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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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 August 1, 2000, the Registrant had 49,274,908 shares of Common
Stock, $0.01 par value, outstanding.
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1
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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 22
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 27
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities
Holders 28
Item 6. Exhibits and Reports on Form 8-K 28
Signature Page 31
2
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 738 $ 3,618
Receivables, net 202,700 85,044
Investment in accounts receivable securitization 61,403 54,396
Accounts receivable -- other 19,530 20,764
Inventories, net 179,615 144,756
Net assets of discontinued operations 117,500 -
Other current assets 37,979 25,551
---------- ----------
Total current assets 619,465 334,129
PROPERTY, PLANT AND EQUIPMENT, NET 596,605 532,156
GOODWILL, NET 587,817 453,483
OTHER ASSETS, NET 43,745 24,273
---------- ----------
TOTAL $1,847,632 $1,344,041
========== ==========
CURRENT LIABILITIES
Accounts payable $ 149,788 $ 122,740
Accrued compensation and vacation 52,976 50,042
Other current liabilities 62,819 52,999
Current portion of long-term debt and capital leases 44,355 13,889
---------- ----------
Total current liabilities 309,938 239,670
LONG-TERM DEBT AND CAPITAL LEASES 1,050,272 653,090
DEFERRED INCOME TAXES 59,417 64,112
OTHER LONG-TERM LIABILITIES 27,960 8,351
---------- ----------
Total liabilities 1,447,587 965,223
MINORITY INTEREST IN NON VOTING STOCK OF SUBSIDIARY - 3,508
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, 49,276,934 and 49,215,078 shares issued
and outstanding, respectively 493 492
Paid-in capital 220,049 219,795
Retained earnings 184,249 155,222
Accumulated other comprehensive income (loss) (4,746) (199)
---------- ----------
Total shareholders' equity 400,045 375,310
---------- ----------
TOTAL $1,847,632 $1,344,041
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE>
3
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<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE AMOUNTS)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, JUNE 30,
-------- --------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $584,902 $439,046 $1,134,544 $879,463
COST OF SALES 447,799 332,719 867,384 674,522
-------- -------- ---------- --------
GROSS PROFIT 137,103 106,327 267,160 204,941
OTHER OPERATING COSTS 96,172 67,410 180,762 128,396
OPERATING INCOME 40,931 38,917 86,398 76,545
OTHER (INCOME) EXPENSE
Interest expense 23,944 14,049 42,936 26,816
Other (income) expense (207) (528) (329) (704)
-------- -------- ---------- --------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 17,194 25,396 43,791 50,433
PROVISION FOR INCOME TAXES 6,336 10,412 17,269 20,677
-------- -------- ---------- --------
INCOME FROM CONTINUING OPERATIONS 10,858 14,984 26,522 29,756
INCOME FROM DISCONTINUED OPERATIONS
(LESS INCOME TAXES OF $243 and $663,
RESPECTIVELY) 386 - 1,058 -
-------- -------- ---------- --------
INCOME BEFORE EXTRAORDINARY ITEM 11,244 14,984 27,580 29,756
EXTRAORDINARY ITEM (LESS INCOME
TAXES OF $907) - - 1,447 -
-------- -------- ---------- --------
NET INCOME $ 11,244 $ 14,984 $ 29,027 $ 29,756
EARNINGS PER SHARE - BASIC
CONTINUING OPERATIONS $ 0.22 $ 0.31 $ 0.54 $ 0.61
DISCONTINUED OPERATIONS 0.01 - 0.02 -
EXTRAORDINARY ITEM - - 0.03 -
EARNINGS PER SHARE - BASIC $ 0.23 $ 0.31 $ 0.59 $ 0.61
EARNINGS PER SHARE - DILUTED
CONTINUING OPERATIONS $ 0.21 $ 0.28 $ 0.51 $ 0.56
DISCONTINUED OPERATIONS 0.01 - 0.01 -
EXTRAORDINARY ITEM - - 0.03 -
EARNINGS PER SHARE - DILUTED $ 0.22 $ 0.28 $ 0.55 $ 0.56
WEIGHTED AVERAGE SHARES - BASIC 49,273 48,967 49,251 48,915
WEIGHTED AVERAGE SHARES - DILUTED 57,116 58,350 57,466 58,300
See notes to unaudited consolidated financial statements.
</TABLE>
4
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<PAGE>
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
SIX MONTHS ENDED
----------------
JUNE 30,
--------
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 29,027 $ 29,756
Adjustments to reconcile net income to cash provided by operations
Depreciation and amortization 41,025 27,298
Extraordinary item pre-tax (2,354) -
Deferred income taxes 4,661 5,790
Other (385) 2,317
Changes in operating assets and liabilities, net of effects
of acquired businesses:
Receivables (1,927) 8,932
Inventories (15,915) (11,797)
Accounts payable 4,625 3,412
All other assets and other liabilities (11,458) 8,942
--------- ---------
Net cash provided by operating activities 47,299 74,650
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs, net of cash acquired (327,702) (162,569)
Capital expenditures (43,942) (39,693)
Investment in equity securities, net (12,594) -
Other investing activities 1,377 1,584
--------- ---------
Net cash used in investing activities (382,861) (200,678)
CASH FLOWS FROM FINANCING ACTIVITIES
Changes due to accounts receivable securitization, net (73,500) 43,222
Proceeds from common stock issuance 255 703
Proceeds from long-term debt 940,119 241,805
Repayments of long-term debt and capital leases (516,482) (149,504)
Debt issuance costs (14,164) -
Other financing activities (3,500) (972)
--------- ---------
Net cash provided by financing activities 332,728 135,254
EFFECT OF EXCHANGE RATE CHANGES ON CASH (46) (4)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (2,880) 9,222
BALANCE AT BEGINNING OF PERIOD 3,618 1,375
--------- ---------
BALANCE AT END OF PERIOD $ 738 $ 10,597
========= =========
See notes to unaudited consolidated financial statements.
</TABLE>
5
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<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 a market leader in four
highly fragmented segments of the printing industry. The Company is a
leading commercial printer in the United States and manufactures and
prints envelopes in the United States and Canada. The Company is also a
printer of office products for the distributor market and 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. Mail-Well I Corporation
("MWI"), a wholly-owned subsidiary of Mail-Well, Inc., conducts most of
the business of Mail-Well, Inc. MWI, together with its subsidiaries, is
the owner of the Company's operating assets and the borrower of the debt
(exclusive of the Convertible Subordinated Notes). 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, 2000.
