<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-K/A
AMENDMENT TO FORM 10-K ANNUAL REPORT
Filed pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Commission File Number 0-29474
BIG FLOWER HOLDINGS, INC.
- --------------------------------------------------------------------------------
Commission File Number 1-14084
BIG FLOWER PRESS HOLDINGS, INC.
DELAWARE 13-3971556
DELAWARE 13-3768322
(State of Incorporation) (I.R.S. Employer
Identification Nos.)
3 East 54th Street
New York, NY 10022
(212) 521-1600
(Address and telephone number of Registrants' Principal Executive Offices)
Indicate by check mark whether the Registrants (1) have 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
Registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
As of May 31, 1999, there were approximately 19,700,000 shares of Big Flower
Holdings Inc.'s common stock, par value $0.01 per share, outstanding. There is
no market for the capital stock of Big Flower Press Holdings, Inc., all
outstanding shares of which are owned by Big Flower Holdings, Inc.
================================================================================
<PAGE>
The undersigned registrants hereby amend the following items, financial
statements, exhibits or other portions of their annual report on Form 10-K for
the fiscal year ended December 31, 1998 as set forth below:
1. Add Exhibits as follows:
EXHIBIT
NUMBER DESCRIPTION
23 Consent of Deloitte & Touche LLP *
99.1 Financial statements and exhibits required *
by Form 11-K Annual Report pursuant to
Section 15 (d) of the Securities Exchange
Act of 1934 for the Big Flower Holdings,
Inc. and Subsidiaries Savings Plus 401(k)
Plan.
99.2 Financial statements and exhibits required *
by Form 11-K Annual Report pursuant to
Section 15 (d) of the Securities Exchange
Act of 1934 for the Webcraft Employee Savings
Trust.
99.3 Financial statements and exhibits required *
by Form 11-K Annual Report pursuant to
Section 15 (d) of the Securities Exchange
Act of 1934 for the Webcraft Inc. Employees
Accumulated Savings Trust.
--------------------------
* being filed herewith
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG FLOWER HOLDINGS, INC.
/s/ RICHARD L. RITCHIE
----------------------
Richard L. Ritchie
Executive Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
DATE: June 29, 1999
BIG FLOWER PRESS HOLDINGS, INC.
/s/ RICHARD L. RITCHIE
----------------------
Richard L. Ritchie
Executive Vice President and Chief
Financial Officer (Principal Financial
and Accounting Officer)
DATE: June 29, 1999
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
to incorporation by Reference in Registration Statements
on Form S-3 and S-8
We consent to the incorporation by reference in Registration Statement No.
333-39443 on Form S-8 and Registration No. 333-44445 on Form S-3 of Big
Flower Holdings, Inc. of our reports dated June 7, 1999, June 7, 1999, and
June 18, 1999 included as an Exhibit to this Form 10-K/A with regard to the
financial statements of Webcraft, Inc. Employees Accumulated Saving Trust,
Webcraft Employee Savings Trust and Big Flower Holdings, Inc. and Subsidiaries
Savings Plus 401(k) Plan, respectively, for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
New York, New York
June 29, 1999
<PAGE>
- --------------------------------------------------------------------------------
BIG FLOWER HOLDINGS, INC.
AND SUBSIDIARIES SAVINGS
PLUS 401(K) PLAN
Financial Statements as of December 31, 1998 and
1997 and for the Year Ended December 31, 1998,
Supplemental Schedules for the Year Ended
December 31, 1998 and Independent Auditors'
Report
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 1998 3
Notes to Financial Statements 4-13
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 14-15
Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998 16
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator and Participants of
Big Flower Holdings, Inc. and Subsidiaries
Savings Plus 401(k) Plan:
We have audited the accompanying statements of net assets available for benefits
of the Big Flower Holdings, Inc. and Subsidiaries Savings Plus 401(k) Plan (the
"Plan") as of December 31, 1998 and 1997, and the statement of changes in net
assets available for benefits for the year ended December 31, 1998. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 1998 and (2) reportable
transactions for the year ended December 31, 1998 are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedules are the
responsibility of the Plan's management. Such supplemental schedules have been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken as
a whole.
June 18, 1999
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS:
Investments :
Investments at fair value $58,756,596 $41,554,311
Loans to participants 3,750,208 2,386,428
----------- -----------
Total investments 62,506,804 43,940,739
----------- -----------
Receivables:
Employee contributions 784,051 552,747
Employer contributions 582,595 333,607
----------- -----------
Total receivables 1,366,646 886,354
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $63,873,450 $44,827,093
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements.
2
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ADDITIONS:
Investment income:
Net appreciation in fair value of investments $ 8,110,883
Interest income 680,050
-----------
Total investment income 8,790,933
-----------
Contributions:
Employee 10,997,111
Employer 2,565,744
-----------
Total contributions 13,562,855
-----------
Total additions 22,353,788
DEDUCTIONS:
Distributions to participants and beneficiaries 3,307,431
-----------
NET INCREASE 19,046,357
NET ASSETS AVAILABLE FOR BENEFITS
Beginning of year 44,827,093
-----------
End of year $63,873,450
-----------
-----------
</TABLE>
See notes to financial statements.
3
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. PLAN DESCRIPTION AND RELATED INFORMATION
Organization of the Plan - Big Flower Holdings, Inc. and Subsidiaries (the
"Company") Savings Plus 401(k) Plan (the "Plan"), formerly the Treasure
Chest Advertising Company, Inc. Savings Plus 401(k) Plan, is a defined
contribution plan. The Plan was established in July 1990 and amended and
restated effective January 1, 1994. The Plan covers eligible employees
credited with three months of service and at least 18 years of age.
Plan Document - Plan provisions regarding participation, vesting,
distributions, allocations, withdrawals and forfeitures are described in
the summary plan description, which is available to all participants. The
following brief description of the Plan is provided for general
information purposes only and is qualified in its entirety by the Plan
Document. Participants should refer to the Plan Document for more
complete information.
Participant Accounts - Separate accounts are maintained for each
participant. Each participant's account is credited with the
participant's pre-tax contributions and Company matching contributions,
discretionary profit sharing contributions (should the Company elect), and
investment earnings and losses. These amounts are invested in any of the
available investment funds, including a Company common stock fund, as
directed by the participant. Allocations of plan earnings are based on
participant account balances.
Vesting - Participants are immediately vested in their elective
contributions plus actual earnings thereon. Company matching contributions
are vested 100% in their entirety after the participant has attained at
least five years of credited service. Forfeitures of non-vested matching
contributions are used to reduce the Company's future matching
contributions and any profit sharing contributions. Participants shall at
all times have a nonforfeitable right to the vested amounts of their
accounts.
Plan Administration - All assets of the Plan are held and managed by a
trustee and an independent custodian. Investments are participant
directed. The custodian executes participant investment orders. All other
matters with respect to the Plan are administered by a committee whose
members are appointed by the Board of Directors of Treasure Chest
Advertising Company, Inc. (the "Administrative Committee").
Payment of Benefits - A participant's plan benefits may be distributed at
retirement, death, disability, age 59 1/2, termination of employment (if
the participant no longer wishes to continue in the Plan) or proven
financial hardship, as approved by the Administrative Committee. Such
benefits will normally be paid in a lump sum.
4
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
Investments - Investments in all funds, except the Guaranteed Certificate
funds and participant loans, are presented at fair value, based on the
quoted market prices of the underlying securities within each fund. The
Guaranteed Certificate funds are presented at contract value, which
represents the accumulated contributions plus accrued net earnings, less
distributions. The crediting interest rate on the contracts held by the
Guaranteed Certificate funds range from 4.10% to 6.60% at December 31,
1998 and 1997. Participant loans are valued at cost which approximates
fair value. Purchases and sales are recorded on a trade date basis.
Interest income is recorded on the accrual basis.
Net appreciation in fair value of investments includes realized and
unrealized gains and losses on investments sold or held during the year.
Benefits - Benefits are recorded in the accompanying financial statements
when paid. The benefits payable to terminated participants are not
reflected in the accompanying financial statements. Net assets available
for plan benefits at December 31, 1998 include $756,000 for participants
who have withdrawn from the plan but have not yet been paid their vested
benefits.
Plan Expenses - Accounting and administrative fees are paid out of plan
assets unless paid by the Company. The Company paid all accounting and
administrative fees of the Plan for the year ended December 31, 1998.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Concentrations of Credit Risk - The Plan's financial instruments that are
exposed to concentrations of credit risk consist primarily of cash, cash
equivalents and mutual fund investments. The Plan's cash, cash equivalents
and mutual fund investments are held in a segregated account administered
by the Plan's custodian, Great-West Life & Annuity Insurance Company.
