's Board of Directors adopted
a non-qualified stock option plan (the "1998 Plan") for key
employees and directors authorizing future grants of stock
options to purchase up to 1,000,000 shares of the Company's
common stock. The Compensation Committee of the Board has
approved stock option grants for 234,000 shares under this plan
during 1998. The exercise price of all options granted is at
least the fair market value of the Company's common stock on
the date of the grant.
8
<PAGE>
<PAGE>
6. ACQUISITIONS
The presentation below summarizes the Company's acquisitions,
<TABLE>
<CAPTION>
ESTIMATED
MONTH OPERATING ANNUAL
LOCATION ACQUIRED SEGMENT SALES
----------------------------------------------------------------------------
(MILLIONS)
<S> <C> <C> <C> <C>
1997 ACQUISITIONS
Griffin Envelope, Inc. ("Griffin") Seattle, Washington June Envelope $ 12
The Allied Printers ("Allied") Seattle, Washington July High Impact 17
Murray Envelope Corporation ("Murray") Hattiesburg, Mississippi July Envelope 48
National Color Graphics, Inc. ("NCG") Atlanta, Georgia September High Impact 23
Intertec Mailing Services ("MW Services") Nashville, Tennessee October Envelope 7
Cambridge, Maryland plant of Western
Graphics Communications ("MW Graphics") Cambridge, Maryland December Envelope 33
----
Aggregate purchase price was $87.0
million, with $32.7 million goodwill
recorded $140
1998 ACQUISITIONS THROUGH SEPTEMBER 1998
Poser Business Forms, Inc. ("Poser") Fairhope, Alabama January Documents $ 90
Rono Graphic Communications Co. ("Rono") Portland, Oregon March High Impact 12
Lawson Mardon Label Division ("MW Label") Toronto, Ontario March Labels 81
Denver Forms Company ("Denver Forms") Denver, Colorado March Documents 12
National Graphics Company ("Natl Graphics") Denver, Colorado March Envelope 8
EPX Denver ("EPX") Denver, Colorado March Documents 4
Blue Line Envelope ("Blue Line") Montreal, Quebec April Envelope 6
South Press, Inc. ("South Press") Dallas, Texas April High Impact 12
Century Index Corporation ("Century") Anaheim, California May Envelope 8
Label Division, IP Paper ("IP Label") Bowling Green, Kentucky May Labels 30
Anderson Lithograph ("Anderson") Los Angeles, California May High Impact 135
Illinois Envelope, Inc ("Illinois") Kalamazoo, Michigan June Envelope 7
Gould Packaging, Inc ("Gould") Vancouver, Washington June Envelope 14
Graphics Illustrated, Inc. ("Graphics") West Palm Beach, Florida August Commercial 11
McLaren, Morris and Todd Ltd. ("MM&T") Mississauga, Ontario August Commercial 34
John D. Lucas Printing Co. ("Lucas") Baltimore, Maryland August Commercial 27
Armstrong-White, Inc. ("Armstrong") Bloomfield Hills, Michigan August High Impact 2
Richtman Printing ("Richtman") Englewood, Colorado September Commercial 6
Production Press, Inc. ("PPI") Jacksonville, Illinois September Commercial 9
----
Aggregate purchase price was $313.4
million, with $156.1 million goodwill
recorded $508
1998 MERGERS, COMMERCIAL PRINTING GROUP
Color Art, Inc. ("Color Art") St. Louis, Missouri May Commercial $ 76
Accu-Color, Inc. ("Accu-Color") St. Louis, Missouri May Commercial 14
Industrial Printing Company ("IPC") Toledo, Ohio May Commercial 20
IPC Graphics ("IPC Graphics") Toledo, Ohio May Commercial 11
United Lithograph, Inc.("United Litho") Somerville, Mass. May Commercial 21
French Bray, Inc. ("French Bray") Glen Burnie, Maryland May Commercial 23
Clarke Printing Co. ("Clarke") San Antonio, Texas May Commercial 11
----
$176
</TABLE>
All of the acquisitions have been accounted for under the purchase
method of accounting. Accordingly the historical results of operations
of the Company include results of operations of each of the acquisitions
from their date of purchase. The mergers, as more fully described in
Note 7 to the financial statements included elsewhere herein, were
accounted for as poolings of interests and, accordingly, the Company's
consolidated financial statements since inception have been restated to
include the operations of the Commercial Printing Group, adjusted to
conform with the Company's accounting policies and presentation.
