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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 March 31, 1999
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, Suite 160, 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 April 30, 1999, the Registrant had 48,938,291 shares of Common
Stock, $0.01 par value, outstanding.
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<PAGE>
<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 18
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 19
Signature Page 22
2
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,301 $ 1,375
Receivables, net 149,046 130,523
Investment in accounts receivable securitization 14,848 47,069
Accounts receivable -- other 8,935 12,686
Income tax receivable 2,118 10,715
Inventories, net 116,530 114,131
Other current assets 16,813 19,351
---------- ----------
Total current assets 310,591 335,850
PROPERTY, PLANT AND EQUIPMENT, NET 462,525 437,732
EQUITY INVESTMENT 22,725 -
GOODWILL, NET 350,872 322,149
OTHER ASSETS, NET 28,903 32,225
---------- ----------
TOTAL $1,175,616 $1,127,956
========== ==========
CURRENT LIABILITIES
Accounts payable $ 97,338 $ 87,023
Accrued compensation and vacation 45,970 41,401
Other current liabilities 53,894 47,192
Current portion of long-term debt and capital leases 9,865 8,036
---------- ----------
Total current liabilities 207,067 183,652
LONG-TERM DEBT AND CAPITAL LEASES 582,268 583,427
DEFERRED INCOME TAXES 50,809 47,534
OTHER LONG-TERM LIABILITIES 14,139 10,468
---------- ----------
Total liabilities 854,283 825,081
---------- ----------
MINORITY INTEREST IN NON VOTING STOCK OF SUBSIDIARY 3,500 3,500
---------- ----------
SHAREHOLDERS' 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,
48,885,298 and 48,846,904 shares issued and outstanding,
respectively (including 3,896,544 shares held by ESOP) 489 488
Paid-in capital 217,342 217,218
Retained earnings 105,512 90,740
Accumulated other comprehensive income (loss) (5,510) (9,071)
---------- ----------
Total shareholders' equity 317,833 299,375
---------- ----------
TOTAL $1,175,616 $1,127,956
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE>
3
<PAGE>
<PAGE>
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE AMOUNTS)
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31,
---------
1999 1998
---- ----
<S> <C> <C>
NET SALES $440,417 $318,734
COST OF SALES 340,752 249,687
-------- --------
GROSS PROFIT 99,665 69,047
OTHER OPERATING COSTS
Selling, administrative and other 62,037 43,270
Merger costs - 2,231
-------- --------
Total other operating costs 62,037 45,501
-------- --------
OPERATING INCOME 37,628 23,546
OTHER (INCOME) EXPENSE
Interest expense 12,767 7,390
Other (income) expense (176) (603)
-------- --------
INCOME BEFORE INCOME TAXES 25,037 16,759
PROVISION FOR INCOME TAXES 10,265 7,226
-------- --------
NET INCOME $ 14,772 $ 9,533
======== ========
EARNINGS PER SHARE - BASIC $ 0.30 $ 0.22
EARNINGS PER SHARE - DILUTED $ 0.28 $ 0.20
WEIGHTED AVERAGE SHARES - BASIC 48,864 43,515
WEIGHTED AVERAGE SHARES - DILUTED 58,260 53,717
See notes to unaudited consolidated financial statements.
</TABLE>
4
<PAGE>
<PAGE>
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31,
---------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,772 $ 9,533
Adjustments to reconcile net income to cash provided by
operations
Depreciation and amortization 12,705 8,355
Deferred income taxes 2,874 2,495
Other 1,007 137
Changes in operating assets and liabilities, net of effects
of acquired businesses:
Receivables (9,929) (13,612)
Inventories (536) (4,954)
Accounts payable 9,880 4,906
All other assets and other liabilities 22,408 12,481
-------- ---------
Net cash provided by operating activities 53,181 19,341
-------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs, net of cash acquired (46,491) (140,927)
Equity investment (22,726) -
Capital expenditures (21,907) (14,011)
Other investing activities 916 500
-------- ---------
Net cash used in investing activities (90,208) (154,438)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Changes due to accounts receivable securitization, net 32,443 (20,279)
Net proceeds from common stock issuance 124 92,005
Proceeds from long-term debt 101,376 97,388
Repayments of long-term debt and capital leases (96,505) (61,392)
Other financing activities (558) (1,239)
-------- ---------
Net cash provided by financing activities 36,880 106,483
-------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,073 702
-------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 926 (27,912)
BALANCE AT BEGINNING OF PERIOD 1,375 40,911
-------- ---------
BALANCE AT END OF PERIOD $ 2,301 $ 12,999
======== =========
See notes to unaudited consolidated financial statements.
</TABLE>
5
<PAGE>
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS -- Mail-Well, Inc. and subsidiaries
(collectively referred to as the "Company") is one of the largest
printers in North America. The Company prints and manufactures
envelopes in the United States and Canada and is a leading commercial
printer in the United States. The Company is also a printer of custom
business documents for the distributor market and a printer of labels
for the food and beverage industry.