3. PLAN FUNDING
Participants may annually contribute from 1% to 15% of their gross
salaries to the Plan, up to a maximum amount as established under the
Internal Revenue Code ("IRC"). Participants may adjust their contribution
percentages four times a year, or at such other times determined by the
Administrative Committee. In addition, participants may, at the discretion
of the Administrative Committee, deposit rollover amounts from other plans
into the Plan. The Company will contribute a matching contribution equal
to 50% of the first 3% of salary which each participant contributes.
4. LOANS TO PARTICIPANTS
Active participants may obtain loans from their accounts with the consent
of the Administrative Committee. The repayment period of such loans cannot
exceed five years unless the proceeds are used to purchase the
participant's principal residence, in which case longer terms, up to
fifteen years, are allowed. Interest rates are established by the
Administrative Committee at a rate equal to a bank's prime rate plus 1%,
which equaled 9.00% and 8.50% at December 31, 1998 and 1997, respectively.
5
<PAGE>
The aggregate principal balance of loans outstanding to a participant may
not exceed the lesser of (i) $50,000 or (ii) one-half of the participant's
vested accrued benefit. Loans cannot be less than $1,000. All loans are
secured by an assignment of a security interest in the participant's
account.
5. TAX STATUS
The Plan obtained its latest determination letter on May 31, 1996, in
which the Internal Revenue Service stated that the Plan, as then designed,
was in compliance with the applicable requirements of IRC Section 401. The
Plan has been amended since receiving the determination letter. In 1995,
the Plan's sponsor became aware of certain technical deficiencies in the
operation of the Plan. In November 1995, the Plan entered into the
Voluntary Compliance Review Program ("VCR Program") established by the
Internal Revenue Service as a method of bringing the operation of the Plan
into compliance with the law for the 1990 through 1994 Plan years. The
Company has made the corrective actions required by the VCR Program for
those years. Additionally, in November 1998, the Plan entered into the
VCR Program for additional operational defects occurring in the 1995 -
1998 Plan years. The Company intends to make the corrective actions
required by the VCR Program for those years and intends that the Plan
will continue to maintain its tax qualification.
6. INVESTMENTS
The following table presents the fair value of investments. Investments
that represent 5% or more of the Plan's net assets available for plan
benefits are separately identified.
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1998 1997
<S> <C> <C>
Investments at fair value as determined by the custodian based on
market prices of underlying assets in the funds invested:
Bond funds $ 1,853,009 $ 1,555,614
Money market funds:
Money Market Fund I 584,461 638,723
Money Market Fund II 3,513,810 * 2,357,883 *
Equity funds:
Aggressive Growth Fund I 6,596,259 * 3,869,917 *
Aggressive Growth Fund II 3,301,664 * 2,881,689 *
Growth Fund II 9,401,263 * 7,192,397 *
Other equity funds 14,473,509 9,502,496
Mutual funds:
Profile Series I 4,059,755 * 2,429,163 *
Profile Series II 4,432,712 * 2,774,644 *
Other profile series 2,967,834 1,755,169
Big Flower Holdings, Inc. Common Stock 265,654 98,391
Investments at estimated value:
Other investments:
Guaranteed Certificate Fund 36m 6,773,355 * 6,084,645 *
Other investments 533,311 413,580
Loans to participants 3,750,208 * 2,386,428 *
------------ ------------
Total investments $ 62,506,804 $ 43,940,739
------------ ------------
------------ ------------
</TABLE>
* Represents investments that exceed 5% of Plan assets.
6
<PAGE>
7. INVESTMENTS OPTIONS
The plan allows a variety of funds in which to invest. Set forth below is
a brief description of these funds. Participants should review each
particular fund's prospectus prior to investing. The descriptions set
forth below are qualified in their entirety by the particular prospectus.
Bond Funds - Funds are invested in corporate or government bonds with
different interest rates and maturity periods. The available options are
as follows:
I. Maxim U.S. Government Mortgage Securities Portfolio
II. Maxim Investment Grade Corporate Bond Portfolio
III. Maxim Corporate Bond Portfolio
IV. Putnam Global Governmental Income Portfolio
V. Maxim Short-Term Maturity Bond Portfolio
Guaranteed Certificate Funds - Similar to certificates of deposit and
guaranteed by the Great-West Life and Annuity Insurance Company, these
Funds are credited daily with interest earned until maturity.
Aggressive Growth Funds - Investments are made in the common stocks of
companies that are considered undervalued or present growth possibilities.
The available options are as follows:
I. Twentieth Century Ultra Investors Fund
II. AIM Constellation Fund
III. Maxim Small-Cap Index Portfolio
IV. Maxim Growth Index Portfolio
V. Maxim Small-Cap Aggressive Growth Portfolio
Growth Funds - Funds are generally invested in common stocks of medium or
large companies that offer growth potential. The available options are as
follows:
I. Fidelity Advisor Growth Opportunities Fund
II. Orchard Index 500 Fund
III. AIM Weingarten Fund
IV. Maxim Small-Cap Value Portfolio
Growth & Income Funds - These funds invest in large companies with stable
histories, offering opportunities for both long term growth and current
income through bonds and dividend-paying stock. The available options are
as follows:
I. Maxim Total Return Portfolio
II. AIM Charter Fund
III. Maxim Value Index Portfolio
IV. Putnam Fund for Growth & Income
V. Fidelity Advisor Equity Income Fund
International Funds - These Funds invest in large international companies
that offer growth potential. These available options are as follows:
I. Putnam Global Growth Fund
II. Maxim Foreign Equity Portfolio
III. Fidelity Advisor Overseas Fund
7
<PAGE>
Money Market Fund I - Formally known as the Daily Interest Guaranteed
Fund, amounts are invested in short term money market securities not to
exceed 13 months, except for U.S. governmental securities which are
limited to 25 months. Interest earned in this fund is guaranteed not to
fall below 4.0% per annum. As of July 1, 1993, this fund was closed to new
participants, although existing participants may continue to contribute.
Money Market Fund II - Formally named the Maxim Money Market Portfolio,
amounts are invested in short term money market securities with maturities
not to exceed 13 months, except for U.S. governmental securities which are
limited to 25 months.
Mutual Funds - These Funds are invested throughout the above Funds in
various combinations to provide a diversified group of securities.
I. Profile Series I
II. Profile Series II
III. Profile Series III
IV. Profile Series IV
V. Profile Series V
Big Flower Holdings, Inc. Common Stock -These funds are invested in the
common stock of the Company.
8. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has
the right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of the Employee
Retirement Income Security Act of 1974. In the event of the Plan's
termination, participants will become 100% vested in their accounts.