The table below presents the historical sales and cost of sales of the
Company, restated for the mergers, adjusted to show the effects of the
acquisitions as if the acquisitions had occurred on January 1 of the
year prior to their actual purchase date.
9
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales as reported $404,143 $278,794 $1,072,936 $ 782,708
1997 acquisitions in the aggregate - 13,421 - 82,717
1998 acquisitions in the aggregate 13,860 132,226 175,499 384,134
-------- -------- ---------- ----------
Net sales, pro forma $418,003 $424,441 $1,248,435 $1,249,559
-------- -------- ---------- ----------
Cost of sales, as reported $318,521 $218,017 $ 847,840 609,347
1997 acquisitions in the aggregate - 11,447 - 67,866
1998 acquisitions in the aggregate 10,695 107,287 138,633 314,339
-------- -------- ---------- ----------
Cost of sales, pro forma $329,216 $336,751 $ 986,473 $ 991,552
-------- -------- ---------- ----------
Gross profit, as reported $ 85,622 $ 60,777 $ 225,096 $ 173,361
======== ======== ========== ==========
21.2% 21.8% 21.0% 22.1%
Gross profit, pro forma $ 88,787 $ 87,690 $ 261,962 $ 258,007
======== ======== ========== ==========
21.2% $ 20.7% 21.0% 20.6%
</TABLE>
7. MERGERS WITH COMMERCIAL PRINTING COMPANIES
Effective May 30, 1998, the Company completed its mergers with
seven commercial printing companies through the exchange of common
stock, which had a market value of $21.965 per share, as shown in the
table below:
<TABLE>
<CAPTION>
SHARES OF MAIL-WELL
OPERATING COMPANY NAME COMMON STOCK EXCHANGED
<S> <C>
Color Art, Inc. ("Color Art") 2,351,951 shares
Accu-Color, Inc. ("Accu-Color") 622,391
Industrial Printing Company ("Industrial Printing") 570,161
IPC Graphics, Inc. ("IPC Graphics") 325,973
United Lithograph, Inc. ("United Lithograph") 519,568
French Bray, Inc. ("French Bray") 538,040
Clarke Printing, Co. ("Clarke Printing") 437,984
</TABLE>
The Company's consolidated financial statements give retroactive
effect to the mergers, which have been accounted for using the pooling of
interests method and, as a result, the financial position, results of
operations and cash flows are presented as if the combining companies had
been consolidated for all periods presented.
Color Art is a commercial printer with offices located in St. Louis
and Osage Beach, Missouri, and also the operator of a short-run printing
and graphics company through its subsidiary Graphic Links, LLC. Accu-
Color, located in St. Louis, Missouri, is primarily a supplier of color
separation and other graphic arts services to the printing and
advertising industries.
Industrial Printing is located in Toledo, Ohio and is engaged in the
printing and selling of advertising pieces, labels and general commercial
printing. IPC Graphics prints and sells advertising pieces, mailers and
business forms from its facilities in Toledo, Ohio.
10
<PAGE>
<PAGE>
United Lithograph provides commercial printing services to
individuals and businesses located in the New England region from its
offices in Somerville, Massachusetts. French Bray, located in Glen
Burnie, Maryland, provides commercial, high quality, multi-color printing
in the Mid-Atlantic region. Clarke Printing designs, manufactures and
sells printed materials throughout Texas and Mexico.
The companies listed above are hereafter collectively referred to as
the Commercial Printing Group.
Each of the mergers was negotiated and consummated as separate
transactions and the separate mergers were not contingent upon each
other. Except for French Bray and Clarke Printing, all of the above
entities had elected Subchapter S corporation treatment for U.S. federal
income tax purposes and, accordingly, did not pay U.S. federal income
taxes. Subsequent to May 30, 1998, these companies will be included in
Mail-Well's consolidated U.S. federal income tax return. In connection
with the mergers, the Company also issued common stock to acquire the net
assets (including the assumption of the debt associated with such assets)
of certain related real estate ventures owned by shareholders of the
commercial printing companies. The shares of the Company's common stock
exchanged for real estate assets are included with the shares exchanged
for the respective operating company in the table above. The results of
operations and financial condition of the real estate assets are
reflected in the consolidated financial statements with significant
intercompany transactions and balances eliminated.