INVENTORIES -- Detail of inventories, in thousands:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------- -----------------
<S> <C> <C>
Raw materials $ 65,362 $ 55,896
Work in process 40,479 32,020
Finished goods 79,695 61,620
Provision for obsolescence, loss and other (5,921) (4,780)
-------- --------
$179,615 $144,756
======== ========
</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 -- Other comprehensive income includes
changes in shareholders' equity that do not result directly from
transactions with shareholders. A summary of comprehensive income
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
(in thousands)
Net income $11,244 $14,984 $29,027 $29,756
Currency translation adjustments, net (3,775) 3,704 (4,492) 7,231
Unrealized gain on investments, net 90 184 (55) 218
------- ------- ------- -------
Comprehensive income $ 7,559 $18,872 $24,480 $37,205
======= ======= ======= =======
</TABLE>
6
<PAGE>
<PAGE>
EARNINGS PER SHARE -- 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 JUNE 30, 2000
EARNINGS PER SHARE - BASIC
Income available to common shareholders $11,244 49,273 $0.23
=====
EFFECT OF DILUTIVE SECURITIES
Stock options - 524
Convertible Subordinated Notes 1,214 7,319
------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $12,458 57,116 $0.22
======= ====== =====
FOR THE THREE MONTHS ENDED JUNE 30, 1999
EARNINGS PER SHARE - BASIC
Income available to common shareholders $14,984 48,967 $0.31
=====
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,160
Convertible Subordinated Notes 1,313 8,003
Other - 220
------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $16,297 58,350 $0.28
======= ====== =====
FOR THE SIX MONTHS ENDED JUNE 30, 2000
EARNINGS PER SHARE - BASIC
Income available to common shareholders $29,027 49,251 $0.59
=====
EFFECT OF DILUTIVE SECURITIES
Stock options - 566
Convertible Subordinated Notes 2,524 7,602
Other - 47
------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $31,551 57,466 $0.55
======= ====== =====
FOR THE SIX MONTHS ENDED JUNE 30, 1999
EARNINGS PER SHARE - BASIC
Income available to common shareholders $29,756 48,915 $0.61
=====
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,162
Convertible Subordinated Notes 2,626 8,003
Other - 220
------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $32,382 58,300 $0.56
======= ====== =====
</TABLE>
RECLASSIFICATION -- Certain amounts in the 1999 financial
statements have been reclassified to conform to the 2000 presentation.
7
<PAGE>
<PAGE>
2. ACQUISITIONS
On January 28, 2000, the Company acquired Braceland Brothers,
Inc., a commercial printing company located in Philadelphia,
Pennsylvania, with approximate annual sales of $30.3 million.
In February 2000, the Company acquired 13,450,588 shares (or 91%
outstanding) of the common stock of Atlanta-based American Business
Products ("ABP") for $20 per share in a cash tender offer. In the
second step of the acquisition, ABP merged with a wholly owned
subsidiary of the Company. The total value of the transaction,
including the assumption of debt, was approximately $333.6 million. ABP
is a premier provider of printed office products and specialty packaging
solutions through its Curtis 1000, International Envelope, Discount
Labels and Jen-Coat business units. ABP reported 1999 sales of $475.9
million and net income and fully diluted earnings per share from
continuing operations of $19.7 million and $1.31, respectively.
On May 24, 2000 the Company acquired Craftsman Litho, Inc., a
commercial printing company located in Waterbury, Connecticut, with
approximate annual sales of $12.8 million.
On June 5, 2000, the Company acquired Strathmore Press, Inc., a
commercial printing company located in Cherry Hills, New Jersey, with
approximate annual sales of $15.0 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, the purchase price allocation to inventory,
property, plant and equipment and restructuring charges for closing
certain plants for certain acquisitions have not been finalized.
Therefore, the amount of goodwill could be adjusted within one year of
the purchase.
The table below presents the results of operations for the three-
month and six-month periods ended June 30, 2000 and 1999 giving effect
to the acquisition of ABP and the $800 million senior secured credit
facility (See Note 3) as if they had occurred on January 1, 2000 and
January 1, 1999, respectively. The table includes Jen-Coat as a
discontinued operation (See Note 7 for further information).
<TABLE>
<CAPTION>
(in thousands, except per share data) Three Months ended Six Months ended
June 30 June 30
----------------------- ---------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $584,902 $521,121 $1,176,096 $1,043,634
Income from continuing operations $ 17,194 $ 15,230 $ 26,159 $ 31,410
Net income $ 11,244 $ 16,342 $ 29,197 $ 32,686
Income from continuing operations per share:
Basic $ 0.22 $ 0.33 $ 0.53 $ 0.64
Diluted $ 0.21 $ 0.30 $ 0.50 $ 0.58
Net income per share:
Basic $ 0.23 $ 0.33 $ 0.59 $ 0.67
Diluted $ 0.22 $ 0.30 $ 0.55 $ 0.61
</TABLE>
8
<PAGE>
<PAGE>
3. LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
INTEREST RATE AT
JUNE 30, 2000 JUNE 30, 2000 DECEMBER 31, 1999
---------------- ------------- -----------------
<S> <C> <C> <C>
Bank Borrowings:
Unsecured loan, due June 9, 2003 6.88% $ 18,622 $ 21,876
Unsecured revolving loan facility, due
March 31, 2003 - 172,000
Unsecured revolving loan facility, due
July 31, 2000 6.43% 1,690 242
Secured revolving line of credit, due
February 22, 2006 8.88% 64,000 -
Secured Tranche A term loan, due
February 22, 2006 8.88% 293,750 -
Secured Tranche B term loan, due
February 22, 2007 9.13% 249,375 -
Senior Subordinated Notes, due 2008 8.75% 300,000 300,000
Convertible Subordinated Notes, due 2002 5.00% 139,063 152,050
Other Various 28,127 20,811
---------- --------
1,094,627 666,979
Less current maturities (44,355) (13,889)
---------- --------
Long-term debt and capital leases $1,050,272 $653,090
========== ========
</TABLE>
On February 18, 2000, the Company entered into a $800 million
senior secured credit facility (the "New Facility"). The proceeds were
used to finance the acquisition of ABP, pay related costs and expenses,
refinance the unsecured revolving loan facilities, and reduce the
amounts drawn under the accounts receivable securitization (see Note 5),
with the remainder to provide funds for general corporate purposes. The
availability under the unsecured uncommitted revolving loan facility,
due July 31, 2001, was reduced from $20 million to $10 million. The
unsecured revolving loan facility, due March 31, 2003 was terminated.
The New Facility consists of a $250 million revolving line of
credit, a $300 million Tranche A term loan and a $250 million Tranche B
term loan. The Company is required to repay $25 million of principal in
the first year of the Tranche A term loan, with increases of $10 million
a year until a $75 million payment in the sixth year. The Company is
required to pay $2.5 million per year on the Tranche B term loan, with a
balloon payment in 2007 of $233 million. Any optional prepayments of
principal must be applied proportionately among the Tranche A and B term
loans. The revolving line may be paid down at any time at the option of
the Company.
The New Facility contains certain financial and other covenants
that are customary for credit facilities of its type and size. The New
Facility is secured by substantially all tangible and intangible
property of U.S. entities, except for the accounts receivable sold under
the securitization program and certain property and equipment under
lease obligations.
In 2000, the Company wrote off deferred financing costs of
$635,000 (net of $244,000 of income tax benefits) capitalized in
connection with the bank debt which was repaid in February, 2000. The
write-off is shown as an extraordinary item in the statement of
operations. Also, in March 2000, the Company repurchased $12,987,000 of
the outstanding Convertible Subordinated Notes at a discount and
recorded a gain of $2,989,000 (net of $1,151,000 of income tax expense),
which is shown as an extraordinary item in the statement of operations.
9
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<PAGE>
4. 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 represented 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 was for severance,
other termination benefits and property exit costs, including
noncancelable operating leases. These charges were 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 and $998,000 in expenses for
the three months and six months ended June 30, 1999, respectively,
relating to the relocation of personnel, equipment and inventory, which
under generally accepted accounting principles could not be 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. 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 570 personnel had been terminated as of June
30, 2000. The remaining property exit costs are for one lease, which
has been exited for a cost of $600,000 plus legal fees in July 2000.