8
<PAGE>
9. INVESTMENT INFORMATION BY FUND
Significant components of the changes in net assets for each investment
option, which include investment appreciation and earnings, contributions
and distributions, and, additionally, net assets available for benefits
for each investment option are as follows for the year ended December 31,
1998:
<TABLE>
<CAPTION>
1998
<S> <C>
Net appreciation (depreciation):
Aggressive Growth Fund I $ 1,514,759
Aggressive Growth Fund II 544,660
Aggressive Growth Fund III (1,676)
Aggressive Growth Fund IV 357,792
Aggressive Growth Fund V (18,806)
Bond Fund I 42,494
Bond Fund II 20,408
Bond Fund III 15,251
Bond Fund IV 5,679
Bond Fund V 4,337
Big Flower Holdings, Inc. Common Stock (27,896)
Growth Fund I 321,560
Growth Fund II 2,048,232
Growth Fund III 493,562
Growth Fund IV 17,645
Growth & Income Fund I 62,813
Growth & Income Fund II 333,055
Growth & Income Fund III 151,058
Growth & Income Fund IV 193,760
Growth & Income Fund V 50,446
International Fund I 327,622
International Fund II 17,691
International Fund III 16,499
Money Market Fund II 138,675
Profile Series I 596,701
Profile Series II 583,160
Profile Series III 229,879
Profile Series IV 50,052
Profile Series V 21,471
-----------
Total $ 8,110,883
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
Interest income:
Guaranteed Certificate Fund 36m $332,242
Guaranteed Certificate Fund 60m 11,787
Guaranteed Certificate Fund 84m 15,034
Money Market Funds 16,112
Loans to Participants 304,875
--------
Total $680,050
--------
--------
</TABLE>
9
<PAGE>
9. INVESTMENT INFORMATION BY FUND (continued)
<TABLE>
<CAPTION>
1998
<S> <C>
Employee contributions:
Guaranteed Certificate Fund 36m $ 641,912
Guaranteed Certificate Fund 60m 49,683
Guaranteed Certificate Fund 84m 57,170
Aggressive Growth Fund I 1,113,669
Aggressive Growth Fund II 596,625
Aggressive Growth Fund III 118,562
Aggressive Growth Fund IV 394,425
Aggressive Growth Fund V 313,209
Bond Fund I 141,234
Bond Fund II 55,676
Bond Fund III 167,956
Bond Fund IV 41,237
Bond Fund V 16,651
Big Flower Holdings, Inc. Common Stock 164,953
Growth Fund I 358,167
Growth Fund II 804,216
Growth Fund III 355,325
Growth Fund IV 86,983
Growth & Income Fund I 84,510
Growth & Income Fund II 227,136
Growth & Income Fund III 339,365
Growth & Income Fund IV 328,606
Growth & Income Fund V 134,013
International Fund I 374,412
International Fund II 58,635
International Fund III 73,927
Money Market Fund II 638,073
Profile Series I 1,242,735
Profile Series II 1,185,083
Profile Series III 551,690
Profile Series IV 186,014
Profile Series V 95,259
-----------
Total $10,997,111
-----------
-----------
</TABLE>
10
<PAGE>
9. INVESTMENT INFORMATION BY FUND (continued)
<TABLE>
<CAPTION>
1998
<S> <C>
Employer contributions:
Guaranteed Certificate Fund 36m $ 250,061
Guaranteed Certificate Fund 60m 12,142
Guaranteed Certificate Fund 84m 15,178
Aggressive Growth Fund I 251,646
Aggressive Growth Fund II 160,456
Aggressive Growth Fund III 28,347
Aggressive Growth Fund IV 87,583
Aggressive Growth Fund V 72,126
Bond Fund I 41,449
Bond Fund II 14,564
Bond Fund III 28,649
Bond Fund IV 6,587
Bond Fund V 5,123
Big Flower Holdings, Inc. Common Stock 26,384
Growth Fund I 80,498
Growth Fund II 232,339
Growth Fund III 78,417
Growth Fund IV 12,633
Growth & Income Fund I 22,039
Growth & Income Fund II 59,223
Growth & Income Fund III 66,829
Growth & Income Fund IV 75,931
Growth & Income Fund V 20,327
International Fund I 79,795
International Fund II 16,428
International Fund III 15,733
Money Market Fund II 217,257
Profile Series I 282,635
Profile Series II 294,725
Profile Series III 135,042
Profile Series IV 35,445
Profile Series V 22,888
-----------
2,748,479
Less forfeitures applied (182,735)
-----------
Total $ 2,565,744
-----------
-----------
</TABLE>
11
<PAGE>
9. INVESTMENT INFORMATION BY FUND (continued)
<TABLE>
<CAPTION>
1998
<S> <C>
Distributions to participants and beneficiaries:
Guaranteed Certificate Fund 36m $ 324,080
Guaranteed Certificate Fund 60m 58,301
Guaranteed Certificate Fund 84m 12,450
Money Market Fund I 36,885
Aggressive Growth Fund I 294,533
Aggressive Growth Fund II 266,963
Aggressive Growth Fund III 10,198
Aggressive Growth Fund IV 67,742
Aggressive Growth Fund V 22,979
Bond Fund I 87,730
Bond Fund II 7,996
Bond Fund III 74,794
Bond Fund IV 9,144
Bond Fund V 3,540
Big Flower Holdings, Inc. Common Stock 1,514
Growth Fund I 183,903
Growth Fund II 355,908
Growth Fund III 99,119
Growth Fund IV 17,640
Growth & Income Fund I 18,599
Growth & Income Fund II 67,723
Growth & Income Fund III 35,290
Growth & Income Fund IV 107,163
Growth & Income Fund V 3,089
International Fund I 83,357
International Fund II 17,048
International Fund III 6,746
Money Market Fund II 490,008
Profile Series I 223,335
Profile Series II 104,896
Profile Series III 137,854
Profile Series IV 34,008
Profile Series V 29,440
Loans to Participants 89,038
-----------
3,383,013
Less forfeitures (75,582)
-----------
Total $ 3,307,431
-----------
-----------
</TABLE>
12
<PAGE>
9. INVESTMENT INFORMATION BY FUND (continued)
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net assets available for plan benefits (end of year):
Guaranteed Certificate Fund 36m $ 6,880,267 $ 6,177,882
Guaranteed Certificate Fund 60m 230,584 187,025
Guaranteed Certificate Fund 84m 316,955 236,357
Money Market Fund I 584,461 638,723
Aggressive Growth Fund I 6,728,494 3,947,790
Aggressive Growth Fund II 3,367,644 2,942,453
Aggressive Growth Fund III 365,320 228,134
Aggressive Growth Fund IV 1,717,128 665,113
Aggressive Growth Fund V 1,005,043 1,000,540
Bond Fund I 686,384 684,331
Bond Fund II 354,011 270,606
Bond Fund III 523,027 390,541
Bond Fund IV 147,389 138,043
Bond Fund V 186,078 103,793
Big Flower Holdings, Inc. Common Stock 281,813 100,695
Growth Fund I 1,768,583 1,258,962
Growth Fund II 9,503,363 7,261,629
Growth Fund III 2,135,027 1,317,372
Growth Fund IV 245,699 140,809
Growth & Income Fund I 474,029 333,882
Growth & Income Fund II 1,638,580 1,154,221
Growth & Income Fund III 1,448,267 889,904
Growth & Income Fund IV 1,534,632 1,123,755
Growth & Income Fund V 443,183 200,127
International Fund I 1,618,999 1,051,816
International Fund II 203,238 201,803
International Fund III 227,577 151,238
Money Market Fund II 3,618,791 2,422,513
Profile Series I 4,206,145 2,525,216
Profile Series II 4,600,980 2,875,174
Profile Series III 2,098,306 1,324,555
Profile Series IV 600,392 338,751
Profile Series V 382,853 156,912
Loans to Participants 3,750,208 2,386,428
----------- -----------
Total $63,873,450 $44,827,093
----------- -----------
----------- -----------
</TABLE>
* * * * * *
13
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Description of Investments,
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Collateral, Current
Lessor or Similar Party Par or Maturity Value Cost Value
BOND FUNDS
<S> <C> <C> <C>
* Great-West Life & Annuity Ins. Co. Bond Fund I $ 638,062 $ 663,728
* Great-West Life & Annuity Ins. Co. Bond Fund II 334,843 348,666
* Great-West Life & Annuity Ins. Co. Bond Fund III 511,065 511,010
* Great-West Life & Annuity Ins. Co. Bond Fund IV 143,406 147,272
* Great-West Life & Annuity Ins. Co. Bond Fund V 179,999 182,333
---------- ----------
Total Bond Funds 1,807,375 1,853,009
---------- ----------
OTHER INVESTMENTS
* Great-West Life & Annuity Ins. Co. Guaranteed Certificate Fund 36m 6,773,355 6,773,355
* Great-West Life & Annuity Ins. Co. Guaranteed Certificate Fund 60m 226,043 226,043
* Great-West Life & Annuity Ins. Co. Guaranteed Certificate Fund 84m 307,268 307,268
---------- ----------
Total Other Investments 7,306,666 7,306,666
---------- ----------
EQUITY FUNDS
* Great-West Life & Annuity Ins. Co. Aggressive Growth Fund I 5,710,999 6,596,259
* Great-West Life & Annuity Ins. Co. Aggressive Growth Fund II 3,072,463 3,301,664
* Great-West Life & Annuity Ins. Co. Aggressive Growth Fund III 371,822 351,407
* Great-West Life & Annuity Ins. Co. Aggressive Growth Fund IV 1,413,938 1,665,285
* Great-West Life & Annuity Ins. Co. Aggressive Growth Fund V 1,031,686 971,600
* Great-West Life & Annuity Ins. Co. Growth Fund I 1,527,013 1,730,001
* Great-West Life & Annuity Ins. Co. Growth Fund II 8,327,960 9,401,263
* Great-West Life & Annuity Ins. Co. Growth Fund III 1,789,210 2,097,919
* Great-West Life & Annuity Ins. Co. Growth Fund IV 231,438 239,272
* Great-West Life & Annuity Ins. Co. Growth & Income Fund I 435,425 462,692
* Great-West Life & Annuity Ins. Co. Growth & Income Fund II 1,404,427 1,609,943
* Great-West Life & Annuity Ins. Co. Growth & Income Fund III 1,356,255 1,412,416
* Great-West Life & Annuity Ins. Co. Growth & Income Fund IV 1,410,864 1,494,420
* Great-West Life & Annuity Ins. Co. Growth & Income Fund V 407,275 430,321
* Great-West Life & Annuity Ins. Co. International Fund I 1,418,058 1,583,585
* Great-West Life & Annuity Ins. Co. International Fund II 211,522 203,114
* Great-West Life & Annuity Ins. Co. International Fund III 228,427 221,534
---------- ----------
Total Equity Funds 30,348,782 33,772,695
---------- ----------
</TABLE>
* Investments with a party-in-interest.