Each of the above transactions has been accounted for individually
as a pooling of interests and, accordingly, the consolidated financial
statements for the periods subsequent to February 24, 1994 (inception)
have been restated to include the accounts of the Commercial Printing
Group. Prior to the mergers, Industrial Printing's and IPC Graphics'
fiscal year ended on September 30, United Lithograph's fiscal year ended
on June 30 and French Bray's fiscal year ended on July 31. Accordingly,
the accompanying financial statements include those financial statements
of entities with different fiscal years restated on a calendar year
basis. Additionally, the consolidated financial statements reflect
certain minor adjustments to conform the accounting policies of the
Commercial Printing Group with the Company's.
In connection with the mergers, transaction costs incurred by the
Commercial Printing Group of approximately $3.3 million were expensed in
1998. These costs consist primarily of investment banking, legal and
accounting fees.
8. SEGMENT INFORMATION
The Company's operating segments prepare separate financial
information that is evaluated regularly by senior management in assessing
performance and deciding how to allocate resources. The Company does not
allocate corporate overhead, merger expense, interest (income) expense,
amortization expense or income taxes by segment in assessing performance.
Operating segments of the Company are defined primarily by product line,
and segment information for the three and nine months ended September 30
is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales
U.S. envelope $169,133 $150,207 $ 503,404 $429,584
Canadian envelope 26,175 26,901 82,848 85,983
High impact color printing 105,997 56,388 225,654 137,443
Commercial printing 51,127 42,804 130,830 122,098
Business communication printing<Fa> 28,728 2,494 81,887 7,600
Label printing 22,983 0 48,313 0
-------- -------- ---------- --------
Total net sales $404,143 $278,794 $1,072,936 $782,708
-------- -------- ---------- --------
11
<PAGE>
<PAGE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating income
U.S. envelope $15,555 $15,868 $ 47,918 $ 45,126
Canadian envelope 4,997 4,396 14,147 12,938
High impact color printing 8,302 3,848 13,351 7,462
Commercial printing 5,241 2,602 10,119 7,365
Business communication printing<Fa> 2,098 102 6,307 416
Label printing 1,686 0 3,610 0
Corporate (5,716) (3,539) (14,876) (11,512)
-------- -------- -------- --------
Total operating income $32,163 $23,277 $ 80,576 $ 61,795
-------- -------- -------- --------
Depreciation
U.S. envelope $3,292 $2,686 $9,638 $7,513
Canadian envelope 561 581 1,698 1,723
High impact color printing 3,015 1,709 7,193 4,747
Commercial printing 974 1,710 4,274 5,054
Business communication printing<Fa> 426 88 1,277 231
Label printing 1,004 0 2,137 0
Corporate (1,212) (1,300) (3,643) (3,629)
-------- -------- -------- --------
Total depreciation $8,060 $5,474 $ 22,574 $ 15,639
-------- -------- -------- --------
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
------------- ------------
1998 1997
---- ----
<S> <C> <C>
Identifiable Assets
U.S. envelope $ 401,193 $374,715
Canadian envelope 97,366 93,997
High impact color printing 320,840 161,070
Commercial printing 139,785 79,460
Business communication printing<Fa> 84,188 5,750
Label printing 94,084 0
Corporate <Fb> (66,220) (43,581)
---------- --------
Total assets $1,071,236 $671,411
---------- --------
<FN>
<Fa> 1997 information for the business communication printing segment
represents IPC Graphics, which was part of the merger completed on May
30, 1998 and accounted for under the pooling of interests method.
<Fb> Corporate identifiable assets include adjustments for the accounts
receivable securitization sales and certain significant operating
leases. This is done to reflect the return on assets employed within
each segment on a consistent basis
</TABLE>
12
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the consolidated
historical financial statements and related notes of Mail-Well, Inc. and
its subsidiaries (the "Company") included elsewhere in this report. In
addition to the historical information contained herein, this report
contains forward-looking statements. The reader of this information
should understand that all such forward-looking statements are subject
to various uncertainties and risks that could affect their outcome. The
Company's actual results could differ materially from those suggested by
such forward-looking statements. Factors which could cause or
contribute to such differences include, but are not limited to, product
demand and sales, growth rate, ability to obtain assumed productivity
savings, quality controls, availability of acquisition opportunities and
their related costs, cost savings due to integration and synergies
associated with acquisitions, ability to obtain additional financings
and bank debt restructuring, interest rates, foreign currency exchange
rates, paper and raw material costs, waste paper prices, ability to pass
through paper costs to customers, postage rates, changes in the direct
mail industry, competition, ability to develop new products, labor
costs, labor relations and advertising costs. This entire report should
be read to put such forward-looking statements in context and to gain a
more complete understanding of the uncertainties and risks involved in
the Company's business.