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>
Initial reserve $11,699 $2,907 $1,355 $15,961
Utilized in 1998 (10,104) (523) (81) (10,708)
------- ------ ------ -------
Balance 12/31/98 1,595 2,384 1,274 5,253
Utilized in 1999 (591) (1,608) (1,011) (3,210)
Transferred 19 (418) 399 -
------- ------ ------ -------
Balance 12/31/99 1,023 358 662 2,043
Additions in 2000 - - 56 56
Utilized in 2000 (833) (358) (298) (1,489)
Transferred (190) - 190 -
------- ------ ------ -------
Balance 6/30/00 $ - $ - $ 610 $ 610
======= ====== ====== =======
</TABLE>
10
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<PAGE>
5. COMMITMENTS AND CONTINGENCIES
In July 1999, the Company and certain of its subsidiaries
("Originators") entered into an agreement to sell, on a revolving basis,
trade receivables to a wholly-owned subsidiary, Mail-Well Trade
Receivables Corp. ("MTRC"). MTRC was capitalized by the Company as a
bankruptcy-remote special purpose entity that is subject to certain
covenants and restrictions, including a restriction from engaging in any
business or activity unrelated to acquiring and selling interests in
receivables. New receivables, except those failing certain eligibility
criteria, are sold to MTRC on a daily basis as previously sold accounts
receivables are collected. MTRC, in turn, sells an undivided variable
percentage interest in the pool of receivables, up to a maximum of $75
million (reduced from $150 million at December 31, 1999), to a multi-
seller receivables securitization company, for which there are no
repurchase agreements. The Company maintains a subordinated interest in
the portion of the pooled receivables, which are not transferred to the
securitization company.
The Company's securitization is accounted for as a sale in
accordance with FASB Statement No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.
Therefore, the Company's accounts receivable have been reduced by the
amount of receivables sold to MTRC and the retained interest in the pool
of receivables has been reported as an investment available for sale,
recorded at its estimated fair value. An allowance for doubtful
accounts is also maintained for both receivables not included in the
pool and for its retained interest in the pool. As of June 30, 2000,
the Company had sold $140.0 million of accounts receivable to MTRC and
MTRC had sold beneficial interests totaling $75.0 million to the
securitization company.
The Company is involved in various lawsuits incidental to its
businesses. In management's opinion, it is not probable that an adverse
determination against the Company relating to these suits would occur
that would be material to the consolidated financial statements.
6. SEGMENT INFORMATION
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, Envelope, Label and Printed Office Products. ABP
segments were included in Mail-Well's segments as follows: Curtis 1000
is included in Printed Office Products; International Envelope,
Envelope; Label Lynx, Label; and Discount Labels, Printed Office
Products.
The segment information that follows excludes the Jen-Coat
operation, which is shown as a discontinued operation in the
consolidated statements of operations for the three months and six
months periods ended June 30, 2000. See Note 7 for further information.
11
<PAGE>
<PAGE>
Two locations were reclassified from Envelope to Commercial
Printing and Printed Office Products, respectively, since the 1999 Form
10-K. Label Lynx was reclassified from Printed Office Products to Label
since the March 31, 2000 Form 10-Q. Segment information for all periods
has been restated to reflect these changes. Segment information as of
and for the three and six months ended June 30, 2000 and 1999 is
presented below:
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES TO EXTERNAL CUSTOMERS:
Commercial Printing $222,282 $168,100 $ 445,682 $354,178
Envelope 209,410 176,543 411,763 371,066
Printed Office Products 94,295 41,277 163,514 76,226
Label 58,915 53,126 113,585 77,993
-------- -------- ---------- --------
Total $584,902 $439,046 $1,134,544 $879,463
======== ======== ========== ========
OPERATING INCOME (LOSS):
Commercial Printing $ 14,934 $ 13,827 $ 32,627 $ 28,253
Envelope 19,653 22,856 41,795 47,258
Printed Office Products 9,439 4,049 17,632 7,008
Label 4,388 3,941 7,939 5,622
Corporate (7,483) (5,756) (13,595) (11,596)
-------- -------- ---------- --------
Total $ 40,931 $ 38,917 $ 86,398 $ 76,545
======== ======== ========== ========
DEPRECIATION AND
AMORTIZATION:
Commercial Printing $ 6,711 $ 5,516 $ 13,206 $ 10,592
Envelope 5,518 3,954 10,140 7,750
Printed Office Products 2,342 665 3,698 1,196
Label 1,985 1,736 3,940 2,859
Corporate 3,006 2,219 6,169 3,895
-------- -------- ---------- --------
Total $ 19,562 $ 14,090 $ 37,153 $ 26,292
======== ======== ========== ========
<CAPTION>
June 30, December 31,
2000 1999
---- ----
IDENTIFIABLE ASSETS:
Commercial Printing $ 707,639 $ 637,013
Envelope 578,510 530,733
Printed Office Products 278,358 124,394
Label 226,138 218,023
Net Assets of Discontinued
Operations 117,500 -
Corporate (60,513) (166,122)
---------- ----------
Total assets $1,847,632 $1,344,041
========== ==========
</TABLE>
Intercompany sales by segment include $1,015,000, $4,039,000,
$2,776,000 and $1,189,000 for Commercial Printing, Envelope, Printed
Office Products & Label, respectively for the three months of 2000 and
$2,684,000, $5,666,000, $3,809,000 and $1,598,000, respectively for the
six months of 2000. These amounts have been eliminated in consolidation
and are excluded from the amounts above.
Depreciation and amortization shown above excludes depreciation
and amortization for the discontinued operation.
12
<PAGE>
<PAGE>
7. SUBSEQUENT EVENTS
In November 1996, the Company refinanced certain equipment under a
sale/leaseback arrangement. In 1997, the Company reacquired the
equipment from the original lessor and sold and leased back such
equipment from a new buyer-lessor. In August 2000, the Company entered
into a renewed lease related to substantially the same pool of
equipment, which added certain additional pieces as substitute for
previously disposed equipment for a total fair value of approximately
$23 million. In addition, the Company refinanced a new pool of
equipment under a sale/leaseback arrangement with a fair value of $19
million. The proceeds were used to pay down the secured revolving line
of credit.
The leasebacks are classified as operating leases. At the end of
the six year lease term, the Company may either (1) purchase the
equipment for a specified amount, (2) sell the equipment on behalf of
the lessor, or (3) return the equipment to the lessor for a fee. If the
Company elects to return the equipment to the lessor at the end of the
lease term, the Company has guaranteed a residual value of $16.4 million
for the benefit of the lessor.
In July 2000, the company signed a letter of intent to sell Jen-
Coat, its extrusion coating and laminating segment. The transaction is
scheduled to close approximately September 30, 2000. Net proceeds to
the company will be approximately $100 million and will be used
primarily to reduce debt. The operating results of this operation are
reported as a discontinued operation in the consolidated statements of
operations for the three months and six months periods ended June 30,
2000 and the net assets are shown as a separate category of current
assets in the consolidated balance sheets as of June 30, 2000.
In July 2000, the Board of Directors approved the purchase on the
open market of up to $10 million of its common stock at prevailing market
levels, at such time and on such terms as the Company is permitted under
the rules and regulations of the Securities Exchange Commission and New
York Stock Exchange.
On July 25, 2000, the Company acquired CML Industries Ltd., a
supplier of envelopes and paper converted products located in Ontario
and Quebec, Canada, with approximate annual sales of $29.7 million.
8. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
In December 1998, MWI ("Issuer" or "MWI"), the Company's wholly-
owned subsidiary, and the only direct subsidiary of the Company, issued
$300.0 million aggregate principal amount of 8 3/4% Senior Subordinated
Notes ("Senior Notes") due in 2008. The Senior Notes are guaranteed by
the majority of the U.S. subsidiaries (the "Guarantor Subsidiaries") of
MWI, all of which are wholly owned, and by Mail-Well, Inc. ("Parent
Guarantor"). The guarantees are joint and several, full, complete and
unconditional. There are no material restrictions on the ability of the
Guarantor Subsidiaries to transfer funds to MWI in the form of cash
dividends, loans or advances, other than ordinary legal restrictions
under corporate law, fraudulent transfer and bankruptcy laws.
The following condensed consolidating financial information
illustrates the composition of the Parent Guarantor, Issuer, Guarantor
Subsidiaries and non-guarantor subsidiaries. The Issuer, the Guarantor
Subsidiaries and the non-guarantor subsidiaries comprise all of the
direct and indirect subsidiaries of the Parent Guarantor. Management
has determined that separate complete financial statements would not
provide additional material information that would be useful in
assessing the financial composition of the Guarantor Subsidiaries.
Investments in subsidiaries are accounted for under the equity
method, wherein the investor company's share of earnings and income
taxes applicable to the assumed distribution of such earnings are
included in net income. In addition, investments increase in the amount
of permanent contributions to subsidiaries and decrease in the amount of
distributions from subsidiaries. The elimination entries eliminate the
equity method investment in subsidiaries and the equity in earnings of
subsidiaries, intercompany payables and receivables and other
transactions between subsidiaries.
13
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Quarter Ended June 30, 2000
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $110,180 $414,191 $60,531 $ - $584,902
COST OF SALES - 88,856 313,326 45,617 - 447,799
------- -------- -------- ------- -------- --------
GROSS PROFIT - 21,324 100,865 14,914 - 137,103
OTHER OPERATING COSTS 59 17,822 70,970 7,321 - 96,172
------- -------- -------- ------- -------- --------
OPERATING INCOME (LOSS) (59) 3,502 29,895 7,593 - 40,931
OTHER (INCOME) EXPENSE
Interest expense 1,972 22,152 8,582 (1,190) (7,572) 23,944
Other (income) expense (2,211) (5,261) (510) 203 7,572 (207)
------- -------- -------- ------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES 180 (13,389) 21,823 8,580 - 17,194
PROVISION (BENEFIT) FOR
INCOME TAXES - (4,935) 8,116 3,155 - 6,336
------- -------- -------- ------- -------- --------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 180 (8,454) 13,707 5,425 - 10,858
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 11,064 21,141 4,590 - (36,795) -
------- -------- -------- ------- -------- --------
INCOME FROM CONTINUING OPERATIONS 11,244 12,687 18,297 5,425 (36,795) 10,858
DISCONTINUED OPERATIONS - (1,623) 2,009 - - 386
------- -------- -------- ------- -------- --------
NET INCOME $11,244 $ 11,064 $ 20,306 $ 5,425 $(36,795) $ 11,244
======= ======== ======== ======= ======== ========
</TABLE>
14
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Quarter Ended June 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $88,080 $271,338 $79,628 $ - $439,046
COST OF SALES - 67,450 208,618 56,651 - 332,719
------- ------- -------- ------- -------- --------
GROSS PROFIT - 20,630 62,720 22,977 - 106,327
OTHER OPERATING COSTS 43 15,599 38,092 13,676 - 67,410
------- ------- -------- ------- -------- --------
OPERATING INCOME (LOSS) (43) 5,031 24,628 9,301 - 38,917
OTHER (INCOME) EXPENSE
Interest expense 2,136 11,671 518 1,936 (2,212) 14,049
Other (income) expense (2,206) (36) (658) 160 2,212 (528)
------- ------- -------- ------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES AND
EXTRAORDINARY ITEM 27 (6,604) 24,768 7,205 - 25,396
PROVISION (BENEFIT) FOR
INCOME TAXES - (2,706) 11,222 1,896 - 10,412
------- ------- -------- ------- -------- --------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES AND
EXTRAORDINARY ITEM 27 (3,898) 13,546 5,309 - 14,984
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 14,957 18,855 5,309 - (39,121) -
------- ------- -------- ------- -------- --------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM 14,984 14,957 18,855 5,309 (39,121) 14,984
EXTRAORDINARY ITEM - - - - - -
------- ------- -------- ------- -------- --------
NET INCOME $14,984 $14,957 $ 18,855 $ 5,309 $(39,121) $ 14,984
======= ======= ======== ======= ======== ========
</TABLE>
15
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Six-months Ended June 30, 2000
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $225,878 $737,399 $171,267 $ - $1,134,544
COST OF SALES - 180,978 561,665 124,741 - 867,384
------- -------- -------- -------- -------- ----------
GROSS PROFIT - 44,900 175,734 46,526 - 267,160
OTHER OPERATING COSTS 101 34,707 120,114 25,840 - 180,762
------- -------- -------- -------- -------- ----------
OPERATING INCOME (LOSS) (101) 10,193 55,620 20,686 - 86,398
OTHER (INCOME) EXPENSE
Interest expense 4,088 39,164 15,678 (851) (15,143) 42,936
Other (income) expense (4,423) (10,865) (542) 358 15,143 (329)
------- -------- -------- -------- -------- ----------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES 234 (18,106) 40,484 21,179 - 43,791
PROVISION (BENEFIT) FOR
INCOME TAXES - (6,896) 15,789 8,376 - 17,269
------- -------- -------- -------- -------- ----------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 234 (11,210) 24,695 12,803 - 26,522
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 26,955 40,863 8,749 - (76,567) -
------- -------- -------- -------- -------- ----------
INCOME FROM CONTINUING
OPERATIONS 27,189 29,653 33,444 12,803 (76,567) 26,522
DISCONTINUED OPERATIONS - (2,307) 2,009 1,356 - 1,058
------- -------- -------- -------- -------- ----------
INCOME BEFORE
EXTRAORDINARY ITEM 27,189 27,346 35,453 14,159 (76,567) 27,580
EXTRAORDINARY ITEM 1,838 (391) - - - 1,447
------- -------- -------- -------- -------- ----------
NET INCOME $29,027 $ 26,955 $ 35,453 $ 14,159 $(76,567) $ 29,027
======= ======== ======== ======== ======== ==========
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Six-months Ended June 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $189,275 $561,858 $128,330 $ - $879,463
COST OF SALES - 147,333 434,457 92,732 - 674,522
------- -------- -------- -------- -------- --------
GROSS PROFIT - 41,942 127,401 35,598 - 204,941
OTHER OPERATING COSTS 111 31,583 77,505 19,197 - 128,396
------- -------- -------- -------- -------- --------
OPERATING INCOME (LOSS) (111) 10,359 49,896 16,401 - 76,545
OTHER (INCOME) EXPENSE
Interest expense 4,271 21,832 (1,024) 3,688 (4,424) 24,343
Accounts rec. securitization discount - 445 2,028 - 2,473
Other (income) expense (4,423) (338) (645) 278 4,424 (704)
------- -------- -------- -------- -------- --------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES 41 (11,580) 49,537 12,435 - 50,433
PROVISION (BENEFIT) FOR
