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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
COMMISSION FILE NUMBER 1-12551
------------------------
CENVEO, INC.
(Exact name of Registrant as specified in its charter.)
COLORADO 84-1250533
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
8310 S. VALLEY HIGHWAY, #400
ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(Registrant's telephone number, including area code)
------------------------
Indicate by check mark 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 / /
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes /X/ No / /
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of April 29, 2005 was $221,380,917.
As of April 29, 2005 the Registrant had 49,067,921 shares of Common
Stock, $0.01 par value, outstanding.
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CENVEO, INC. AND SUBSIDIARIES
INDEX
PAGE
----
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-- March 31,
2005 and December 31, 2004......................... 1
Condensed Consolidated Statements of Operations--
Three months ended March 31, 2005 and 2004......... 2
Condensed Consolidated Statements of Cash Flows--
Three months ended March 31, 2005 and 2004......... 3
Notes to Condensed Consolidated Financial
Statements......................................... 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations... 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk..................................... 18
Item 4. Controls and Procedures......................... 19
Part II. Other Information
Item 6. Exhibits........................................ 20
Signatures.................................................. 23
i
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CENVEO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(Unaudited)
MARCH 31, 2005 DECEMBER 31, 2004
-------------- -----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.............................. $ 2,897 $ 796
Accounts receivable.................................... 257,711 252,711
Inventories............................................ 118,101 112,219
Other current assets................................... 50,626 46,019
---------- ----------
TOTAL CURRENT ASSETS............................... 429,335 411,745
Property, plant and equipment, net......................... 352,774 367,260
Goodwill................................................... 307,372 308,938
Other intangible assets, net............................... 30,824 28,788
Other assets............................................... 57,809 58,016
---------- ----------
TOTAL ASSETS............................................... $1,178,114 $1,174,747
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable....................................... $ 170,716 $ 172,731
Accrued compensation and related liabilities........... 54,169 58,639
Other current liabilities.............................. 68,706 64,714
Current maturities of long-term debt................... 2,861 2,270
---------- ----------
TOTAL CURRENT LIABILITIES.......................... 296,452 298,354
Long-term debt, less current maturities.................... 798,951 767,499
Other liabilities.......................................... 49,298 51,540
---------- ----------
TOTAL LIABILITIES.................................. 1,144,701 1,117,393
Commitments and contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 25,000 shares
authorized, none issued.............................. -- --
Common stock, $0.01 par value; 100,000,000 shares
authorized, 48,722,904 and 48,702,832 shares issued
and outstanding as of March 31, 2005 and December 31,
2004, respectively................................... 487 487
Paid-in capital........................................ 214,930 214,902
Accumulated deficit.................................... (192,596) (170,039)
Deferred compensation.................................. (1,811) (2,003)
Accumulated other comprehensive income................. 12,403 14,007
---------- ----------
TOTAL SHAREHOLDERS' EQUITY......................... 33,413 57,354
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................. $1,178,114 $1,174,747
========== ==========
See notes to condensed consolidated financial statements.
1
CENVEO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share amounts)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
-------------------------
2005 2004
-------- --------
Net sales................................................... $449,602 $423,742
Cost of sales............................................... 362,847 335,322
-------- --------
Gross profit................................................ 86,755 88,420
Operating expenses:
Selling, general and administrative expenses............ 72,664 67,998
Amortization of intangible assets....................... 1,330 1,405
Loss on sale of non-strategic businesses................ 722 --
Restructuring and impairment charges.................... 8,068 103
-------- --------
Operating income............................................ 3,971 18,914
Other expenses:
Interest expense........................................ 18,192 18,399
Loss from the early extinguishment of debt.............. -- 17,748
Other................................................... (11) 441
-------- --------
Loss before income taxes.................................... (14,210) (17,674)
Income tax (expense) benefit................................ (8,346) 1,139
-------- --------
Net loss.................................................... $(22,556) $(16,535)
======== ========
Loss per share--basic and diluted........................... $ (0.47) $ (0.35)
======== ========
Weighted average shares--basic and diluted.................. 47,780 47,739
See notes to condensed consolidated financial statements.