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 (ticker: MWL). These
financial statements include the accounts of the Company and its
majority owned subsidiaries. The equity investment in Porter Chadburn
plc is accounted for on the equity method since control does not exist
and we own 29.9% as of March 31, 1999. See Note 3 for further
discussion. 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 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, 1999. 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 months ended March 31, 1999
and 1998.
INVENTORIES-- Detail of inventories, in thousands:
<TABLE>
<CAPTION>
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
<S> <C> <C>
Raw materials $ 46,471 $ 45,720
Work in process 22,552 22,089
Finished goods 51,228 49,256
Reserve for obsolescence, loss and other (3,721) (2,934)
-------- --------
$116,530 $114,131
======== ========
</TABLE>
SHAREHOLDERS' EQUITY--The change in Common Stock and Paid-in
Capital is caused by the exercise of stock options. The change in
Retained Earnings is net income. See "Other Comprehensive Income" for
an explanation of the change in those accounts.
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 shareholders'
equity that do not result directly from transactions with share owners.
A summary of comprehensive income follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31, 1999 MARCH 31, 1998
-------------- --------------
<S> <C> <C>
(in thousands)
Net income $14,772 $9,533
Currency translation adjustments, net 3,527 302
Unrealized loss on investments, net 34 (132)
------- ------
Comprehensive income $18,333 $9,703
======= ======
</TABLE>
6
<PAGE>
<PAGE>
EARNINGS PER SHARE -- 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
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED MARCH 31, 1999
EARNINGS PER SHARE - BASIC
Income available to common shareholders $14,772 48,864 $0.30
=====
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,173
Convertible Subordinated Notes 1,313 8,003
Other - 220
------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $16,085 58,260 $0.28
======= ====== =====
FOR THE THREE MONTHS ENDED MARCH 31, 1998
EARNINGS PER SHARE - BASIC
Income available to common shareholders $ 9,533 43,515 $0.22
=====
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,954
Convertible Subordinated Notes 1,083 8,003
Other - 245
------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $10,616 53,717 $0.20
======= ====== =====
</TABLE>
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
beginning 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. The Company has minimal hedging and derivative activity, but it
has not determined the impact of this statement on its operations and
financial position.
In March 1998, the Accounting Standards Executive Committee of the
AICPA issued Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The SOP,
which has been adopted prospectively as of January 1, 1999, requires the
capitalization of certain costs incurred in connection with developing
or obtaining internal use software. Prior to the adoption of the SOP,
the Company expensed all internal use software related internal costs as
incurred. The effect of adopting the SOP was immaterial to the quarter
ended March 31, 1999 and is not expected to have a material impact on
earnings going forward.
RECLASSIFICATION -- Certain amounts in the 1998 financial
statements have been reclassified to conform to the 1999 presentation.
7
<PAGE>
<PAGE>
2. 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
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 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. The consolidated
balance sheets reflect the accounts of the Company as if the additional
common stock had been issued during all periods presented.
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 were 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 conditions of the real estate assets
are reflected in the restated consolidated financial statements with
significant intercompany transactions and balances eliminated. The
mergers with the real estate entities have been accounted for as taxable
business combinations and the recognizable tax benefits attributable to
the increase in tax basis were allocated to additional paid-in capital.
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 accompanying consolidated financial statements
reflect certain minor adjustments to conform the accounting policies of
the Commercial Printing Group to the Company's.
8
<PAGE>
<PAGE>
Net sales and net income of the separate companies for the periods
preceding the mergers were as follows:
<TABLE>
<CAPTION>
UNAUDITED
UNAUDITED PRO FORMA
NET PRO FORMA DILUTED
NET INCOME NET INCOME EARNINGS
SALES (LOSS)<F1> (LOSS)<F2> PER SHARE
----- ---------- ---------- ---------
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
QUARTER ENDED MARCH 31, 1998
Mail-Well, Inc. as previously reported $ $274,705 $9,510 $9,510
Color Art 18,199 (173) (481)
Accu-Color 3,036 215 47
Industrial Printing 5,690 219 63
IPC Graphics 2,960 45 (19)
United Lithograph 5,532 (91) (170)
French Bray 5,756 (258) (258)
Clarke Printing 2,856 66 66
-------- ------ ------
Pooled entities 44,029 23 (752)
-------- ------ ------
$318,734 $9,533 $8,758 $0.18
======== ====== ====== =====
<FN>
<F1> Income (loss) includes aggregate merger expenses of the Commercial
Printing Group totaling $2.2 million in the first quarter of 1998.
These costs consist primarily of investment banking, legal and
accounting fees.
<F2> Unaudited pro forma net income reflects adjustments to net income
to record an estimated provision for income taxes for each period
presented assuming Color Art, Accu-color, Industrial Printing, IPC
Graphics and United Lithograph were tax paying entities.
</TABLE>
3. ACQUISITIONS
On February 2, 1999, the Company acquired Colorhouse, Inc., a pre-
press company located in Minneapolis, Minnesota, with approximate annual
sales of $20.7 million. On February 4, 1999, the Company acquired Hill
Graphics, a sheetfed commercial printer located in Houston, Texas, with
approximate annual sales of $20.5 million.