INCOME TAXES - (4,746) 21,462 3,961 - 20,677
------- -------- -------- -------- -------- --------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 41 (6,834) 28,075 8,474 - 29,756
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 29,715 36,549 8,474 - (74,738) -
------- -------- -------- -------- -------- --------
NET INCOME $29,756 $ 29,715 $ 36,549 $ 8,474 $(74,738) $ 29,756
======= ======== ======== ======== ======== ========
</TABLE>
17
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF FINANCIAL POSITION
June 30, 2000
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ 10,191 $ (10,521) $ 1,068 $ - $ 738
Receivables, net - 2,899 163,363 36,438 - 202,700
Investment in accounts receivable
Securitization - - - 61,403 - 61,403
Accounts receivable - other - 10,924 8,231 375 - 19,530
Inventories, net - 49,371 106,046 24,198 - 179,615
Net assets of discontinued operations - - 117,500 - - 117,500
Note receivable from Issuer 147,436 - - - (147,436) -
Other current assets 436 53,128 11,804 2,588 (29,977) 37,979
-------- ---------- ---------- -------- ----------- ----------
Total current assets 147,872 126,513 396,423 126,070 (177,413) 619,465
INVESTMENT IN SUBSIDIARIES 399,981 998,049 53,220 - (1,451,250) -
PROPERTY, PLANT AND
EQUIPMENT, NET - 129,576 384,136 82,893 - 596,605
GOODWILL, NET - 48,292 464,010 75,515 - 587,817
NOTES RECEIVABLE FROM
SUBSIDIARIES - 245,000 - - (245,000) -
OTHER ASSETS, NET 3,963 50,727 19,654 4,074 (34,673) 43,745
-------- ---------- ---------- -------- ----------- ----------
TOTAL $551,816 $1,598,157 $1,317,443 $288,552 $(1,908,336) $1,847,632
======== ========== ========== ======== =========== ==========
CURRENT LIABILITIES
Accounts payable $ - $ 27,830 $ 104,191 $ 17,767 $ - $ 149,788
Accrued compensation and vacation - 10,207 36,966 5,803 - 52,976
Other current liabilities 12,708 20,011 (62,007) 122,084 (29,977) 62,819
Note payable to Parent - 147,436 - - (147,436) -
Current portion of long-term debt
and capital leases - 30,952 3,340 10,063 - 44,355
-------- ---------- ---------- -------- ----------- ----------
Total current liabilities 12,708 236,436 82,490 155,717 (177,413) 309,938
LONG-TERM DEBT AND
CAPITAL LEASES 139,063 877,191 14,031 19,987 - 1,050,272
NOTES PAYABLE TO ISSUER - - 245,000 - (245,000) -
DEFERRED INCOME TAXES - 62,313 - 11,785 (14,681) 59,417
OTHER LONG-TERM
LIABILITIES - 22,236 25,092 624 (19,992) 27,960
-------- ---------- ---------- -------- ----------- ----------
Total liabilities 151,771 1,198,176 366,613 188,113 (457,086) 1,447,587
SHAREHOLDERS' EQUITY 400,045 399,981 950,830 100,439 (1,451,250) 400,045
-------- ---------- ---------- -------- ----------- ----------
TOTAL $551,816 $1,598,157 $1,317,443 $288,552 $(1,908,336) $1,847,632
======== ========== ========== ======== =========== ==========
</TABLE>
18
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF FINANCIAL POSITION
December 31, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ 27,667 $ (28,003) $ 3,954 $ - $ 3,618
Receivables, net - 87 35,860 49,097 - 85,044
Investment in accounts receivable
Securitization - - - 54,396 - 54,396
Accounts receivable - other - 8,572 10,004 2,188 - 20,764
Inventories, net - 36,337 82,277 26,142 - 144,756
Note receivable from Issuer 147,436 - - - (147,436) -
Other current assets 345 24,247 3,597 4,348 (6,986) 25,551
-------- ---------- --------- -------- ----------- ----------
Total current assets 147,781 96,910 103,735 140,125 (154,422) 334,129
INVESTMENT IN SUBSIDIARIES 377,318 663,928 48,574 - (1,089,820) -
PROPERTY, PLANT AND
EQUIPMENT, NET - 104,938 323,180 104,038 - 532,156
GOODWILL, NET - 45,460 279,252 128,771 - 453,483
NOTE RECEIVABLE FROM
SUBSIDIARIES - 245,000 - - (245,000) -
OTHER ASSETS, NET 2,943 32,517 3,851 8,432 (23,470) 24,273
-------- ---------- --------- -------- ----------- ----------
TOTAL $528,042 $1,188,753 $ 758,592 $381,366 $(1,512,712) $1,344,041
======== ========== ========= ======== =========== ==========
CURRENT LIABILITIES
Accounts payable $ - $ 19,499 $ 79,447 $ 23,794 $ - $ 122,740
Accrued compensation and vacation - 8,388 32,638 9,016 - 50,042
Other current liabilities 682 99,317 (163,815) 123,801 (6,986) 52,999
Note payable to parent - 147,436 - - (147,436) -
Current portion of long-term debt
And capital leases - 674 4,652 8,563 - 13,889
-------- ---------- --------- -------- ----------- ----------
Total current liabilities 682 275,314 (47,078) 165,174 (154,422) 239,670
LONG-TERM DEBT AND
CAPITAL LEASES 152,050 472,180 6,690 22,170 - 653,090
NOTE PAYABLE TO ISSUER - - 245,000 - (245,000) -
DEFERRED INCOME TAXES - 57,881 - 9,709 (3,478) 64,112
OTHER LONG-TERM
LIABILITIES - 2,560 25,160 623 (19,992) 8,351
-------- ---------- --------- -------- ----------- ----------
Total liabilities 152,732 807,935 229,772 197,676 (422,892) 965,223
MINORITY INTEREST - 3,500 - 8 - 3,508
SHAREHOLDERS' EQUITY 375,310 377,318 528,820 183,682 (1,089,820) 375,310
-------- ---------- --------- -------- ----------- ----------
TOTAL $528,042 $1,188,753 $ 758,592 $381,366 $(1,512,712) $1,344,041
======== ========== ========= ======== =========== ==========
</TABLE>
19
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
Six-months ended June 30, 2000
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES $(4,441) $ (32,691) $106,926 $ (22,495) $ - $ 47,299
CASH FLOWS FROM
INVESTING ACTIVITIES
Acquisition costs, net of
cash acquired - - (32,155) (295,547) - (327,702)
Capital expenditures - (5,734) (30,892) (7,316) - (43,942)
Investment in marketable
securities, net (1,500) (110) 1,158 (12,142) - (12,594)
Investment in subsidiaries (255) (362,584) - - 362,839 -
Other investing activities 15,939 (10,819) (6,307) 76,064 (73,500) 1,377
------- --------- -------- --------- --------- ---------
Net cash used in investing
activities 14,184 (379,247) (68,196) (238,941) 289,339 (382,861)
CASH FLOWS FROM FINANCING
ACTIVITIES
Changes due to accounts
receivable securitization, net - (22,784) (50,716) (73,500) 73,500 (73,500)
Net proceeds from common stock
issuance 255 - - - - 255
Proceeds from long-term debt - 935,000 - 5,119 - 940,119
Repayments of long-term debt
and capital lease obligations (9,998) (500,345) (2,487) (3,652) - (516,482)
Debt issuance costs - (14,164) - - - (14,164)
Investment by parent - 255 31,955 330,629 (362,839) -
Other financing activities - (3,500) - - - (3,500)
------- --------- -------- --------- --------- ---------
Net cash provided by financing
activities (9,743) 394,462 (21,248) 258,596 (289,339) 332,728
EFFECT OF EXCHANGE RATE
CHANGES ON CASH - - - (46) - (46)
------- --------- -------- --------- --------- ---------
NET CHANGE IN CASH AND
CASH EQUIVALENTS - (17,476) 17,482 (2,886) - (2,880)
BALANCE AT BEGINNING OF
YEAR - 27,667 (28,003) 3,954 - 3,618
------- --------- -------- --------- --------- ---------
BALANCE AT END OF YEAR $ - $ 10,191 $(10,521) $ 1,068 $ - $ 738
======= ========= ======== ========= ========= =========
</TABLE>
20
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
Six-months ended June 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Eliminations Consolidated
--------- ------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES $ 4,251 $ 72,358 $ (8,941) $ 6,982 $ - $ 74,650