<TABLE>
<CAPTION>
OVERVIEW THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales
U.S. envelope $169,133 $150,207 $ 503,404 $429,584
Canadian envelope 26,175 26,901 82,848 85,983
High impact color printing 105,997 56,388 225,654 137,443
Commercial printing 51,127 42,804 130,830 122,098
Business communication printing 28,728 2,494 81,887 7,600
Label printing 22,983 0 48,313 0
-------- -------- ---------- --------
Total net sales $404,143 $278,794 $1,072,936 $782,708
-------- -------- ---------- --------
Operating income
U.S. envelope $ 15,555 $ 15,868 $ 47,918 $ 45,126
Canadian envelope 4,997 4,396 14,147 12,938
High impact color printing 8,302 3,848 13,351 7,462
Commercial printing 5,241 2,602 10,119 7,365
Business communication printing 2,098 102 6,307 416
Label printing 1,686 0 3,610 0
Corporate (5,716) (3,539) (14,876) (11,512)
-------- -------- ---------- --------
Total operating income $ 32,163 $ 23,277 $ 80,576 $ 61,795
Interest expense 10,979 7,948 26,132 22,237
Other (income) expense (49) 326 (1,134) (606)
Income tax expense 8,510 6,186 22,023 15,620
-------- -------- ---------- --------
Net income $ 12,723 $ 8,817 $ 33,555 $ 24,544
======== ======== ========== ========
</TABLE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED
TO THE SAME PERIOD IN 1997
Mail-Well's net income for the third quarter of 1998 was $12.7
million, an increase of 44.3% over the same period in 1997. Earnings
per diluted share increased 19.0% to $0.25, up from last year's $0.21 as
restated for the 1998 merger transactions. Revenues, including
acquisitions from date of purchase, increased to a record $404.1
million, 45.0% higher than last year as restated.
13
<PAGE>
<PAGE>
Revenue growth is primarily attributable to acquisitions since the
third quarter of 1997. The average Canadian exchange rate was 8.6% lower
in the third quarter of 1998 compared to the third quarter of 1997
resulting in a 0.8% decline in total revenue between the periods.
Excluding acquisitions, volume improvement in the third quarter of 1998,
over the same period in 1997, of 0.7% is offset by price declines
attributable primarily to material cost reductions between the periods.
Because of the historical ability to pass through material cost
fluctuations to customers the Company uses material margin (that is, net
sales less net cost of materials) as revenue trend indicators. Material
margin dollars for the third quarter 1998 increased 45.3% compared to the same
period in 1997, primarily due to acquisitions. Excluding acquisitions
material margin dollars, adjusted for the Canadian dollar fluctuation, for
the third quarter of 1998 increased 4.4% over the same period in 1997.
Gross profit of $85.6 million for the third quarter of 1998 increased
40.9% over the same period in 1997. Expressed as a percent of sales gross
profit declined 0.6% to 21.2% in the third quarter of 1998 compared to the
year ago period. This decline is partially attributable to acquisitions, which
generally have lower gross profit to sales percent than the existing business.
It is also due to increased labor and distribution costs in the existing
business, particularly in the U.S. Envelope segment.
Expressed as a percent of sales, selling and administrative expense
decreased 0.3% in the third quarter of 1998 compared to the year ago
period. Interest expense increased $3.0 million to $11.0 million in the
third quarter of 1998 compared to the prior year period primarily due to
the increase in acquisitions.
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO
THE SAME PERIOD IN 1997
Mail-Well's net income for the first nine months of 1998 was $33.6
million, an increase of 36.7% over the same period in 1997. Earnings
per diluted share increased 13.6% to $0.67, up from last year's $0.59 as
restated for the 1998 merger transaction. Revenues, including
acquisitions from date of purchase, rose to a record $1.1 billion, 37.1%
higher than last year as restated.
Revenue growth for the first nine months of 1998 is primarily
attributable to acquisitions in 1997 and 1998. The average Canadian
exchange rate was 5.5% lower in the first nine months of 1998 compared
to the same period in 1997, resulting in a 0.6% decline in total revenue
between the periods. Excluding acquisitions, volume for the first nine
months of 1998 increased 2.2% compared to the same period in 1997,
but is offset by price declines in the same period. Because of the
historical ability to pass through material cost fluctuations to
customers the Company uses material margin (that is, net sales less net
cost of materials) as revenue trend indicators. Material margin dollars for
the first nine months of 1998 increased 35.3% compared to the same period in
1997, primarily due to acquisitions. Excluding acquisitions material
margin dollars, adjusted for the Canadian dollar fluctuation, for the first
nine months of 1998 increased 0.1% compared to the same period in 1997.