These acquisitions have been accounted for as purchases and,
accordingly, the net purchase price of each acquisition was allocated to
the various assets and liabilities according to their estimated fair
values as of the date of the respective purchase. The results of
operations of each of the acquisitions have been included in the
accompanying consolidated statements of operations from the date of the
acquisition.
Certain purchase agreements require the payment of additional
consideration in the form of cash payments if specific operating
performance criteria are met. Any subsequent payment will be allocated
to goodwill. In addition, purchase price allocation to inventory and
property, plant and equipment for certain acquisitions have not been
finalized. Therefore, the amount of goodwill could be adjusted within
one year of the purchase.
On March 17, 1999, the Company commenced a formal tender offer to
purchase all of the shares of Porter Chadburn plc, a label manufacturing
company based in England with a substantial portion of its operations in
the United States, for a price of approximately $.63 per share (38.5
pence) in cash. The total value of the offer, including the assumption
of debt and transaction costs will be approximately $102.5 million.
Porter Chadburn earned $8.7 million (pre-tax) on sales of $126.2 million
for its fiscal year ended March 27, 1998. For the six months ended
September 25, 1998, Porter Chadburn earned $4.5 million (pre-tax) on
sales of $62.7 million. (All U.S. dollar amounts are based upon an
exchange rate for British pounds of $1.642).
9
<PAGE>
<PAGE>
As of March 18, 1999, the Company had acquired on the open market
29.9% of the outstanding shares of Porter Chadburn. These costs have
been recorded as an equity investment as of March 31, 1999. For the
quarter ended March 31, 1999, the Company recorded $70,000 of income in
Other Income (Expense) related to its portion of the earnings of Porter
Chadburn, net of amortization of the differential between cost and book
value of the investment. As of May 12, 1999, the Company owned in excess
of 90% of the outstanding shares of Porter Chadburn, and expects to
complete the acquisition in the second quarter.
4. LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
INTEREST RATE AT
MARCH 31, 1999 MARCH 31, 1999 DECEMBER 31, 1998
-------------- -------------- -----------------
<S> <C> <C> <C>
Bank Borrowings:
Unsecured loan, due June 9, 2003 6.88% $ 24,795 $ 25,461
Unsecured revolving loan facility, due
March 31, 2003 5.88% 97,000 93,000
Senior Subordinated Notes, due 2008 8.75% 300,000 300,000
Convertible Subordinated Notes, due 2002 5.00% 152,050 152,050
Other 18,288 20,952
-------- --------
592,133 591,463
Less current maturities (9,865) (8,036)
-------- --------
Long-term debt and capital leases $582,268 $583,427
======== ========
</TABLE>
5. RESTRUCTURING CHARGES
In November 1998, the Company committed to implement a
restructuring program affecting the Envelopes and Commercial Printing
segments and recorded a pre-tax provision of $15,961,000, of which
$11,699,000 represents non-cash charges for asset write-offs and
impairments, primarily machinery and equipment. Impairment losses were
calculated based on the excess of the carrying amount of the assets over
the assets' fair values. The fair value of an asset is generally
determined based on recent comparable sales and independent quotes from
the used equipment market. The remaining $4,262,000 is for severance,
other termination benefits and property exit costs, including
noncancelable operating leases. These charges are a result of the
regionalization of the Company's U.S. Envelopes operations and
reorganization of the Company's Commercial Printing operations,
primarily in the Northwest.
The Company also incurred $499,000 of restructuring costs for the
quarter ended March 31, 1999 relating to the relocation of personnel,
equipment and inventory which under generally accepted accounting
principles could not be previously accrued for as part of the Company's
previously announced restructuring initiative. These costs are also
included in "Selling, administrative and other" in the consolidated
statements of operations. Severance costs for the 616 personnel
included in the restructuring provision resulted from regionalizing
special manufacturing operations (490 personnel) and administrative
functions (126 personnel) in various locations of the Company's U.S.
operations. Approximately 208 personnel had been terminated as of March
31, 1999 and the remaining terminations are expected to be completed by
mid 1999.
10
<PAGE>
<PAGE>
The following table summarizes the costs associated with the
restructuring program (in thousands):
<TABLE>
<CAPTION>
ASSET SEVERANCE & PROPERTY
WRITE-DOWNS RELATED COSTS EXIT COSTS TOTAL
----------- ------------- ---------- -----
<S> <C> <C> <C> <C>
ENVELOPES
Initial reserve $ 8,912 $2,825 $ 500 $12,237
Utilized in 1998 8,912 433 26 9,371
------- ------ ------ -------
Balance at 12/31/98 - 2,392 474 2,866
Utilized in 1999 - 469 45 514
------- ------ ------ -------
Balance 3/31/99 $ - $1,923 $ 429 $ 2,352
======= ====== ====== =======
COMMERCIAL PRINTING
Initial reserve $ 2,787 $ 82 $ 855 $ 3,724
Utilized in 1998 2,787 82 55 2,924
------- ------ ------ -------
Balance 12/31/98 - - 800 800
Utilized in 1999 - - 146 146
------- ------ ------ -------
Balance 3/31/99 $ - $ - $ 654 $ 654
======= ====== ====== =======
TOTAL
Initial reserve $11,699 $2,907 $1,355 $15,961
Utilized in 1998 11,699 515 81 12,295
------- ------ ------ -------
Balance 12/31/98 - 2,392 1,274 3,666
Utilized in 1999 - 469 191 660
------- ------ ------ -------
Balance 3/31/99 $ - $1,923 $1,083 $ 3,006
======= ====== ====== =======
</TABLE>
6. SEGMENT INFORMATION
Operating segments are components of an enterprise about which
separate financial information is available that is evaluated regularly
by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. Generally, financial
information is required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to
allocate resources to segments. Additionally, segment information for
all periods has been restated to reflect the mergers of the Commercial
Printing Group as discussed in Note 2.