CASH FLOWS FROM
INVESTING ACTIVITIES
Acquisition costs, net of
cash acquired - - (73,548) (89,021) - (162,569)
Capital expenditures - (4,971) (30,290) (4,432) - (39,693)
Investment in subsidiaries - (158,313) (91,649) - 249,962 -
Other investing activities (4,954) 1 4,898 936 703 1,584
------- --------- --------- --------- --------- ---------
Net cash used in investing
activities (4,954) (163,283) (190,589) (92,517) 250,665 (200,678)
CASH FLOWS FROM FINANCING
ACTIVITIES
Changes due to accounts
receivable securitization, net - 5,434 37,788 - - 43,222
Net proceeds from common stock
issuance 703 - - - - 703
Proceeds from long-term debt - 232,000 - 9,805 - 241,805
Repayments of long-term debt and
capital lease obligations - (138,010) (1,472) (10,022) - (149,504)
Investment by parent 703 158,313 91,649 (250,625) -
Other financing activities - (1,117) 145 - - (972)
------- --------- --------- --------- --------- ---------
Net cash provided by financing
activities 703 99,010 194,774 91,432 (250,625) 135,254
EFFECT OF EXCHANGE RATE
CHANGES ON CASH - - - (4) - (4)
------- --------- --------- --------- --------- ---------
NET CHANGE IN CASH AND
CASH EQUIVALENTS - 8,085 (4,756) 5,893 - 9,222
BALANCE AT BEGINNING OF
YEAR - 6,952 (7,311) 1,734 - 1,375
------- --------- --------- --------- --------- ---------
BALANCE AT END OF YEAR $ - $ 15,037 $ (12,067) $ 7,627 $ - $ 10,597
======= ========= ========= ========= ========= =========
</TABLE>
21
<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:
* paper and other raw material costs and the ability to pass
through paper costs to customers
* general labor conditions
* ability to obtain productivity savings
* postage rates and other changes in the direct mail industry
* competition from electronic media, including the internet
* demand for printed materials
* interest rates and foreign currency exchange rates
* ability to obtain additional financing
* availability of acquisition opportunities and their related
costs
* ability to achieve cost savings from integration of
acquisitions
This entire report should be read to put such forward-looking statements
in context and to gain a more complete understanding of the
uncertainties and risks involved in the Company's business.
OVERVIEW, HISTORICAL FINANCIAL DATA BY SEGMENT (IN THOUSANDS)
The following table presents historical financial data by segment,
including acquisitions from their purchase dates.
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
---------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales
Commercial Printing $222,282 $168,100 $ 445,682 $354,178
Envelope 209,410 176,543 411,763 371,066
Printed Office Products 94,295 41,277 163,514 76,226
Label 58,915 53,126 113,585 577,993
-------- -------- ---------- --------
Total net sales $584,902 $439,046 $1,134,544 $879,463
======== ======== ========== ========
Operating income
Commercial Printing $ 14,934 $ 13,827 $ 32,627 $ 28,253
Envelope 19,653 22,856 41,795 47,258
Printed Office Products 9,439 4,049 17,632 7,008
Label 4,388 3,941 7,939 5,622
Corporate (7,483) (5,756) (13,595) (11,596)
-------- -------- ---------- --------
Total operating income 40,931 38,917 86,398 76,545
Interest expense (23,944) (14,049) (42,936) (26,816)
Other income (expense) 207 528 329 704
Income tax expense (6,336) (10,412) (17,269) (20,677)
-------- -------- ---------- --------
Income from continuing operations $ 10,858 $ 14,984 $ 26,522 $ 29,756
======== ======== ========== ========
</TABLE>
22
<PAGE>
<PAGE>
Net sales for the quarter ended June 30, 2000 increased 33.2% to
$584.9 million compared to net sales of $439.0 million for the quarter
ended June 30, 1999. This increase in net sales was attributable to
sales from companies acquired during 2000, a full quarter of sales from
companies acquired during 1999 and internal growth in Commercial
Printing and Label offset by a decline in pricing within the Envelope
segment. Gross profit of $137.1 million for the quarter ended June 30,
2000 represents a 28.9% increase over the quarter ended June 30, 1999.
Expressed as a percent of net sales, gross profit decreased by 80 basis
points to 23.4% for the quarter ended June 30, 2000 compared to 24.2%
for the quarter ended June 30, 1999. This decrease was primarily due to
unfavorable pricing in the envelope business offset by acquisitions with
higher gross profit percentages. Expressed as a percent of net sales,
other operating costs (which includes selling, administrative and other
expense) increased to 16.4% for the quarter ended June 30, 2000 from
15.4% in the quarter ended June 30, 1999. The increase was mainly due
to the impact of acquisitions. Operating income increased 5.2% from the
quarter ended June 30, 1999.
Net income from continuing operations for the quarter ended June
30, 2000 decreased 27.5% to $10.9 million from $15.0 million in the
second quarter of the prior year. This decrease was primarily due to a
70% increase in interest expense, partially offset by reduced income tax
expense. Earnings per diluted share from continuing operations
decreased 25.0% to $0.21 in the quarter ended June 30, 2000 from $0.28
in 1999.
Net sales for the six months ended June 30, 2000 increased 29.0%
to $1,134.5 million compared to net sales of $879.5 million for the six
months ended June 30, 1999. This increase in net sales was attributable
to sales from companies acquired during 2000, a full six months of sales
from companies acquired during 1999 and internal growth in Commercial
Printing and Label offset by a decline in volume and pricing within the
Envelope segment. Gross profit of $267.2 million for the six months
ended June 30, 2000 represents a 30.4% increase over the six months
ended June 30, 1999. Expressed as a percent of net sales, gross profit
increased by 30 basis points to 23.6% for the six months ended June 30,
2000 compared to 23.3% for the six months ended June 30, 1999. This
increase was primarily due to acquisitions with higher gross profit
percentages offset by pricing in the envelope business expressed as a
percent of net sales, other operating costs (which includes selling,
administrative and other expense) increased to 15.9% for the six months
ended June 30, 2000 from 14.6% in the six months ended June 30, 1999.
The increase was mainly due to the impact of acquisitions. Operating
income increased 12.9% from the six months ended June 30, 1999.
Net income from continuing operations for the six months ended
June 30, 2000 decreased 11.1% to $26.5 million from $29.8 million in the
six months of the prior year. This decrease was primarily due to a 60%
increase in interest expense, partially offset by reduced income tax
expense. Earnings per diluted share from continuing operations
decreased 8.9% to $0.51 for the six months ended June 30, 2000 from
$0.56 in 1999.
23
<PAGE>
<PAGE>
RESULTS OF OPERATIONS FOR SIGNIFICANT BUSINESS SEGMENTS
COMMERCIAL PRINTING
-------------------
QUARTER ENDED JUNE 30, 2000 COMPARED TO THE QUARTER ENDED JUNE 30, 1999
NET SALES--Net sales increased by $54.1 million (32.2%) for the
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999,
primarily due to a volume increase of approximately 15% and the balance
due to acquisitions in 1999 and 2000.