Gross profit of $225 million for the first nine months of 1998 increased
29.8% over the same period in 1997. Expressed as a percent of sales gross
profit declined 1.1% to 21.0% for the first nine months of 1998 compared to
the same period of 1997. This decline is partially due to acquisitions, which
generally have a lower gross profit to sales percent than existing business.
It is also due to the effects of the merger on restated operating results
since, under pooling of interests accounting operations of the commercial
printing companies are included as of the beginning of 1998 even though the
merger was completed on May 30, 1998. As a result commercial printing
operations include results from periods when they were privately owned
companies and not experiencing the cost benefits of Mail-Well ownership.
Expressed as a percent of sales, selling and administrative expense
decreased 0.9% in the first nine months of 1998 compared to the year ago
period, due to consolidation of certain administrative functions in the
envelope segments. Merger expenses of $3.3 million are legal and consulting
fees relating to the May 30, 1998, commercial printing companies mergers,
which are required to be expensed under the pooling of interest
accounting method. Interest expense increased $3.9 million to $26.1
million in the first nine months of 1998 compared to the prior year
period primarily due to the increase in acquisitions.
14
<PAGE>
<PAGE>
YEAR 2000
The Company completed an assessment of its existing computer systems
in 1997 and expects to spend and capitalize approximately $9 to $11
million in 1998 and 1999 to purchase and install new systems. The new
systems are capable of distinguishing between the year 1900 and the year
2000 ("Year 2000 compliant"). The Company is also conducting an
evaluation of actions required to ensure its remaining business critical
computer systems will not be disrupted with respect to dating in the
Year 2000. The Company has completed or is engaged in the process of
updating, replacing and testing certain of its computer systems so as to
operate without disruption due to Year 2000 issues. These actions are
scheduled to be completed through the third quarter of 1999 and, based
on current information available, the Company does not anticipate the
costs of remedial actions, which are being expensed as incurred, will be
material. Since there can be no assurance that remedial actions can be
completed on a timely basis contingency plans are also being developed
to address business critical systems which may not be Year 2000
compliant.
All business critical vendors and customers have been identified
and contacted for information on their actions to mitigate Year 2000
disruptions. The Company is in the process of evaluating information
supplied to date and contacting those who have not responded to our
inquiries. If Year 2000 issues of our business critical vendors and
customers are not addressed satisfactorily they could conceivably cause
widespread problems, disrupting our business causing a decline in
earnings. These theoretical consequences are of a kind and magnitude not
unique to the Company, but are generally shared with other manufacturing
companies. Although there is inherent uncertainty with respect to these
Year 2000 issues, particularly with respect to the Year 2000 readiness
of our vendors and customers, at this time management does not believe
that the Company's business will be materially affected by Year 2000
issues.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ( the "Statement"). The
Statement, which will be effective for the year 2000, requires
derivative instruments to be recorded in the balance sheet at their fair
value with changes in fair value being recognized in earnings unless
specific hedging accounting criteria are met. Given the current level of
its derivative and hedging activities, the Company believes the impact
will not be material.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL REQUIREMENTS -- Net cash provided by operating activities
was $41.1 million for the first nine months of 1998 as compared to
$45.3 million for the same period for 1997. The decrease is mainly
due to increased sales in the third quarter for the high impact segment
causing a corresponding increase in receivables of $20 million. Capital
expenditures for the first nine months of 1998 were $49.4 million compared
to $31.4 million for the same period in 1997 due primarily to replacement of
obsolete equipment with new more efficient equipment. At September 30,
1998, the Company had approximately $53 million of available credit
under the $300 million facility with the Bank of America. In addition
receivable sales continue to be a significant source of funding for the
Company. At September 30, 1998, the Company had sold $76 million of
receivables under a $100 million securitization facility. The Company
believes that cash from operations, its cash position and cash available
under credit facilities will be sufficient to meet its capital
expenditure, debt maturity and other funding requirements through
December 31, 1998.
COMMON STOCK ISSUANCE -- In February 1998 the Company sold
4,864,600 shares of its Common Stock at a price of $19.625 per share,
adjusted for the 2:1 split, through a group of underwriters led by
Prudential Securities Incorporated. Proceeds from the sale of stock of
$91.2 million were used for general corporate purposes. Additional
proceeds have resulted from the exercise of options.