14
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Description of Investments,
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Collateral, Current
Lessor or Similar Party Par or Maturity Value Cost Value
MONEY MARKET FUNDS
<S> <C> <C> <C>
* Great-West Life & Annuity Ins. Co. Money Market Fund I 584,461 584,461
* Great-West Life & Annuity Ins. Co. Money Market Fund II 3,428,228 3,513,810
------------ ------------
Total Money Market Funds 4,012,689 4,098,271
------------ ------------
MUTUAL FUNDS
* Great-West Life & Annuity Ins. Co. Profile Series I 3,776,728 4,059,755
* Great-West Life & Annuity Ins. Co. Profile Series II 4,157,090 4,432,712
* Great-West Life & Annuity Ins. Co. Profile Series III 1,908,656 2,019,668
* Great-West Life & Annuity Ins. Co. Profile Series IV 551,636 578,804
* Great-West Life & Annuity Ins. Co. Profile Series V 353,552 369,362
------------ ------------
Total Mutual Funds 10,747,662 11,460,301
------------ ------------
COMMON STOCK
* Big Flower Holdings, Inc. 291,656 265,654
------------ ------------
* Loans to Participants Loans to Participants, interest 3,750,208
rates ranging from 7.0% to 10.0%, ----------
maturities ranging from 1 to
5 years (up to 15 years for
home purchases)
Total Investments $ 54,514,830 $ 62,506,804
------------ ------------
------------ ------------
</TABLE>
* Investments with a party-in-interest.
15
<PAGE>
BIG FLOWER HOLDINGS, INC. AND SUBSIDIARIES
SAVINGS PLUS 401(K) PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
SERIES OF TRANSACTIONS, WHEN AGGREGATED, INVOLVING AMOUNTS IN
EXCESS OF 5% OF THE VALUE OF PLAN ASSETS
(a) (b) (c) (d) (g) (i)
Description of Asset
(Including Interest Rate and Purchase Selling Cost of Net Gain
Identity of Party Involved Maturity in Case of Loan) Price Price Asset or (Loss)
<S> <C> <C> <C> <C> <C>
Great West Life & Annuity Ins. Co. Aggressive Growth Fund I $ 12,352,615
Great West Life & Annuity Ins. Co. Aggressive Growth Fund I $ 11,141,042 $ 9,768,063 $ 1,372,979
Great West Life & Annuity Ins. Co. Aggressive Growth Fund II 7,220,737
Great West Life & Annuity Ins. Co. Aggressive Growth Fund II 7,345,732 6,633,803 711,929
Great West Life & Annuity Ins. Co. Aggressive Growth Fund V 2,896,236
Great West Life & Annuity Ins. Co. Aggressive Growth Fund V 2,884,608 2,703,241 181,367
Great West Life & Annuity Ins. Co. Growth Fund I 3,509,360
Great West Life & Annuity Ins. Co. Growth Fund I 3,334,764 2,899,952 434,812
Great West Life & Annuity Ins. Co. Growth Fund II 18,240,807
Great West Life & Annuity Ins. Co. Growth Fund II 18,080,473 14,890,102 3,190,371
Great West Life & Annuity Ins. Co. Growth Fund III 3,914,785
Great West Life & Annuity Ins. Co. Growth Fund III 3,604,749 3,119,745 485,004
Great West Life & Annuity Ins. Co. Growth & Income Fund II 3,140,019
Great West Life & Annuity Ins. Co. Growth & Income Fund II 2,996,966 2,609,384 387,582
Great West Life & Annuity Ins. Co. Growth & Income Fund III 3,279,943
Great West Life & Annuity Ins. Co. Growth & Income Fund III 2,893,311 2,669,143 224,168
Great West Life & Annuity Ins. Co. Growth & Income Fund IV 3,332,964
Great West Life & Annuity Ins. Co. Growth & Income Fund IV 3,128,796 2,832,699 296,097
Great West Life & Annuity Ins. Co. International Fund I 3,008,987
Great West Life & Annuity Ins. Co. International Fund I 2,779,488 2,490,882 288,606
Great West Life & Annuity Ins. Co. Money Market Fund II 8,293,201
Great West Life & Annuity Ins. Co. Money Market Fund II 7,172,585 7,014,912 157,673
Great West Life & Annuity Ins. Co. Profile Series I 8,049,838
Great West Life & Annuity Ins. Co. Profile Series I 7,015,944 6,394,341 621,603
Great West Life & Annuity Ins. Co. Profile Series II 8,449,904
Great West Life & Annuity Ins. Co. Profile Series II 7,375,102 6,667,942 707,160
Great West Life & Annuity Ins. Co. Profile Series III 3,994,625
Great West Life & Annuity Ins. Co. Profile Series III 3,482,846 3,199,848 282,998
</TABLE>
16
<PAGE>
EXHIBIT 99.2
WEBCRAFT EMPLOYEE SAVINGS TRUST
FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULES FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997,
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
WEBCRAFT EMPLOYEE SAVINGS TRUST
TABLE OF CONTENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1998 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES:
Supplemental Schedule of changes in Plan's Interest in Master Trust's
Net Assets by Fund for the Year Ended December 31, 1998 8
Item 27A - Supplemental Schedule of Assets Held for Investment Purposes
as of December 31, 1998 9
Item 27D - Supplemental Schedule of Reportable Transactions
for the Year Ended December 31, 1998 10
</TABLE>
------------------------
Supplemental Schedules other than the ones listed above have been omitted
because of the absence of conditions under which they are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Retirement Committee and Participants of
the Webcraft Employee Savings Trust
We have audited the accompanying statements of net assets available for benefits
of the Webcraft Employee Savings Trust (the "Plan") as of December 31, 1998
and 1997, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1998. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1)
assets held for investment purposes as of December 31, 1998, and (2)
reportable transactions for the year ended December 31, 1998, are presented
for the purpose of additional analysis and are not a required part of the
basic financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedule of changes in plan's interest in Master Trust's net assets by fund is
presented by the purpose of additional analysis rather than to present the
net assets available for benefits and changes in net assets available for
benefits of the individual funds. These supplemental schedules are the
responsibility of the Plan's management. Such supplemental schedules have
been subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken
as a whole.
/s/ DELOITTE & TOUCHE LLP
June 7, 1999
<PAGE>
WEBCRAFT EMPLOYEE SAVINGS TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
Investments at fair value:
Plan interest in the Webcraft, Inc. Master Trust for
401(k) Plans (Note 3) $44,877,463 $ --
Fidelity Institutional Retirement Money Market Portfolio -- 1,926,417
Fidelity Short-Term Bond Portfolio -- 5,832,129
Fidelity Asset Manager -- 2,743,560
Fidelity Growth and Income Portfolio -- 12,001,948
Fidelity Magellan Fund -- 5,318,584
Fidelity Contrafund -- 4,390,168
Fidelity International Growth and Income Fund -- 1,532,925
Fidelity U.S. Equity Index -- 623,762
Fidelity U.S. Bond Index -- 228,099
Employee loans receivable 2,271,878 2,303,964
----------- -----------
Total investments 47,149,341 36,901,556
----------- -----------
Receivables:
Employer contributions receivable 94,279 24,195
Employees contributions receivable 296,179 175,089
----------- -----------
Total receivables 390,458 199,284
----------- -----------
Total assets 47,539,799 37,100,840
----------- -----------
LIABILITIES
Accrued administrative expenses 26,197 2,731
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $47,513,602 $37,098,109
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements.