The Company's operating segments prepare separate financial
information that is evaluated regularly by the Chief Operating Officer
in assessing performance and deciding how to allocate resources.
Corporate expenses include the costs of maintaining a corporate office.
The Company does not allocate corporate overhead, interest (income)
expense, amortization expense, gains and losses on disposal of assets or
income taxes by segment in assessing performance.
Operating segments of the Company are defined primarily by product
line and consist of Commercial Printing, Envelopes, Printing for
Distributors and Labels. The latter two segments were added via
acquisitions in the first quarter of 1998. The Envelopes segment prints
and manufactures envelopes designed to customer specifications. The
Commercial Printing segment specializes in printing advertising
literature, high-end catalogs, annual reports, calendars and other
materials and provides a broad range of printing and graphic arts
services primarily to the advertising industry. The Printing for
Distributors segment prints a diverse line of custom products addressing
the business documents needs of small and medium-sized end users. The
Labels segment is a leading supplier of labels to the North American
food and beverage markets.
Early in 1999, the Company combined the High Impact Color Printing
segment with the Commercial Printing Group under one organization, now
called the Commercial Printing segment. In addition, Mail-Well Graphics
was reclassified from Envelopes to Commercial Printing since the 1998
Form 10-K. Segment information for all periods has been restated to
reflect these changes. Segment information as of and for the three
months ended March 31, 1999 and 1998 is presented below:
11
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 1998
---- ----
<S> <C> <C>
NET SALES:
Commercial Printing $ 183,799 $ 99,493
Envelopes 198,875 190,659
Printing for Distributors 32,876 24,557
Labels 24,867 4,025
---------- ----------
Total $ 440,417 $ 318,734
---------- ----------
OPERATING INCOME (LOSS):
Commercial Printing $ 13,913 $ 5,753
Envelopes 25,117 21,484
Printing for Distributors 2,757 1,701
Labels 1,681 263
Corporate (5,840) (5,655)
---------- ----------
Total $ 37,628 $ 23,546
---------- ----------
DEPRECIATION AND AMORTIZATION:
Commercial Printing $ 5,076 $ 3,880
Envelopes 3,796 3,449
Printing for Distributors 531 245
Labels 1,123 161
Corporate 1,676 522
---------- ----------
Total $ 12,202 $ 8,257
---------- ----------
<CAPTION>
March 31, December 31,
1999 1998
---- ----
<S> <C> <C>
IDENTIFIABLE ASSETS:
Commercial Printing $ 551,751 $ 495,918
Envelopes 511,933 500,355
Printing for Distributors 98,889 98,610
Labels 97,727 93,188
Corporate (84,684) (60,115)
---------- ----------
Total assets $1,175,616 $1,127,956
---------- ----------
</TABLE>
12
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
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 the
following:
* 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 financing 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
* 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>
OVERVIEW, HISTORICAL FINANCIAL DATA BY SEGMENT (IN THOUSANDS)
<CAPTION>
QUARTER ENDED MARCH 31,
-----------------------
1999 1998
---- ----
<S> <C> <C>
Net sales
Commercial Printing $183,799 $ 99,493
Envelopes 198,875 190,659
Printing for Distributors 32,876 24,557
Labels 24,867 4,025
-------- --------
Total net sales 440,417 318,734
-------- --------
Operating income
Commercial Printing 13,913 5,753
Envelopes 25,117 21,484
Printing for Distributors 2,757 1,701
Labels 1,681 263
Corporate (5,840) (3,424)
Merger costs - (2,231)
-------- --------
Total operating income 37,628 23,546
Interest expense (12,767) (7,390)
Other income (expense) 176 603
Income tax expense (10,265) (7,226)
-------- --------
Net income $ 14,772 $ 9,533
======== ========
</TABLE>
13
<PAGE>
<PAGE>
Net sales for 1999 increased 38.2% to $440.4 million compared to
net sales of $318.7 million for 1998. This increase in net sales was
attributable to sales from companies acquired during 1999, a full
quarter of sales from companies acquired during 1998 and internal growth
in each segment, offset by declines in the Canadian exchange rate. Gross
profit of $99.7 million for 1999 represents a 44.3% increase over 1998.
Expressed as a percent of net sales, gross profit increased by .9% to
22.6% for 1999 compared to 21.7% for 1998 primarily due to the Company's
productivity improvements, the impact of purchasing programs and
benefits from restructuring initiatives. Expressed as a percent of net
sales, selling, administrative and other expense decreased 0.2% to 14.1%
in 1999 from 14.3% in 1998 due to efficiency improvements as a result of
the assimilation of acquisitions. Operating income increased 59.8% from
1998.