15
<PAGE>
<PAGE>
RECENT DEVELOPMENTS
ACQUISITIONS -- Acquisitions pending or closed subsequent to
September 30, 1998, are as follows:
On October 26, 1998, the Company acquired Perfection Forms and
Apico Corporation. Both companies are business communication document
printers located in Girard, Kansas, with combined annual sales of $20
million.
On October 30, 1998, the Company acquired Trafton Printing, Inc.
("Trafton") of Amarillo, Texas. Trafton is a high-end sheetfed printer
with annual sales of $9 million.
On November 2, 1998, the Company acquired Imperial Litho and
Dryography, Inc. ("Imperial") of Phoenix, Arizona. Imperial is a full-
service web and sheetfed printer with annual sales of $26 million.
16
<PAGE>
<PAGE>
ITEM 3.--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK -- N/A
PART II -- OTHER INFORMATION
ITEM 1.--LEGAL PROCEEDINGS -- None
ITEM 2.--CHANGES IN SECURITIES -- None
ITEM 3.--DEFAULTS UPON SENIOR SECURITIES -- None
ITEM 4.--SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS -- None
ITEM 5.--OTHER INFORMATION -- NONE
17
<PAGE>
ITEM 6.--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<C> <S>
3(i) Articles of Incorporation of the Company - incorporated by reference from Exhibit 3(i)
of the Company's Form 10-Q for the quarter ended June 30, 1997.
3(i)(a) Amendment to Articles of Incorporation of the Company.
3(ii) Bylaws of the Company - incorporated by reference from Exhibit 3.4 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.1 Form of Certificate representing the Common Stock, par value $0.01 per share, of
the Company - incorporated by reference from Exhibit 4.1 of the Company's Amendment
No. 1 to Form S-3 dated October 29, 1997 (Reg. No. 333-35561).
4.2 Indenture dated as of February 24, 1994 by and between M-W Corp. and Shawmut
Bank, National Association, as Trustee, with respect to the 10-1/2% Original Senior
Subordinated Notes and the 10-1/2% Exchange Senior Subordinated Notes due 2004,
including the form of Note and the guarantees of the Company, Wisco and Pavey -
incorporated by reference from Exhibit 4.3 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
4.2.1 Supplemental Indenture dated July 31, 1995 to the Indenture identified in Exhibit
4.2 - incorporated by reference from Exhibit 4.4.1 of the Company's Registration
Statement on Form S-1 dated September 21, 1995.
4.2.2 Form of Second Supplemental Indenture to the Indenture identified in Exhibit 4.2
- incorporated by reference from Exhibit 4.4.2 of the Company's Registration
Statement on Form S-1 dated September 21, 1995.
4.3 Form of Indenture between the Company and The Bank of New York, as Trustee, dated
November 1997, relating to the Company's $152,050,000 aggregate principal amount of
5% Convertible Subordinated Notes due 2002 - incorporated by reference from Exhibit
4.2 to the Company's Amendment No. 2 to Form S-3 dated November 10, 1997 (Reg. No.
333-36337).
4.4 Form of Supplemental Indenture between the Company and The Bank of New York, as
Trustee, dated November 1997, relating to the Company's $152,050,000 aggregate
principal amount of 5% Convertible Subordinated Notes due 2002 and Form of
Convertible Note - incorporated by reference from Exhibit 4.5 to the Company's
Amendment No. 2 to Form S-3 dated November 10, 1997 (Reg. No. 333-36337).
10.1 Asset Purchase Agreement dated December 7, 1993 by and among GP Envelope, G-P,
M-W Corp. and the Company, as amended - incorporated by reference from Exhibit 10.1
of the Company's Registration Statement on Form S-1 dated March 25, 1994.
10.2 General Indemnity Agreement between M-W Corp. and Amwest Surety Insurance Company
together with form of Letter of Credit - incorporated by reference from Exhibit
10.16 of the Company's Registration Statement on Form S-1 dated March 25, 1994.
10.3 Form of Indemnity Agreement between the Company and each of its officers and
directors - incorporated by reference from Exhibit 10.17 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.4 Form of Indemnity Agreement between Mail-Well I Corporation and each of its
officers and directors - incorporated by reference from Exhibit 10.18 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.5 Form of M-W Corp. Employee Stock Ownership Plan effective as of February 23, 1994
and related Employee Stock Ownership Plan Trust Agreement - incorporated by
reference from Exhibit 10.19 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
10.6 Form of M-W Corp. 401(k) Savings Retirement Plan - incorporated by reference from
Exhibit 10.20 of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.7 Company 1994 Stock Option Plan, as amended on May 7, 1997 - incorporated by
reference from Exhibit 10.56 of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997.