-2-
<PAGE>
WEBCRAFT EMPLOYEE SAVINGS TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 3,917,216
Interest 93,145
Dividends 571,627
Plan interest in the investment income of the Webcraft,
Inc. Master Trust for 401(k)
Plans (Note 3) 3,648,558
-----------
8,230,546
Contributions:
Employer 525,245
Employees 3,531,142
-----------
4,056,387
-----------
Rollovers from other plans 957,751
Transfer of contributions from Webcraft, Inc. Employees
Accumulated Savings Trust 136,125
-----------
Total additions 13,380,809
-----------
DEDUCTIONS
Benefits paid to employees 2,872,857
Administrative expenses 92,459
-----------
Total deductions 2,965,316
-----------
NET INCREASE 10,415,493
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 37,098,109
-----------
-----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $47,513,602
-----------
-----------
</TABLE>
See notes to financial statements.
-3-
<PAGE>
WEBCRAFT EMPLOYEE SAVINGS TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Webcraft Employee Savings Trust (the
"Plan") provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering all employees of
Webcraft, Inc. and Subsidiaries (the "Company"), who work 30 hours or more
per week and who are not covered by collective bargaining agreements (i.e.
non-union). Employees may enroll on the first semi-annual enrollment
date after their date of hire upon meeting the eligibility requirements
noted above. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
EMPLOYEE CONTRIBUTIONS - An eligible employee who participates may make
contributions to the Plan, through payroll deductions, of any whole
percentage from 1% to 17% of his or her annual compensation, up to the
maximum contribution allowed by the Internal Revenue Code. For the years
ended December 31, 1998 and 1997, the maximum allowable contribution per
employee was $10,000 and $9,500, respectively.
EMPLOYER CONTRIBUTIONS - Prior to November 1, 1998, matching contributions
were made by the Company equal to 25% of the first 6% of the participant's
contribution. Also, the Company did not match any contributions for
participants whose annual base salary equaled or exceeded $50,000.
Effective November 1, 1998, an amendment was made to the Plan Agreement
whereby matching contributions made by the Company were increased to 50% of
the first 6% of the participant's contribution and the Company's matched
contributions will be made for participants regardless of salary level.
PARTICIPANT ACCOUNTS - Each participant's account is adjusted for the
participant's contributions and withdrawals, as applicable, the appropriate
amount of the Company's contributions and an allocation of Plan earnings
and expenses. Allocations are based upon the participant's proportionate
share of assets in the Plan.
FORFEITURES - Forfeitures of non-vested Company contributions are used to
reduce Company contributions.
TRANSFERS - If an employee is a participant in either the Webcraft
Employee Savings Trust (WEST plan) or the Webcraft, Inc. Employees
Accumulated Savings Trust (EAST plan) and the employee's job status
changes (i.e. union to non-union or vice-versa), the employee transfers
all plan assets and loans to the corresponding plan.
-4-
<PAGE>
VESTING - All participant contributions and income thereon are fully vested
at all times. Company contributions and income thereon are vested based on
the participant's years of service, as noted below.
<TABLE>
<CAPTION>
VESTED
YEARS OF SERVICE PERCENTAGE
<S> <C>
Less than 1 0%
At least 1 but less than 2 25
At least 2 but less than 3 50
At least 3 but less than 4 75
4 or more 100
</TABLE>
<PAGE>
In addition, Company contributions and income thereon become fully vested
upon the participant's retirement on or after age 65 or because of
disability.
WITHDRAWALS - During employment, a participant may withdraw amounts
applicable to participant contributions and income thereon, if the
participant experiences an immediate and heavy financial hardship, as
defined in the Plan. In addition, participants may borrow against their
accounts subject to certain restrictions.
BENEFIT PAYMENTS - Upon death, disability, termination or retirement, a
participant's vested values under the Plan may be distributed in a lump sum
payment or in installments.
INVESTMENT OPTIONS - The Plan allows a variety of funds in which to invest.
Set forth below is a brief description of these funds. Participants should
review each particular fund's prospectus prior to investing. The
descriptions set forth below are qualified in their entirety by the
particular prospectus. Upon enrollment in the Plan, a participant may
direct employer and employee contributions in any of ten investment
options:
Fidelity Institutional Retirement Money Market Portfolio - Funds are
invested in shares of a registered investment company that invests in
high-quality U.S. dollar-denominated money market instruments of U.S.
and foreign issuers.
Fidelity Short-Term Bond Portfolio - Funds are invested in shares of a
registered investment company that invests in a broad range of
investment-grade fixed income securities.
Fidelity Asset Manager - Funds are invested in shares of a registered
investment company that invests in stocks, bonds and short-term
investments of U.S. and foreign issuers.
Fidelity Growth and Income Portfolio - Funds are invested in shares of
a registered investment company that invests in securities of domestic
and foreign issuers that offer growth of earnings potential while
paying current dividends.
Fidelity Magellan Fund - Funds are invested in shares of a registered
investment company that invests in equity securities of domestic,
foreign and multi-national issuers.
Fidelity Contrafund - Funds are invested in shares of a registered
investment company that invests in securities of companies, both in the
U.S. and abroad, that are considered "undervalued" as a result of an
overly pessimistic appraisal by the public.
-5-
<PAGE>
Fidelity International Growth and Income Fund - Funds are invested in
shares of a registered investment company that invests in foreign
securities.
Fidelity U.S. Equity Index - Funds are invested primarily in the 500
companies that make up the S&P 500 and in other securities that are
based on the value of the Index.
Fidelity U.S. Bond Index - Funds are invested primarily in debt
securities whose performance corresponds to debt securities in the
Lehman Brothers Aggregate Bond Index.
Big Flower Stock Fund - Funds are invested primarily in common shares
of Big Flower Holdings, Inc., the Company's ultimate parent.
Participants may not invest more than 10% of their account balance in
the Big Flower Stock Fund.
Participants may change their investment options daily.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accompanying financial statements have been
prepared on the accrual basis and present the net assets available for plan
benefits and changes in those net assets.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
VALUATION OF INVESTMENTS - The Plan's investments are stated at fair value.
Shares of the Fidelity funds are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year-end.
Shares of Big Flower stock, included in the Big Flower Stock Fund, are
valued at their quoted market price. The net asset value for each
outstanding unit of the Big Flower Stock Fund is determined by the trustee.
The Plan's interest in the Webcraft Master Trust (Note 3) is stated at fair
value. Quoted market prices are used to value investments in the Master
Trust.
PAYMENT OF BENEFITS - Benefit payments to participants are recorded upon
distribution.
RECLASSIFICATIONS - Certain amounts reported in the 1997 financial
statements have been reclassified to conform with the 1998 financial
statement presentation.
3. INTEREST IN THE WEBCRAFT, INC. MASTER TRUST
The Plan has an agreement with the Trustee, whereby beginning in August,
1998 substantially all of the assets of the Plan are held in the Master
Trust. The assets are maintained in a commingled account by the Trustee.
The Plan's beneficial interest in the combined investments of the Master
Trust is determined on the basis of the initial asset contribution to
the Master Trust, adjusted for subsequent contributions, distributions and
allocated income and realized and unrealized gains and losses. Allocations
of investment income and net appreciation (depreciation) in the fair value
of investments (both realized and unrealized) are determined on the
basis of proportionate share in the Master Trust's assets stated at
market value. At December 31, 1998, the Plan's interest in the net
assets of the Master Trust was approximately 94%. The remaining 6%
interest is held by another plan sponsored by the Company.
-6-
<PAGE>
The following table presents the cost and fair value of investments held by
the Master Trust at December 31, 1998.
<TABLE>
<CAPTION>
FAIR
COST VALUE
<S> <C> <C>
Fidelity Institutional Retirement Money Market Portfolio $ 2,720,590 $ 2,720,590*
Fidelity Short-Term Bond Portfolio 5,983,855 5,771,223*
Fidelity Asset Manager 3,409,509 3,488,946*
Fidelity Growth and Income Portfolio 10,661,055 16,374,164*
Fidelity Magellan Fund 6,504,261 8,781,264*
Fidelity Contrafund 4,945,801 6,392,534*
Fidelity International Growth and Income Fund 1,771,752 1,917,414
Fidelity U.S. Equity Index 1,306,517 1,576,718
Fidelity U.S. Bond Index 678,340 687,910
Big Flower Stock Fund 171,648 176,113
----------- -----------
$38,153,328 $47,886,876
----------- -----------
----------- -----------
* Represents the Plan's investments which exceeded 5% of net assets available
for benefits as of December 31, 1998.