Earnings for 1999 increased 55.0% to $14.8 million from $9.5
million in the prior year. Earnings per diluted share increased 40.0% to
$0.28 in 1999 from $0.20 in 1998.
RESTRUCTURING CHARGES - In November 1998 the Company committed to
implement a restructuring program affecting the Envelopes and Commercial
Printing segments and recorded a pre-tax provision of $16.0 million, of
which $11.7 million represents non-cash charges for asset write-offs and
impairments. The Company also incurred $0.5 million of restructuring
costs in the quarter ended March 31, 1999 relating to the relocation of
equipment which under generally accepted accounting principles could not
be previously accrued for as part of the Company's restructuring
initiative. These costs are included in "Selling, administrative and
other" in the consolidated statements of operations. For more
information on these charges please refer to Note 5 of the Notes to
Consolidated Financial Statements included in the Annual Report on Form
10-K for the year ended December 31, 1998.
RESULTS OF OPERATIONS BY BUSINESS SEGMENT
Commercial Printing
The following table presents historical financial data for the
Commercial Printing segment, including acquisitions from their purchase
dates. The results also include those of the merged businesses described
in Note 2 to the Consolidated Financial Statements (accounted for under
the pooling of interests method), except that the results of IPC
Graphics have been included with the Printing for Distributors segment
beginning January 1, 1997. The results for 1998 have been restated to
reflect the combination of High Impact Color Printing segment with the
Commercial Printing segment. In addition, Mail-Well Graphics was
reclassified from Envelopes to Commercial Printing.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
- -----------------------
1999 1998
---- ----
(DOLLARS IN THOUSANDS) $ % $ %
-------- ----- ------- -----
<S> <C> <C> <C> <C>
Net sales $183,799 100.0 $99,493 100.0
Cost of sales 143,716 78.2 79,105 79.5
Operating expenses 26,170 14.2 14,635 14.7
-------- ----- ------- -----
Operating income $ 13,913 7.6 $ 5,753 5.8
======== ===== ======= =====
</TABLE>
NET SALES --Net sales increased by $84.2 million (84.7%) for the
quarter ended March 31, 1999 compared to the quarter ended March 31,
1998, primarily due to acquisitions in 1998 and 1999. Without
acquisitions net sales were essentially unchanged as volume gains were
offset by declining paper prices.
COST OF SALES -- Cost of sales includes material (net of waste
recovery revenue), labor, depreciation and other manufacturing and
distribution costs. Total cost of sales, as a percent of sales,
decreased from 79.5% for the quarter ended March 31, 1998 to 78.2% for
the quarter ended March 31, 1999. This decline was primarily due to the
impact of the benefits from new acquisitions adopting our corporate
purchasing programs and continuous improvement initiatives.
14
<PAGE>
<PAGE>
OPERATING EXPENSES -- Operating expenses include selling and
administrative expenses. For the quarter ended March 31, 1999,
operating expenses, as a percent of sales, decreased 0.5% to 14.2% from
14.7% in the prior year due to continuous improvement initiatives.
Envelopes
The following table presents historical financial data for the
Envelopes operations of the Company, including acquisitions from their
purchase dates. The results of Mail-Well Graphics for 1998 have been
reclassified to the Commercial Printing segment.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
- -----------------------
(DOLLARS IN THOUSANDS)
1999 1998
---- ----
(DOLLARS IN THOUSANDS) $ % $ %
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Net sales $198,875 100.0 $190,659 100.0
Cost of sales 149,533 75.2 147,018 77.1
Operating expenses 24,225 12.2 22,157 11.6
-------- ----- -------- -----
Operating income $ 25,117 12.6 $ 21,484 11.3
======== ===== ======== =====
</TABLE>
NET SALES -- Net sales increased by $8.3 million (4.3%) for the
quarter ended March 31, 1999 compared to the quarter ended March 31,
1998. Excluding acquisitions, sales decreased $1.1 million. Sales
growth was more than offset by declining paper prices and a decline in
the average exchange rate for the Canadian dollar. The average selling
price per thousand units, excluding acquisitions, decreased 1.9% to
$18.98 for the quarter ended March 31, 1999, from $19.35 for the quarter
ended March 31, 1998 due to a decrease in paper costs offset by changes
in mix. Because paper cost changes have historically been passed
through to the customer, the Company uses volumes of units sold and
material gross margin (that is, net sales less cost of materials, net of
waste recovery revenue) as revenue trend indicators in its envelope
operations. Excluding acquisitions, unit volume increased by 2.3% to
10.1 billion units in the first quarter of 1999 from 9.9 billion units
in the same quarter in 1998. Material gross margin per thousand units
sold, excluding acquisitions, increased 6.6% to $11.81 for the quarter
ended March 31, 1999 from $11.08 for the quarter ended March 31, 1998
primarily due to improved product mix and continued improvement in the
Canadian business, offset by a decline in the average exchange rate for
Canada by 5.5%.