OPERATING INCOME--The increase in operating income from $13.8
million to $14.9 million in the quarter ended June 30, 2000 was due to
acquisitions in 1999 and 2000 as volume impact was offset by changes in
product mix. Total cost of sales, as a percent of sales, increased from
77.3% for the quarter ended June 30, 1999 to 78.0% for the quarter ended
June 30, 2000. This increase was primarily due to general cost
increases, mainly in raw materials, and product mix.
SIX-MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX-MONTHS ENDED JUNE 30,
1999
NET SALES--Net sales increased by $91.5 million (25.8%) for the
six-months ended June 30, 2000 compared to the six-months ended June 30,
1999, primarily due to a volume increase of approximately 15% and the
balance due to acquisitions in 1999 and 2000.
OPERATING INCOME--The majority of the increase in operating income
from $28.3 million to $32.6 million in the six-months ended June 30,
2000 was due to acquisitions in 1999 and 2000 as volume impact was
offset by changes in product mix. Total cost of sales, as a percent of
sales was the same (77.7%) for both six-month periods.
ENVELOPE
--------
QUARTER ENDED JUNE 30, 2000 COMPARED TO THE QUARTER ENDED JUNE 30, 1999
NET SALES--Net sales increased by $32.9 million (18.6%) for the
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999.
The majority of the increase (14%) in net sales was attributable to
sales from a company acquired during 2000 and a full quarter of sales
from a company acquired during 1999, with the remainder resulting from
management's strategy to grow sales volume by lowering prices to meet
competitor's prices.
OPERATING INCOME--The decrease in operating income from $22.8
million to $19.6 million in the quarter ended June 30, 2000 versus the
quarter ended June 30, 1999 was mostly due to product mix changes and
general pricing pressures offset by the impact of 1999 and 2000
acquisitions. Total cost of sales, as a percent of sales, increased from
74.6% for the quarter ended June 30, 1999 to 79.2% for the quarter ended
June 30, 2000. The increase was due to product mix changes and pricing
pressures. The strategy to grow sales in the second quarter by lowering
prices was successful, but resulted in reduced operating margins.
Rising paper prices, which could not in some cases be immediately passed
on to customers also contributed to reduced operating margins.
24
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<PAGE>
SIX-MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX-MONTHS ENDED JUNE 30,
1999
NET SALES--Net sales increased by $40.7 million (11.0%) for the
six-months ended June 30, 2000 compared to the six-months ended June 30,
1999. The majority of the increase in net sales was attributable to
sales from a company acquired during 2000 and a full six months of sales
from a company acquired during 1999. Increases in volume for the
quarter ended June 30, 2000 were offset by a decrease in volume for the
quarter ended March 31, 2000.
OPERATING INCOME--The decrease in operating income from $47.3
million to $41.8 million in the six-months ended June 30, 2000 versus
the six-months ended June 30, 1999 was due mostly to general pricing
pressures and product mix changes. Total cost of sales, as a percent of
sales, increased from 75.3% for the six-months ended June 30, 1999 to
78.5% for the six-months ended June 30, 2000. The increase was due to
product mix changes and pricing pressures offset by the impact of 1999
and 2000 acquisitions. The strategy to grow sales in the second quarter
by lowering prices was successful, but resulted in reduced operating
margins. Rising paper prices, which could not in some cases be passed
on immediately to customers also contributed to reduced operating
margins.
PRINTED OFFICE PRODUCTS
-----------------------
QUARTER ENDED JUNE 30, 2000 COMPARED TO THE QUARTER ENDED JUNE 30, 1999
NET SALES--Net sales increased by $53.1 million (128.4%) for the
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999.
This increase in net sales was attributable to sales from a company
acquired during 2000 offset by decreases in volume at existing
businesses. Increases in specialty label and other specialty products
like VersaSeal(R) have been more than offset by decreases in the
traditional forms business.
OPERATING INCOME--The majority of the increase in operating income
from $4.0 million to $9.4 million in the quarter ended June 30, 2000 was
due to acquisitions in 1999 and 2000 and a change in product mix. Total
cost of sales, as a percent of sales, decreased from 77.9% for the
quarter ended June 30, 1999 to 68.0% for the quarter ended June 30,
2000. Total cost of sales, as a percent of sales, was 77.7% for the
quarter ended June 30, 2000 excluding acquisitions from 2000. The
decrease was due to lower material costs through aggressive management
of our main supplier agreement and effects of a new waste reduction
program offset by the negative impact of changes in product mix.
SIX-MONTHS ENDED JUNE 30, 2000 COMPARED TO THE SIX-MONTHS ENDED JUNE 30,
1999
NET SALES--Net sales increased by $87.3 million (114.5%) for the
six-months ended June 30, 2000 compared to the six-months ended June 30,
1999. This increase in net sales was attributable to sales from a
company acquired during 2000 and from companies acquired during 1999
offset by decreases in volume at existing businesses. Increases in
specialty label and other specialty products like VersaSeal(R) have been
more than offset by decreases in the traditional forms business.
OPERATING INCOME--The majority of the increase in operating income
from $7.0 million to $17.6 million in the six-months ended June 30, 2000
was due to acquisitions in 1999 and 2000, productivity improvements and
a change in product mix. Total cost of sales, as a percent of sales,
decreased from 80.2% for the six-months ended June 30, 1999 to 68.7% for
the six-months ended June 30, 2000. Total cost of sales, as a percent
of sales, was 79.2% for the quarter ended June 30, 2000 excluding
acquisitions from 1999 and 2000. The decrease was due to lower material
costs through aggressive management of our main supplier agreement and
effects of a new waste reduction program offset by the negative impact
of changes in product mix.
25
<PAGE>
<PAGE>
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, loss (gain) on disposal of assets and a
reduction of cost of sales from certain supplier rebate programs not
allocated to segments.
Corporate expenses for the quarter and six-months ended June 30,
2000 increased $1.7 million and $2.0 million respectively compared to
1999 as a result of increases in amortization expense and operating
lease expense offset by an increase in corporate retained rebates.
Amortization expense increased as a result of the acquisitions made in
1999 and 2000.
INTEREST EXPENSE
----------------
Interest expense, including accounts receivable securitization
discount, increased $9.9 million and $16.1 million, respectively, for
the quarter and six-months periods ended ended June 30, 2000 compared to
the same periods of 1999. Both increases occurred as a result of higher
average bank debt balances, primarily due to acquisitions, and an
increase in the weighted-average borrowing rate due to the refinancing
of certain bank facilities and a general increase in market interest
rates. 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 $75.0 million until July 2004. At June 30,
2000 and 1999, $140.0 million and $96.0 million, respectively, had been
sold under this agreement. The receivables were sold at a discount
slightly above the prevailing commercial paper rate, plus certain other
fees.
INCOME TAX EXPENSE
------------------
The effective tax rate was 36.9% and 39.4% for the quarter and
six-months periods ended June 30, 2000, respectively, compared to 41.0%
for both periods in 1999. The effective tax rate was higher than the
federal statutory rates due to state and provincial income taxes and
certain goodwill amortization that is not tax deductible. See Note 9 of
the Notes to Consolidated Financial Statements included in the Company's
1999 Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL CASH FLOW
--------------------
Net cash flow provided by operating activities was $47.3 million
and $74.7 million for the six-months ended June 30, 2000 and 1999,
respectively. The decrease in cash flow provided by operating
activities is due to the increase in working capital. The largest
contributor to the increase in working capital is accounts receivable.