</TABLE>
Investment income for the Master Trust for the period August 1, 1998
to December 31, 1998 is as follows:
<TABLE>
<S> <C>
Investment income:
Net appreciation in fair value of investments $1,492,761
Interest 74,732
Dividends 2,335,667
----------
$3,903,160
----------
----------
</TABLE>
4. INCOME TAX STATUS
The Plan has obtained a favorable tax determination letter from the
Internal Revenue Service dated May 23, 1996 indicating that the Plan
qualifies under the provisions of Section 401(a) of the Internal Revenue
Code and that the related trust is exempt from federal income taxes under
Section 501(a) of the Internal Revenue Code. The Plan has been amended
since receiving the determination letter. However, in the opinion of
management, the Plan is designed and is currently being operated in
compliance with the applicable provisions of the Internal Revenue Code.
5. ADMINISTRATION OF THE PLAN
The Plan is administered by the Retirement Committee appointed by the
Company. Administrative expenses are paid by the Plan.
6. TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions of
Employee Retirement Income Security Act of 1974. In the event of the
Plan's termination, all amounts credited to participants' accounts will
become 100% vested.
* * * * * *
7. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Fidelity
Institutional Retirement Services Co. ("Fidelity"). Fidelity is the
Trustee as defined by the plan and, therefore, these Transactions
qualify as party-in-interest. Fees paid by the Plan for the investment
management services amounted to $33,638 for the year ended December 31,
1998.
-7-
<PAGE>
<TABLE>
<CAPTION>
WEBCRAFT EMPLOYEE SAVINGS TRUST
SUPPLEMENTAL SCHEDULE OF CHANGES IN PLAN'S INTEREST IN MASTER TRUST'S NET ASSETS BY FUND
FOR THE YEAR ENDED DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------
Fidelity
----------------------------------------------------------------------------------------------------
Retirement Growth International
Money Short-Term and Growth
Market Bond Asset Income Magellan and Income
Portfolio Portfolio Manager Portfolio Fund Contrafund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $1,932,224 $ 5,862,637 $ 2,769,331 $ 12,048,957 $5,368,824 $ 4,408,426 $ 1,548,042
Contributions 268,441 352,738 402,785 1,017,031 928,142 584,369 271,741
Investment income 120,250 368,716 463,358 3,437,767 1,963,910 1,438,197 156,329
Loan repayments 81,067 179,122 119,301 275,179 273,992 167,285 76,391
Rollover from other plans 35,051 18,609 50,700 245,111 248,478 126,356 56,754
Participant benefits (80,844) (347,776) (120,607) (1,068,003) (448,351) (379,996) (117,473)
Fees and expenses (3,649) (11,005) (5,058) (25,627) (31,441) (10,484) (2,634)
Loans to participants (95,079) (208,003) (130,818) (317,721) (246,580) (170,219) (60,862)
Transfers between funds 151,933 (575,662) (308,251) 24,593 (15,147) (161,480) (141,397)
Transfers from EAST Plan 29,931 2,099 31,933 16,502 12,406 27,765 11,785
Transfer to Master Trust (2,439,325) (5,641,475) (3,272,674) (15,653,789) (8,054,233) (6,030,219) (1,798,676)
---------- ---------- ---------- ----------- --------- --------- ---------
Balance, December 31, 1998 $ - $ - $ - $ - $ - $ - $ -
========== ========== ========== =========== ========= ========= =========
<CAPTION>
Fidelity
----------------------
U.S. U.S. Big Flower Webcraft, Inc.
Equity Bond Stock Loan Master
Index Index Fund Fund Trust Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $ 626,921 $ 228,783 $ - $ 2,303,964 $ - $37,098,109
Contributions 190,737 34,268 6,135 - 4,056,387
Investment income 249,049 28,963 4,007 - 8,230,546
Loan repayments 33,178 1,083 1,207 (1,207,805) -
Rollover from other plans 123,950 12,373 - 40,369 957,751
Participant benefits (198,484) (483) - (110,840) (2,872,857)
Fees and expenses (1,680) (640) (241) - (92,459)
Loans to participants (15,941) (967) - 1,246,190 -
Transfers between funds 475,593 387,508 162,310 - -
Transfers from EAST Plan 3,704 - - - 136,125
Transfer to Master Trust (1,487,027) (690,888) (173,418) - 45,241,724 -
--------- -------- -------- ----------- ----------- -----------
Balance, December 31, 1998 $ - $ - $ - $ 2,271,878 $45,241,724 $47,513,602
========= ======== ======== =========== =========== ===========
</TABLE>
-8-
<PAGE>
WEBCRAFT EMPLOYEE SAVINGS TRUST
ITEM 27A - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF
UNITS COST MARKET
<S> <C> <C> <C>
Webcraft, Inc. Master Trust
FIDELITY*:
Institutional Retirement Money Market Portfolio 2,720,590 $ 2,720,590 $ 2,720,590
Short-Term Bond Portfolio 662,597 5,983,855 5,771,223
Asset Manager 200,629 3,409,509 3,488,946
Growth and Income Portfolio 357,203 10,661,055 16,374,164
Magellan Fund 72,680 6,504,261 8,781,264
Contrafund 112,564 4,945,801 6,392,534
International Growth and Income Fund 91,699 1,771,752 1,917,414
U.S. Equity Index 35,867 1,306,517 1,576,718
U.S. Bond Index 62,423 678,340 687,910
Big Flower Stock Fund 17,115 171,648 176,113
----------- -----------
TOTAL $38,153,328 $47,886,876
----------- -----------
----------- -----------
Webcraft Employee Savings Trust--Employees Loans $ 2,271,878 $ 2,271,878
----------- -----------
----------- -----------
</TABLE>
- ---------------------
* Represents party-in-interest
-9-
<PAGE>
WEBCRAFT EMPLOYEE SAVINGS TRUST
ITEM 27D - SUPPLEMENTAL SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SERIES OF TRANSACTIONS, WHEN AGGREGATED, INVOLVING AN AMOUNT EXCEEDING 5% OF
THE CURRENT VALUE OF PLAN ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL TOTAL
TOTAL TOTAL DOLLAR DOLLAR NET
IDENTITY OF PARTY DESCRIPTION NUMBER OF NUMBER VALUE OF VALUE COST OF GAIN
INVOLVED OF ASSET PURCHASES OF SALES PURCHASES OF SALES ASSET (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C>
Webcraft, Inc. Master Trust
Fidelity Institutional Institutional Retirement 172 140 $1,826,067 $1,229,423 $1,229,423 $ --
Retirement Service Company* Money Market Portfolio
Fidelity Institutional Short-Term Bond 200 151 1,449,985 1,628,481 1,680,640 (52,159)
Retirement Service Company* Portfolio
Fidelity Institutional
Retirement Service Company* Asset Manager 167 126 1,547,646 865,361 761,021 104,610
Fidelity Institutional Growth and Income 232 172 3,854,235 2,671,476 1,893,639 777,837
Retirement Service Company* Portfolio
Fidelity Institutional
Retirement Service Company* Magellan Fund 210 169 2,537,090 1,298,900 1,065,156 233,744
Fidelity Institutional
Retirement Service Company* Contrafund 190 154 1,990,153 1,323,351 1,104,577 218,774
</TABLE>
- ------------------------
* Represents party-in-interest
-10-
<PAGE>
Exhibit 99.3
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
FINANCIAL STATEMENTS AND SUPPLEMENTAL
SCHEDULES FOR THE YEARS ENDED
DECEMBER 31, 1998 AND 1997,
AND INDEPENDENT AUDITORS' REPORT
<PAGE>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
as of December 31, 1998 and 1997 2
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 1998 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES:
Supplemental Schedule of Changes in Plan's Interest in
Net Assets by Fund for the Master Trust's
Year Ended December 31, 1998 8
Item 27A - Supplemental Schedule of Assets Held for Investment Purposes
as of December 31, 1998 9
Item 27D - Supplemental Schedule of Reportable Transactions
for the Year Ended December 31, 1998 10
</TABLE>
------------------------
Supplemental Schedules other than the ones listed above have been omitted
because of the absence of conditions under which they are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Retirement Committee and Participants of
the Webcraft, Inc. Employees Accumulated Savings Trust
We have audited the accompanying statements of net assets available for benefits
of the Webcraft, Inc. Employees Accumulated Savings Trust (the "Plan") as
of December 31, 1998 and 1997, and the related statement of changes in net
assets available for benefits for the year ended December 31, 1998. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1998 and 1997, and the changes in net assets available for benefits for the year
ended December 31, 1998 in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1)
assets held for investment purposes as of December 31, 1998, and (2)
reportable transactions for the year ended December 31, 1998, are presented
for the purpose of additional analysis and are not a required part of the
basic financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedule of changes in plan's interest in Master Trust's net assets by fund
is presented for the purpose of additional analysis rather than to present
the net assets available for benefits and changes in net assets available for
benefits of the individual funds. These supplemental schedules are the
responsibility of the Plan's management. Such supplemental schedules have
been subjected to the auditing procedures applied in our audits of the basic
1998 financial statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic financial
statements taken as a whole.