COST OF SALES -- Cost of sales includes paper (net of waste
recovery revenue), labor, depreciation and other manufacturing and
distributions costs. Total cost of sales, as a percent of sales,
decreased from 77.1% for the quarter ended March 31, 1998 to 75.2% for
the quarter ended March 31, 1999. The decrease was due to the positive
benefits of the Company's restructuring plan and the impact of
purchasing and productivity programs.
OPERATING EXPENSES -- Operating expenses include selling and
administrative expenses. For the quarter ended March 31, 1999,
operating expenses, as a percent of sales, increased 0.6% to 12.2% from
11.6% in the prior year. The primary reasons were restructuring
expenses of $0.2 million incurred in the quarter ended March 31, 1999,
acquisition of companies with higher operating expenses as a percent of
sales and a decline in the average exchange rate for Canada by 5.5%.
Corporate
Certain major production equipment is accounted for as an
operating lease on a consolidated basis while treated as a purchase on a
segment level. The Company classifies the excess of the operating lease
expense over depreciation as a corporate expense in analyzing segment
operations. The Company does not include the amortization of intangibles
recorded in acquisitions in segment results but rather includes it on a
corporate basis. In addition, corporate expenses include corporate
administrative expense and loss (gain) on disposal of assets.
15
<PAGE>
<PAGE>
Corporate expenses for the quarter ended March 31, 1999 increased
$2.4 million compared to 1998 as a result of increases in amortization
expense and corporate administrative expense. Amortization expense
increased as a result of the acquisitions made in the year ended
December 31, 1998 and the quarter ended March 31, 1999. The increase in
corporate administrative expense was attributable to expanded treasury
and finance operations.
MERGER COSTS-Effective May 30, 1998, the Company completed its
mergers with six commercial printing companies and one distributor
company through the exchange of common stock. In connection with the
mergers, transaction costs incurred of $2.2 million were expensed in the
quarter ended March 31, 1998. These costs consist primarily of
investment banking, legal and accounting fees. For more information on
these mergers please refer to Note 2 of the Notes to Consolidated
Financial Statements.
INTEREST EXPENSE - Interest expense for the quarter ended March
31, 1999 increased $5.4 million compared to 1998 as a result of higher
average bank debt balances, primarily due to acquisitions. The Company
continued to participate in its accounts receivable securitization
agreement whereby it can sell, on a revolving basis, an undivided
percentage ownership interest in a designated pool of accounts
receivable up to a maximum of $100.0 million until November 2001. At
March 31, 1999 and 1998 $85.0 million and $71.0 million, respectively,
had been sold under this agreement.
INCOME TAX EXPENSE - The effective tax rate for both periods was
higher than the federal statutory rate due to state and provincial
income taxes and certain goodwill amortization that are not tax
deductible. See Notes 2 and 9 of the Notes to Consolidated Financial
Statements included in the Company's 1998 Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL CASH FLOW -- Net cash flow provided by operating
activities was $53.2 million and $19.3 million for the quarters ended
March 31, 1999 and 1998, respectively. Acquisitions and equity
investments required cash payments of $69.2 million and $140.9 million
for the quarters ended March 31, 1999 and 1998, respectively. Other
investing activities include capital expenditures, which were $21.9
million and $14.0 million for the quarters ended March 31, 1999 and
1998, respectively. Net cash flow from financing activities was
positively affected by the increase in receivables sold under the
securitization agreement at March 31, 1999 and 1998 of $32.4 million
and ($20.3) million, respectively.
At March 31, 1999 the Company had approximately $203.0 million of
available credit under the $300.0 million Bank of America credit
facility. The credit available will be reduced by approximately $79.9
million upon completion of the acquisition of the shares of Porter
Chadburn. See Recent Developments below for further discussion. In
addition, at March 31, 1999, the Company had sold $85.0 million of
receivables under the $100.0 million securitization facility.
SECURITIES OFFERINGS -- The Company has an effective shelf
registration statement on Form S-3 that permits the Company to issue
debt securities, common stock, preferred stock or warrants. At March 31,
1999, there was availability remaining to issue approximately $52.0
million of securities under the shelf registration statement.
FOREIGN CURRENCY --With the strengthening U.S. Dollar, the
Company's foreign currency exposure currently relates to its Canadian
operations. The average Canadian Dollar exchange rate was 0.6615 and
0.6692 USD for the quarters ended March 31, 1999 and 1998, respectively.
The Canadian Dollar exchange rate at March 31, 1999 was 0.6678 USD. Net
sales provided by the Canadian operations for the quarters ended March
31, 1999 and 1998 was USD $49.3 million and USD $31.4 million,
respectively.
SEASONALITY AND ENVIRONMENT -- 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 a material effect
on the Company's liquidity and capital resources.
16
<PAGE>
<PAGE>
RECENT DEVELOPMENTS
On March 17, 1999, the Company commenced a formal tender offer to
purchase all of the shares of Porter Chadburn plc, a label manufacturing
company based in England with a substantial portion of its operations in
the United States, for a price of approximately $.63 per share (38.5
pence) in cash. The total value of the offer, including the assumption
of debt and transaction costs will be approximately $102.5 million.