Accounts receivable has increased mostly in the Commercial Printing and
Label segments because of higher sales in the six months ended June 30,
2000 compared to the prior year. Acquisitions required cash payments of
$327.7 million and $162.6 million for the six-months ended June 30, 2000
and 1999, respectively. Other investing activities, excluding investment
in marketable securities, were $43.9 million and $39.7 million for the
six months ended June 30, 2000 and 1999, respectively. The investment in
equity securities of $12.6 million in the six-months ended June 30, 2000
resulted from funding of supplemental retirement benefits of certain
employees or former employees of American Business Products, Inc. and an
investment in Sprockets.com. Net cash flow from financing activities
was $332.7 million and $135.3 million for the six-months ended June 30,
2000 and 1999, respectively. See footnote 3 of the financial statements
contained in Item 1 for explanation of the 2000 financing activities.
At June 30, 2000, the Company had approximately $194.3 million of
available credit under its various credit facilities.
26
<PAGE>
<PAGE>
FOREIGN CURRENCY
----------------
The Company's foreign currency exposure primarily relates to its
Canadian operations. Net sales provided by the Canadian operations for
the six-months ended June 30, 2000 and 1999 was USD $104.1 million and
USD $95.4 million, respectively. The impact of the change in Canadian
Dollar exchange rates was immaterial.
SEASONALITY AND ENVIRONMENT
---------------------------
As the Company expands its operations into more commercial
printing and labels segments, it has become more impacted by
seasonality. Management expects the first and third quarter to report
higher sales for the Commercial Printing segment because of annual
report and car brochure business. In addition, the third quarter is
traditionally the strongest for the Label segment.
The effects of 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 going forward.
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"), as
amended, which will be effective beginning in the year 2001, 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. Because of the Company's
minimal hedging and derivative activity, management does not anticipate
that the adoption of the statement will have a significant impact on its
operations and financial position.
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 (USD$18,622,000 at June 30, 2000)
and the interest rate risk for the investment in accounts receivable
securitization ($61,403,000 at June 30, 2000) are not considered to be
significant since the difference between 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 June 30, 2000,
$608.8 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.
If LIBOR were to increase 1% from the rate at June 30, 2000 and
the Company borrowed the maximum amount available under its variable
rate debt ($803.1 million), the Company's annual interest expense would
increase by $8.0 million, and annual income after income taxes would
decrease by approximately $4.9 million using a marginal income tax rate
of 38.5%. This analysis does not consider the effects of the reduced
level of overall economic activity that could exist in such an
environment. Further, in the event of a change of such magnitude,
management would likely take actions to further mitigate its exposure to
the change. However, due to the uncertainty of the specific actions
that would be taken and their possible effects, the sensitivity analysis
assumes no changes in the Company's financial structure.
See Item 7A of the Company's 1999 Form 10-K for quantitative and
qualitative disclosures about market risk related to fixed rate long-
term debt. No significant changes in market risk have occurred since
that filing.
27
<PAGE>
<PAGE>
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On May 3, 2000, the Company held its Annual Meeting of
Stockholders, at which the following matters were voted upon:
ELECTION OF DIRECTORS--The following individuals were re-elected
to the Board of Directors by the following vote:
For Withhold
--- --------
Frank P. Diassi 34,370,468 91,635
Frank J. Hevrdejs 34,370,468 91,635
Gerald F. Mahoney 34,232,121 229,982
Jerome W. Pickholz 34,351,718 110,385
Paul V. Reilly 34,204,157 257,946
William R. Thomas 34,351,718 110,385
Janice C. Peters 34,351,718 110,385
SELECTION OF AUDITORS--The selection of Ernst & Young LLP as
independent auditors of the Company for the fiscal year ending 2000 was
ratified by the following vote: 34,406,984 For, 49,990 Against, 5,129
Abstentions.
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 September 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.
4.1.1 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).
4.1.2 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).
4.1.3 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).
4.2 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.
28
<PAGE>
<PAGE>
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 September 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.
10.8 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.
10.9 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.
10.10 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 Receivables Purchase Agreement dated as of July 1, 1999
among Mail-Well Trade Receivables Corporation, as
Seller, Quincy Capital Corporation, as Issuer, The
Alternative Purchasers from Time to Time Party
thereto, Mail-Well I Corporation, as Servicer and Bank
of America National Trust and Savings Association, as
Administrator; and First Amendment thereto--incorporated
by reference from the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1999.
10.17 Purchase and Sales Agreement between Mail-Well I Corporation
as initial Servicer and as Guarantor, The Originators
from Time to Time Party thereto and Mail-Well Trade
Receivable Corporation, as Purchaser dated as of July
1, 1999; and First Amendment thereto--incorporated by
reference from the Company's Quarterly Report on Form
10-Q for the quarter ended September 30, 1999.
10.18 Servicing Agreement dated as of July 1, 1999 by and among
Mail-Well I Corporation, as Servicer, Mail-Well Trade
Receivables Corporation, as Seller under the
Receivables Purchase Agreement and Bank of America
National Trust and Saving Association, as
Administrator; and First Amendment thereto--
incorporated by reference from the Company's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999.
<PAGE>
10.19 Merger Agreement and Plan of Merger by and among American
Business Products, Inc., Mail-Well, Inc. and Sherman
Acquisition Corporation dated January 13,
2000--incorporated by reference from Exhibit (c) (1)
to the Registrant's Tender Offer Statement on Schedule
14D-1 filed with the commission on January 21, 2000.
10.20 Change of Control Agreement dated November 15, 1999, between
the Company and Gerald F. Mahoney--incorporated by
reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
29
<PAGE>
<PAGE>
10.21 Change of Control Agreement dated November 15, 1999, between
the Company and Paul V. Reilly--incorporated by
reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
10.22 Change of Control Agreement dated November 15, 1999, between
the Company and Gary Ritondaro--incorporated by
reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
10.23 Change of Control Agreement dated November 15, 1999, between
the Company and Robert Meyer--incorporated by
reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
10.24 Change of Control Agreement dated November 15, 1999, between
the Company and Michael A. Zawalski--incorporated by
reference from the Company's Annual Report on Form 10-K
for the year ended December 31, 1999.
10.25 Credit Agreement dated as of February 18, 2000 among Mail-Well I
Corporation, Bank of America, N.A., as Administrative Agent
and Letter of Credit Issuing Bank, ABN AMRO Bank, N.V., as
Syndication Agents, the Bank of Nova Scotia, as Documentation
Agent and certain other financial institutions party thereto.
10.26 Security Agreement dated as of February 18, 2000, by and
among Mail-Well I Corporation, Mail-Well, Inc.,
certain other affiliates of the Company and Bank of
America, N.A., as agent.
27.1 <F*> Financial Data Schedule for three-months ended June 30, 2000
27.2 <F*> Financial Data Schedule for three-months ended June 30, 1999
[FN]
<F*> Filed herewith.
(b) Reports on Form 8-K
A report on Form 8-K was filed on July 17, 2000, announcing second
quarter earnings, letter of intent for sale of Jen-Coat, and stock buy-
back program.
30
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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: August 8, 2000 Gerald F. Mahoney
Chairman of the Board/
Chief Executive Officer
By /s/ Gary H. Ritondaro
---------------------------
Date: August 8, 2000 Gary H. Ritondaro
Senior Vice President,
Chief Financial Officer
31