/s/ Deloitte & Touche LLP
June 7, 1999
<PAGE>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
Investments at fair value:
Plan interest in the Webcraft, Inc. Master Trust for
401(k) Plans (Note 3) $3,009,413 $ --
Fidelity Institutional Retirement Money Market Portfolio -- 196,585
Fidelity Short-Term Bond Portfolio -- 110,108
Fidelity Asset Manager -- 210,668
Fidelity Growth and Income Portfolio -- 501,235
Fidelity Magellan Fund -- 494,168
Fidelity Contrafund -- 296,491
Fidelity International Growth and Income Fund -- 112,242
Fidelity U.S. Equity Index -- 34,484
Fidelity U.S. Bond Index -- 233
Employee loans receivable 186,409 97,702
---------- ----------
Total investments 3,195,822 2,053,916
---------- ----------
Receivables:
Employer contributions receivable 12,932 12,268
Employees contributions receivable 65,604 60,010
---------- ----------
Total receivables 78,536 72,278
---------- ----------
Total assets 3,274,358 2,126,194
---------- ----------
LIABILITIES
Accrued administrative expenses 34,845 --
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $3,239,513 $2,126,194
---------- ----------
---------- ----------
</TABLE>
See notes to financial statements.
-2-
<PAGE>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ADDITIONS
Investment income:
Net appreciation in fair value of investments $ 252,622
Interest 4,050
Dividends 35,015
Plan interest in the investment income of the
Webcraft, Inc. Master Trust for 401(k) Plans
(Note 3) 254,602
----------
546,289
Contributions:
Employer 142,415
Employees 761,570
----------
903,985
----------
Total additions 1,450,274
----------
DEDUCTIONS
Benefits paid to employees 161,264
Administrative expenses 39,566
Transfer of contributions to Webcraft Employee Savings Trust 136,125
----------
Total deductions 336,955
----------
NET INCREASE 1,113,319
NET ASSETS AVAILABLE FOR BENEFITS,
BEGINNING OF YEAR 2,126,194
----------
NET ASSETS AVAILABLE FOR BENEFITS,
END OF YEAR $3,239,513
----------
----------
</TABLE>
See notes to financial statements.
-3-
<PAGE>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The following description of the Webcraft, Inc. Employees Accumulated
Savings Trust (the "Plan") provides only general information.
Participants should refer to the Plan Agreement for more complete
description of the Plan's provisions.
GENERAL - The Plan is a defined contribution plan covering hourly
employees of Webcraft, Inc. and Subsidiaries (the "Company") whose
employment is governed by a collective bargaining agreement providing for
Plan participation. Eligible employees may enroll on the first semi-annual
enrollment date after their date of hire upon meeting the eligibility
requirements. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 (ERISA).
EMPLOYEE CONTRIBUTIONS - An eligible employee who participates may make
contributions to the Plan, through payroll deductions, of any whole
percentage from 1% to 17% of his or her annual compensation, up to the
maximum contribution allowed by the Internal Revenue Code. For the years
ended December 31, 1998 and 1997, the maximum allowable contribution per
employee was $10,000 and $9,500, respectively.
EMPLOYER CONTRIBUTIONS - Matching contributions are made by the Company
equal to 25% of the first 6% of the participant's contribution. The Company
may elect to increase this contribution from 25% up to 50%. Also, the
Company will not match any contributions for participants whose annual base
salary equals or exceeds $50,000.
PARTICIPANT ACCOUNTS - Each participant's account is adjusted for the
participant's contributions and withdrawals, as applicable, the appropriate
amount of the Company's contributions and an allocation of Plan earnings
and expenses. Allocations are based upon the participant's proportionate
share of assets in the Plan.
FORFEITURES - Forfeitures of non-vested Company contributions are used to
reduce Company contributions.
TRANSFERS - If an employee is a participant in either the Webcraft
Employee Savings Trust (WEST plan) or the Webcraft, Inc. Employees
Accumulated Savings Trust (EAST plan) and the employee's job status
changes (i.e. union to non-union or vice-versa), the employee transfers
all plan assets and loans to the corresponding plan.
VESTING - All participant contributions and income thereon are fully vested
at all times. Company contributions and income thereon are vested based on
the participant's years of service as noted below.
<TABLE>
<CAPTION>
VESTED
YEARS OF SERVICE PERCENTAGE
<S> <C>
Less than 1 0%
At least 1 but less than 2 25
At least 2 but less than 3 50
At least 3 but less than 4 75
4 or more 100
</TABLE>
-4-
<PAGE>
In addition, Company contributions and income thereon become fully vested
upon the participant's retirement on or after age 65 or because of
disability.
WITHDRAWALS - During employment, a participant may withdraw amounts
applicable to participant contributions and income thereon, if the
participant experiences an immediate and heavy financial hardship, as
defined in the Plan. In addition, participants may borrow against their
accounts subject to certain restrictions.
BENEFIT PAYMENTS - Upon death, disability, termination or retirement, a
participant's vested values under the Plan may be distributed in a lump sum
payment or in installments.
INVESTMENT OPTIONS - The Plan allows a variety of funds in which to invest.
Set forth below is a brief description of these funds. Participants should
review each particular fund's prospectus prior to investing. The
descriptions set forth below are qualified in their entirety by the
particular prospectus. Upon enrollment in the Plan, a participant may
direct employer and employee contributions in any of ten investment
options:
Fidelity Institutional Retirement Money Market Portfolio - Funds are
invested in shares of a registered investment company that invests in
high-quality U.S. dollar-denominated money market instruments of U.S.
and foreign issuers.
Fidelity Short-Term Bond Portfolio - Funds are invested in shares of a
registered investment company that invests in a broad range of
investment-grade fixed income securities.
Fidelity Asset Manager - Funds are invested in shares of a registered
investment company that invests in stocks, bonds and short-term
investments of U.S. and foreign issuers.
Fidelity Growth and Income Portfolio - Funds are invested in shares of
a registered investment company that invests in securities of domestic
and foreign issuers that offer growth of earnings potential while
paying current dividends.
Fidelity Magellan Fund - Funds are invested in shares of a registered
investment company that invests in equity securities of domestic,
foreign and multi-national issuers.
Fidelity Contrafund - Funds are invested in shares of a registered
investment company that invests in securities of companies, both in the
U.S. and abroad, that are considered "undervalued" as a result of an
overly pessimistic appraisal by the public.
Fidelity International Growth and Income Fund - Funds are invested in
shares of a registered investment company that invests in foreign
securities.
Fidelity U.S. Equity Index - Funds are invested primarily in the 500
companies that make up the S&P 500 and in other securities that are
based on the value of the Index.
Fidelity U.S. Bond Index - Funds are invested primarily in debt
securities whose performance corresponds to debt securities in the
Lehman Brothers Aggregate Bond Index.
Big Flower Stock Fund - Funds are invested primarily in common shares
of Big Flower Holdings, Inc., the Company's ultimate Parent.
Participants may not invest more than 10% of their account balance in
the Big Flower Stock Fund.
Participants may change their investment options daily.
-5-
<PAGE>
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accompanying financial statements have been
prepared on the accrual basis and present the net assets available for plan
benefits and changes in those net assets.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
VALUATION OF INVESTMENTS - The Plan's investments are stated at fair value.
Shares of the Fidelity funds are valued at quoted market prices which
represent the net asset value of shares held by the Plan at year-end.
Shares of Big Flower stock, included in the Big Flower Stock Fund, are
valued at their quoted market price. The net asset value for each
outstanding unit of the Big Flower Stock Fund is determined by the trustee.
The Plan's interest in the Webcraft, Inc. Master Trust (Note 3) is stated
at fair value. Quoted market prices are used to value investments in the
Master Trust.
PAYMENT OF BENEFITS - Benefit payments to participants are recorded upon
distribution.
3. INTEREST IN THE WEBCRAFT, INC. MASTER TRUST
The Plan has an agreement with the Trustee, whereby, beginning in August
1998, substantially all of the assets of the Plan are held in the Master
Trust. The assets are maintained in a commingled account by the Trustee
The Plan's beneficial interest in the combined investments of the Master
Trust is determined on the basis of the initial asset contribution to the
Master Trust, adjusted for subsequent contributions, distributions and
allocated income and realized and unrealized gains and losses. Allocations
of investment income and net appreciation (depreciation) in the fair value
of investments (both realized and unrealized) are determined on the basis
of proportionate share in the Master Trust's assets stated at market
value. At December 31, 1998, the Plan's interest in the net assets of the
Master Trust was approximately 6%. The remaining 94% interest is held by
another plan sponsored by the Company.