Porter Chadburn earned $8.7 million (pre-tax) on sales of $126.2 million
for its fiscal year ended March 27, 1998. For the six months ended
September 25, 1998, Porter Chadburn earned $4.5 million (pre-tax) on
sales of $62.7 million. (All U.S. dollar amounts are based upon an
exchange rate for British pounds of $1.642).
As of March 18, 1999, the Company had acquired on the open market
29.9% of the outstanding shares of Porter Chadburn. As of May 12, 1999,
the Company owned in excess of 90% of the outstanding shares of Porter
Chadburn, and expects to complete the acquisition in the second quarter.
YEAR 2000
In 1997 the Company began to assess its existing computer systems,
including an assessment of Year 2000 compliance. In May 1998 the
Company instituted a Year 2000 Project whose goal was to develop and
execute a plan for Year 2000 compliance throughout the Company. The
Company has established an individual at every significant operating
entity to be responsible for coordination with the Year 2000 Project.
What is the Company's state of readiness? What are the costs?
The Company's Year 2000 Project is directed to four major areas:
core computer systems, networking and communications, ancillary systems
(including plant machinery) and verification with key suppliers. The
following summarizes our state of readiness and the costs to address the
Company's Year 2000 issues.
CORE COMPUTER SYSTEMS
The Company completed an assessment of its existing computer
systems in 1997 and expects to spend and capitalize approximately $9 to
$11 million through 1999 to purchase and install new systems. The new
systems are Y2K compliant. These costs are being funded through
operating cash flows. Several computer systems were due to be replaced
but were accelerated because of the Year 2000 issue. Through March 31,
1999, approximately $5.7 million of the estimated $9 to $11 million has
been capitalized.
Through April 1999, 45% of the core systems are compliant. By the
end of the second quarter we expect 55% of the core systems to be
compliant with the remainder to be completed by the end of the third
quarter.
NETWORKING AND COMMUNICATIONS
The Company is also conducting an evaluation of actions required
to minimize the risk that its remaining business critical computer
systems will 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.
ANCILLARY SYSTEMS AND VERIFICATION WITH KEY SUPPLIERS
The Company has completed a database of year 2000 sensitive
devices, plant machinery and desktop software. The Company has also
completed a listing of business critical suppliers, such as paper and
ink suppliers. All such suppliers have been identified and contacted for
information on their actions to mitigate Year 2000 disruptions. Based on
the information received through March 31, 1999, about 40% of the
responses do not indicate whether or not the supplier will be Year 2000
compliant. Therefore, we will be preparing a follow-up mailing to key
suppliers during the second quarter. Based on the information received
through March 31, 1999, management does not
17
<PAGE>
<PAGE>
believe such costs to replace year 2000 sensitive devices, plant
machinery and desktop software will be material to our financial
condition or cash flow.
What is the Company doing about contingency planning?
The Company plans to prepare a contingency plan during the second
quarter of 1999 to be finalized during the third quarter of 1999. The
contingency guidelines to be followed throughout the Company will
address the following issues:
* Response to and recovery from Y2K related failures
* Raw materials inventory stocking levels and alternative sources
* Review of disaster recovery plans
* Comprehensive system backup procedures to preserve 1999 data at
year-end
* Availability of key staff on-site during the New Year's weekend
What are the risks of the Company's Year 2000 issues?
The Company presently believes it has an effective plan in place
to anticipate and resolve any potential Year 2000 issues in a timely
manner. In the event, however, the Company does not properly identify
Year 2000 issues or the resolution is not timely conducted for those
Year 2000 issued identified, there can be no assurance that Year 2000
issues will not materially and adversely affect the Company's results of
operations or relationships with third parties. In addition,
disruptions in the economy generally resulting from Year 2000 issues
also could materially and adversely affect the Company. The amount of
potential liability and lost revenue that would be reasonably likely to
result from the failure by the company and certain key third parties to
achieve Year 2000 compliance on a timely basis cannot be reasonably
estimated at this time. A contingency plan has not yet been developed
for dealing with the most reasonably likely worst case scenario, and
such scenario has not yet been clearly identified. The Company expects
to complete its analysis during the third quarter of 1999.
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. Although the Company
believes it has a minimal current level of hedging and derivative
activity, it has not determined the impact of this statement on its
operations and financial position.
In March 1998, the Accounting Standards Executive Committee of the
AICPA issued Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The SOP,
which has been adopted prospectively as of January 1, 1999, requires the
capitalization of certain costs incurred in connection with developing
or obtaining internal use software. Prior to the adoption of the SOP,
the Company expensed all internal use software related internal costs as
incurred. The effect of adopting the SOP was immaterial to the quarter
ended March 31, 1999 and is not expected to have a material impact on
earnings going forward.