18<PAGE>
<PAGE>
10.8 Form of the Company Incentive Stock Option Agreement - incorporated by reference
from Exhibit 10.22 of the Company's Registration Statement on Form S-1 dated March
25, 1994.
10.9 Form of the Company Nonqualified Stock Option Agreement - incorporated by from
Exhibit 10.23 of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.10 Asset Purchase Agreement dated April 26, 1996 by and between Quality Park
Products, Inc. and Mail-Well I Corporation - incorporated by reference from Exhibit
1 of the Company's Form 8-K dated May 2, 1996.
10.11 Acquisition Agreement and Plan of Share Exchange by and among Graphic Arts
Center, Inc. and Shepard Poorman Communications Corporation dated November 6, 1996 -
incorporated by reference from Exhibit 10.33 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
10.12 Amendment No. 1 to Acquisition Agreement and Plan of Share Exchange by and among
Graphic Arts Center, Inc. and Shepard Poorman Communications Corporation dated
November 6, 1996 - incorporated by reference from Exhibit 10.34 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
10.13 Asset Purchase Agreement dated as of October 15, 1996 by and between Supremex,
Inc. and PNG Products, Inc. Pac National Group and PNG Envelope Internationale,
Inc. - incorporated by reference from Exhibit 10.35 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1996
10.14 Master Lease Agreement dated as of August 1, 1996 between General Electric
Capital Corporation and Mail-Well, Inc., Mail-Well I Corporation, Graphic Arts
Center, Inc., Mail-Well West, Pavey Envelope and Tag Corp., Wisco II, L.L.C and
Wisco Envelope Corp - incorporated by reference from Exhibit 10.36 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
10.15 Purchase and Contribution Agreement dated as of November 15, 1996 between Mail-
Well I Corporation, Wisco Envelope Corp., Pavey Envelope and Tag Corp., Mail-Well
West, Inc., Graphic Arts Center, Inc., Wisco III, L.L.C., Supremex, Inc., Innova
Envelope, Inc., as Sellers, and Mail-Well Trade Receivables Corp., as Purchaser -
incorporated by reference from Exhibit 10.39 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
10.16 Mail-Well Receivables Master Trust Pooling and Servicing Agreement dated as of
November 15, 199 by and between Mail-Well Trade Receivables Corporation, Seller,
Mail-Well I Corporation, Servicer, and Norwest Bank Colorado, National Association,
Trustee - incorporated by reference from Exhibit 10.40 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
10.17 Series 1996-1 Supplement dated as of November 15, 1996 to Pooling and Servicing
Agreement, dated as of November 15, 1996, by and between Mail-Well Trade
Receivables Corporation, Seller, Mail-Well I Corporation, Servicer, and Norwest
Bank Colorado, National Association, as Trustee on behalf of the Series 1996-1
Certificateholders - incorporated by reference from Exhibit 10.41 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
10.18 Series 1996-1 Certificate Purchase Agreement dated as of November 15, 1996 among
Mail-Well Trade Receivables Corporation, as Seller, Corporate Receivables
Corporation, as Purchaser, Norwest Bank Colorado, National Association, as Trustee,
and Mail-Well I Corporation, as Servicer - incorporated by reference from Exhibit
10.42 of the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
10.19 Intercreditor Agreement dated as of November 15, 1996 by and among Citicorp North
America, Inc., as Securitization Company Agent, Banque Paribas, New York Branch, as
Liquidity Agent, Banque Paribas, as Credit Lenders' Agent, Norwest Bank Colorado,
National Association, as Trustee, Mail-Well Trade Receivables Corporation, as
Servicer, originator and Mail-Well Credit Borrower, Supremex, Inc., as the Supremex
Credit Borrower and the other parties hereto - incorporated by reference from Exhibit
10.43 of the Company's Annual Report on Form 10-K for the year ended December 31,
1996.