-6-
<PAGE>
The following table presents the cost and fair value of investments held by
the Master Trust at December 31, 1998.
<TABLE>
<CAPTION>
FAIR
COST VALUE
<S> <C> <C>
Fidelity Institutional Retirement Money Market Portfolio $ 2,720,590 $ 2,720,590*
Fidelity Short-Term Bond Portfolio 5,983,855 5,771,223*
Fidelity Asset Manager 3,409,509 3,488,946*
Fidelity Growth and Income Portfolio 10,661,055 16,374,164*
Fidelity Magellan Fund 6,504,261 8,781,264*
Fidelity Contrafund 4,945,801 6,392,534*
Fidelity International Growth and Income Fund 1,771,752 1,917,414
Fidelity U.S. Equity Index 1,306,517 1,576,718
Fidelity U.S. Bond Index 678,340 687,910
Big Flower Stock Fund 171,648 176,113
----------- -----------
$38,153,328 $47,886,876
----------- -----------
----------- -----------
* Represents the Plan's investments which exceeded 5% of net assets available
for benefits as of December 31, 1998.
</TABLE>
Investment income for the Master Trust for the period August 1, 1998 to
December 31, 1998 is as follows:
<TABLE>
<S> <C>
Investment income:
Net appreciation in fair value of investments $1,492,761
Interest 74,732
Dividends 2,335,667
----------
$3,903,160
----------
----------
</TABLE>
4. INCOME TAX STATUS
The Plan has obtained a favorable tax determination letter from the
Internal Revenue Service dated August 5, 1996 indicating that the Plan
qualifies under the provisions of Section 401(a) of the Internal Revenue
Code and that the related trust is exempt from federal income taxes under
Section 501(a) of the Internal Revenue Code. The Plan has been amended
since receiving the determination letter. However, in the opinion of
management, the Plan is designed and is currently being operated in
compliance with the applicable provisions of the Internal Revenue Code.
5. ADMINISTRATION OF THE PLAN
The Plan is administered by the Retirement Committee appointed by the
Company. Administrative expenses are paid by the Plan.
6. TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to terminate the Plan subject to the provisions of
Employee Retirement Income Security Act of 1974. In the event of the
Plan's termination, all amounts credited to participants' accounts will
become 100% vested.
7. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Fidelity
Institutional Retirement Services Co. ("Fidelity"). Fidelity is the
trustee as defined by the Plan and, therefore, these transactions qualify
as party-in-interest. Fees paid by the Plan for the investment
management services amounted to $18,005 for the year ended December 31,
1998.
* * * * *
-7-
<PAGE>
<TABLE>
<CAPTION>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
SUPPLEMENTAL SCHEDULE OF CHANGES IN PLAN'S INTEREST IN MASTER TRUST'S NET ASSETS BY FUND
FOR THE YEAR ENDED DECEMBER 31, 1998
- ----------------------------------------------------------------------------------------
Fidelity
---------------------------------------------------------------------------------------------------
Retirement Growth International
Money Short-Term and Growth
Market Bond Asset Income Magellan and Income
Portfolio Portfolio Manager Portfolio Fund Contrafund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $ 206,060 $ 115,218 $ 217,881 $ 517,797 $ 510,905 $ 307,705 $ 116,606
Contributions 105,337 65,774 82,396 219,564 217,735 122,445 51,209
Investment income 15,219 9,239 34,238 164,452 195,577 95,998 14,029
Loan repayments 16,084 5,229 4,530 15,751 20,777 11,425 5,128
Transfer to WEST Plan (13,379) (2,099) (31,932) (16,502) (28,959) (27,765) (11,785)
Participant benefits (6,446) (6,781) (15,570) (59,915) (18,749) (35,358) (8,263)
Fees and expenses (3,455) (2,080) (3,005) (10,020) (12,858) (5,042) (1,753)
Loans to participants (26,873) (12,130) (14,364) (37,003) (43,486) (32,230) (7,376)
Transfers between funds (6,078) (167) (17,012) 23,604 (10,008) (13,319) (10,210)
Transfer to Master Trust (286,469) (172,203) (257,162) (817,728) (830,934) (423,859) (147,585)
---------- ---------- ---------- ----------- --------- --------- ---------
Balance, December 31, 1998 $ - $ - $ - $ - $ - $ - $ -
========== ========== ========== =========== ========= ========= =========
<CAPTION>
Fidelity
--------------------
U.S. U.S. Big Flower Webcraft, Inc.
Equity Bond Stock Loan Master
Index Index Fund Fund Trust Total
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 $ 36,064 $ 256 $ - $ 97,702 $ - $ 2,126,194
Contributions 37,293 1,096 1,136 - 903,985
Investment income 16,806 56 675 - 546,289
Loan repayments 3,181 - 24 (82,129) -
Transfer to WEST Plan (3,704) - - - (136,125)
Participant benefits (3,009) - - (7,173) (161,264)
Fees and expenses (1,271) (15) (67) - (39,566)
Loans to participants (4,547) - - 178,009 -
Transfers between funds 30,728 - 2,462 - -
Transfer to Master Trust (111,541) (1,393) (4,230) - 3,053,104 -
--------- -------- -------- ----------- ----------- -----------
Balance, December 31, 1998 $ - $ - $ - $ 186,409 $ 3,053,104 $ 3,239,513
========= ======== ======== =========== =========== ===========
</TABLE>
-8-
<PAGE>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
ITEM 27A - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
UNITS COST MARKET
<S> <C> <C> <C>
Webcraft, Inc. Master Trust
FIDELITY*:
Institutional Retirement Money Market Portfolio 2,720,590 $ 2,720,590 $ 2,720,590
Short-Term Bond Portfolio 662,597 5,983,855 5,771,223
Asset Manager 200,629 3,409,509 3,488,946
Growth and Income Portfolio 357,203 10,661,055 16,374,164
Magellan Fund 72,680 6,504,261 8,781,264
Contrafund 112,564 4,945,801 6,392,534
International Growth and Income Fund 91,699 1,771,752 1,917,414
U.S. Equity Index 35,867 1,306,517 1,576,718
U.S. Bond Index 62,423 678,340 687,910
Big Flower Stock Fund 17,115 171,648 176,113
----------- -----------
TOTAL $38,153,328 $47,886,876
----------- -----------
----------- -----------
Webcraft, Inc. Employees Accumulated Savings
Trust-Employees Loans $ 186,409 $ 186,409
----------- -----------
----------- -----------
</TABLE>
*Represents party-in-interest
-9-
<PAGE>
WEBCRAFT, INC. EMPLOYEES ACCUMULATED SAVINGS TRUST
ITEM 27D - SUPPLEMENTAL SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
SERIES OF TRANSACTIONS, WHEN AGGREGATED, INVOLVING AN AMOUNT EXCEEDING 5% OF
THE CURRENT VALUE OF PLAN ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL TOTAL
TOTAL TOTAL DOLLAR DOLLAR NET
IDENTITY OF PARTY DESCRIPTION NUMBER OF NUMBER VALUE OF VALUE COST OF GAIN
INVOLVED OF ASSET PURCHASES OF SALES PURCHASES OF SALES ASSET (LOSS)
<S> <C> <C> <C> <C> <C> <C> <C>
Webcraft, Inc. Master Trust
Fidelity Institutional Institutional Retirement 172 140 $1,826,067 $1,229,423 $1,229,423 $ --
Retirement Service Company* Money Market Portfolio
Fidelity Institutional Short-Term Bond 200 151 1,449,985 1,628,481 1,680,640 (52,159)
Retirement Service Company* Portfolio
Fidelity Institutional
Retirement Service Company* Asset Manager 167 126 1,547,646 865,361 761,021 104,610
Fidelity Institutional Growth and Income 232 172 3,854,235 2,671,476 1,893,639 777,837
Retirement Service Company* Portfolio
Fidelity Institutional
Retirement Service Company* Magellan Fund 210 169 2,537,090 1,298,900 1,065,156 233,744
Fidelity Institutional
Retirement Service Company* Contrafund 190 154 1,990,153 1,323,351 1,104,577 218,774
</TABLE>
*Represents party-in-interest
-10-
<PAGE>