ITEM 3.--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to certain market risks, including foreign
currency and interest rate risks. The foreign currency risk for foreign
currency denominated debt obligations (US$ 24,795,000 at March 31, 1999)
and the interest rate risk for the investment in accounts receivable
securitization ($41,680,000 at March 31, 1999) are not considered to be
significant since the fair values and carrying values are not material
to the Company's financial position. The Company's cash flows from
operations and earnings are affected by changes in short-term interest
rates since a large portion of its credit agreements include rates
variable with LIBOR. As of March 31, 1999, $97 million of variable rate
debt was outstanding. The fair value of the Company's fixed rate long-
term debt is affected by changes in long-term interest rates. See Item
7A of the Company's 1998 Form 10-K for quantitative and qualitative
disclosures about market risk. No significant changes in market risk
have occurred since that filing.
18
<PAGE>
<PAGE>
PART II -- OTHER INFORMATION
ITEM 6.--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
3(i) Articles of Incorporation of the Company - incorporated by
reference from Exhibit 3(i) of the Company's Form 10-Q
for the quarter ended June 30, 1997.
3(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 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).
4.3 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).
4.4 Indenture dated as of December 16, 1998 between Mail-Well I
Corporation ("MWI") and State Street Bank and Trust
Company, as Trustee, relating to MWI's $300,000,000
aggregate principal amount of 8 3/4% Senior Subordinated
Notes due 2008 - incorporated by reference from the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
4.5 Form of Senior Subordinated Note. Incorporated by reference
from the company's Annual Report of Form 10-K for the
year ended December 31, 1998.
10.1 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.
10.2 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.
10.3 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.
10.4 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.
10.5 Mail-Well, Inc. 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.
10.6 Form of 1994 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.
10.7 Form of the Company Nonqualified Stock Option Agreement -
incorporated by reference from Exhibit 10.23 of the
Company's Registration Statement on Form S-1 dated March
25, 1994.
19
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<PAGE>
10.8 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.
10.9 Mail-Well Receivables Master Trust 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, 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.
10.10 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.
10.11 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.
10.12 Mail-Well, Inc. 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
10.13 1997 Non-Qualified Stock Option Agreement -- incorporated by
reference from exhibit 10.54 of the Company's Form 10-Q
for the quarter ended March 31, 1997.
10.14 Mail-Well, Inc. 1998 Incentive Stock Option Plan-- incorporated
by reference from Exhibit 10.58 to the Company's
Quarterly report on Form 10-Q for the quarter ended March
31, 1998.
10.15 Form of 1998 Incentive Stock Option Agreement-- incorporated by
reference from Exhibit 10.59 to the Company's Quarterly
report on Form 10-Q for the quarter ended March 31, 1998.
10.16 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 Agreement--
incorporated by reference from Exhibit 10.60 to the
Company's Quarterly report on Form 10-Q for the quarter
ended March 31, 1998.
10.17 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 Exhibit 10.61 to the Company's Quarterly report on
Form 10-Q for the quarter ended March 31, 1998.
10.18 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 Exhibit 10.62 to
the Company's Quarterly report on Form 10-Q for the
quarter ended March 31, 1998.
10.19 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 Exhibit 10.63 to the Company's
Quarterly report on Form 10-Q for the quarter ended March
31, 1998.
10.20 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 Exhibit 10.64 to the Company's Quarterly report on
Form 10-Q for the quarter ended March 31, 1998.
10.21 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.
10.22 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.
10.23 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.
<PAGE>
10.24 Purchase Agreement dated December 11, 1998, between MWI and
Donaldson, Lufkin & Jenrette Securities Corporation,
Prudential Securities, Incorporated, Bear, Stearns & Co.,
Inc. and Hanifen, Imhoff Inc., as Initial Purchasers,
relating to MWI's $300,000,000 aggregate principal amount
of 8 3/4% Senior subordinated Notes due 2008--incorporated
by reference from Exhibit 10.27 of the Company's Annual
Report on form 10-K for the year ended December 31, 1998.
20
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<PAGE>
10.25 Registration Rights Agreement dated December 16, 1998 by and
among MWI and Donaldson, Lufkin & Jenrette Securities
Corporation, Prudential Securities, Incorporated, Bear,
Stearns & co., Inc. and Hanifen, Imhoff Inc., as Initial
Purchasers, relating to MWI's $300,000,000 aggregate
principal amount of 8 3/4% Senior subordinated Notes due
2008-- incorporated by reference from Exhibit 10.27 of
the Company's Annual Report on form 10-K for the year
ended December 31, 1998.
27.1 <F*> Financial Data Schedule for three months ended March 31, 1999.
27.2 <F*> Financial Data Schedule for three months ended March 31, 1998.
[FN]
- ------------
<F*> Filed herewith.
(b) Reports on Form 8-K
A report on Form 8-K was filed on January 28, 1999, announcing
the financial results of the company for the quarter and year ending
December 31, 1998.
A report on Form 8-K was filed on March 3, 1999, regarding the
dismissal of Deloitte & Touche LLP as our independent public accountant
and engagement of Ernst & Young LLP as our independent public
accountant.
21
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<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/ Gerald F. Mahoney
----------------------------
Date: May 13, 1999 Gerald F. Mahoney
Chairman of the Board/
Chief Executive Officer
By /s/ Michael A. Zawalski
----------------------------
Date: May 13, 1999 Michael A. Zawalski
Senior Vice President,
Chief Financial Officer
22
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