19<PAGE>
<PAGE>
10.20 Series 1996-1 Asset Purchase Agreement among Corporate Receivables Corporation, the
Liquidity Providers Parties hereto, Citicorp North America, Inc., as Securitization
Company Agent, Banque Paribas, New York Branch, as Liquidity Agent, and Norwest Bank
Colorado, National Association, as trustee, dated as of November 15, 1996 - incorporated
by reference from Exhibit 10.44 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
10.21 1997 Non-Qualified Stock Option Plan - incorporated by reference from exhibit 10.54
of the Company's Form 10-Q for the quarter ended March 31, 1997
10.22 Company's 1998 Incentive Stock Option Plan - incorporated by reference from the
Company's definitive proxy statement for the regular annual meeting of stockholders
held April 29, 1998
10.23 Credit Agreement dated as of March 16, 1998 among Mail-Well I Corporation,
certain Guarantors, Bank of America National Trust and Savings Association, as
Agent and other financial institutions party thereto - incorporated by reference from
the Company's 10-Q for the quarter ended March 31, 1998.
10.24 Credit Agreement dated as of March 16, 1998 among Supremex Inc., certain
Guarantors, Bank of America National Trust and Savings Association, as Agent and
other financial institutions party thereto - incorporated by reference from the
Company's 10-Q for the quarter ended March 31, 1998.
10.25 Participation Agreement dated as of December 15, 1997 among Mail-Well I
Corporation, Keybank National Association, as Trustee and other financial
institutions party thereto - incorporated by reference from the Company's 10-Q for
the quarter ended March 31, 1998.
10.26 Equipment Lease dated as of December 15, 1997 among Mail-Well I Corporation,
Keybank National Association, as Trustee and other financial institutions party
thereto - incorporated by reference from the Company's 10-Q for the quarter ended
March 31, 1998.
10.27 Guaranty Agreement dated as of December 15, 1997 among Mail-Well, Inc., Graphic
Arts Center, Inc., Griffin Envelope Inc., Murray Envelope Corporation, Shepard
Poorman Communications Corporation, Wisco Envelope Corp., Wisco II, LLC, Wisco III,
LLC, Mail-Well I Corporation, Keybank National Association, as Trustee and other
financial institutions party thereto - incorporated by reference from the Company's
10-Q for the quarter ended March 31, 1998.
10.28 Stock Purchase Agreement dated as of December 15, 1997 among Mail-Well I
Corporation and Poser Business Forms, Inc. and other Selling Shareholders party
thereto, incorporated by reference from the Company's report on Form 8-K dated
January 6, 1998.
10.29 Asset Purchase Agreement dated as of January 31, 1998 among Lawson Mardon
Packaging USA, Inc (USA), incorporated by reference from the Company's report on
Form 8-K dated March 10, 1998.
10.30 Asset Purchase Agreement dated as of January 31, 1998 among 3014597 Nova Scotia
Company and Lawson Mardon Packaging Inc. (Canada), incorporated by reference from
the Company's report on Form 8-K dated March 10, 1998.
10.31 Agreement and Plan of Merger among Mail-Well I Corporation, Mail-Well, Inc. and
Anderson Lithograph Holding Corp. dated April 23, 1998, incorporated by reference
from the Company's report on Form 8-K dated May 28, 1998.
10.32 Acquisition Agreement and Plan of Merger among Mail-Well, Inc., Mail-Well I
Corporation, Color Art, Inc. and certain controlling shareholders thereof, dated
May 15, 1998, incorporated by reference from the Company's report on Form 8-K dated
May 30, 1998.
27.1<F*> Financial Data Schedule - as of and for the three months ended September 30, 1998.
<FN>
_____________
<F*> Filed herewith.
</TABLE>
(b) Reports on Form 8-K
None
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/ Michael A. Zawalski
-----------------------
Michael A. Zawalski
Senior Vice President,
Chief Financial Officer
Date: November 13, 1998
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 3,027
<SECURITIES> 24,003
<RECEIVABLES> 155,793
<ALLOWANCES> 0
<INVENTORY> 119,300
<CURRENT-ASSETS> 325,433
<PP&E> 524,480
<DEPRECIATION> (109,321)
<TOTAL-ASSETS> 1,071,236
<CURRENT-LIABILITIES> 193,672
<BONDS> 0
<COMMON> 488
0
0
<OTHER-SE> 300,004
<TOTAL-LIABILITY-AND-EQUITY> 1,071,236
<SALES> 1,072,936
<TOTAL-REVENUES> 1,072,936
<CGS> 847,840
<TOTAL-COSTS> 992,360
<OTHER-EXPENSES> (1,134)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,132
<INCOME-PRETAX> 55,578
<INCOME-TAX> 22,023
<INCOME-CONTINUING> 33,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,555
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.67
</TABLE>