2
CENVEO, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
--------------------------
2005 2004
-------- ---------
Cash flows from operating activities:
Net loss.................................................. $(22,556) $ (16,535)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation......................................... 11,649 11,465
Amortization......................................... 2,439 2,549
Asset impairment charges............................. 7,137 --
Loss on sale of non-strategic businesses............. 722 --
Write-off of deferred financing fees................. 4,220
Other noncash charges, net........................... (1,527) (4,992)
Changes in operating assets and liabilities, excluding the
effects of operations sold:
Accounts receivable.................................. (5,522) (649)
Inventories.......................................... (6,417) (8,038)
Accounts payable and accrued compensation............ (7,304) 11,752
Income taxes payable................................. 3,443 (801)
Other working capital changes........................ (7,126) (11,369)
Other, net........................................... (1,437) (2,080)
-------- ---------
Net cash used in operating activities............... (26,499) (14,478)
Cash flows from investing activities:
Capital expenditures.................................. (6,478) (5,647)
Proceeds from sale of non-strategic businesses........ 3,058 --
Proceeds from sales of property, plant and
equipment........................................... 21 229
-------- ---------
Net cash used in investing activities............... (3,399) (5,418)
Cash flows from financing activities:
Increase in borrowings under credit facility.......... 32,469 10,613
Proceeds from issuance of long-term debt.............. -- 320,000
Repayments of long-term debt.......................... (565) (302,237)
Proceeds from issuance of common stock................ 28 7
Capitalized loan fees................................. -- (8,291)
-------- ---------
Net cash provided by financing activities........... 31,932 20,092
Effect of exchange rate changes on cash and cash
equivalents................................................ 67 (244)
-------- ---------
Net increase (decrease) in cash and cash
equivalents....................................... 2,101 (48)
Cash and cash equivalents at beginning of year.............. 796 307
-------- ---------
Cash and cash equivalents at end of quarter................. $ 2,897 $ 259
======== =========
See notes to condensed consolidated financial statements.
3
CENVEO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
of Cenveo, Inc. and subsidiaries (collectively, "Cenveo", or the "Company")
have been prepared in accordance with generally accepted accounting
principles for interim financial statements and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of Cenveo
at March 31, 2005 and the results of operations and cash flows for the
three months ended March 31, 2005. Operating results for the three months
ended March 31, 2005 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2005. The condensed
consolidated balance sheet at December 31, 2004 has been derived from the
audited financial statements at that date but does not include all of the
information and footnote disclosures required by generally accepted
accounting principles for complete financial statements.
It has been our practice to close our quarters on the Saturday closest
to the last day of the calendar month so that each quarter has the same
number of days and 13 full weeks. The financial information in this report
is presented using a calendar convention. The reporting periods, which
consist of thirteen weeks ending on April 2, 2005 and March 27, 2004, are
reported as ending on March 31, 2005 and 2004, respectively. The effects of
this practice are generally not significant.
The financial information presented in this report should be read in
conjunction with the financial statements contained in our Annual Report on
Form 10-K for 2004.
2. STOCK-BASED COMPENSATION
We account for our fixed stock option plans under Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25").
Under APB 25, we are not required to recognize compensation expense on the
stock options granted under our plans since the options are granted with an
exercise price equal to the market value of the underlying stock on the
grant date.
If we were to apply the fair value recognition provisions of Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, the Company's reported and pro forma net loss and loss per
share would have been as follows (in thousands, except per share data):
THREE MONTHS ENDED
MARCH 31,
-----------------------
2005 2004
-------- --------
Net loss, as reported................................... $(22,556) $(16,535)
Add: stock-based compensation expense included in
reported net loss............................... 192 145
Less: stock-based compensation expense determined
under fair value method for all awards.......... (1,304) (815)
-------- --------
Pro forma net loss...................................... $(23,668) $(17,205)
======== ========
Loss per share--basic and diluted:
As reported......................................... $ (0.47) $ (0.35)
Pro forma........................................... $ (0.50) $ (0.36)
4
CENVEO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVENTORIES
Inventories consist of the following (in thousands):
MARCH 31, DECEMBER 31,
2005 2004
--------- ------------
Raw materials.......................................... $ 34,953 $ 36,440
Work in process........................................ 30,457 30,357
Finished goods......................................... 57,699 50,122
--------- ---------
123,109 116,919
Reserves............................................... (5,008) (4,700)
--------- ---------
$ 118,101 $ 112,219
========= =========
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following (in thousands):
MARCH 31, DECEMBER 31,
2005 2004
--------- ------------
Land and land improvements............................. $ 18,897 $ 19,457
Buildings and building improvements.................... 108,787 109,889
Machinery and equipment................................ 525,074 532,470
Furniture and fixtures................................. 13,980 13,997
Construction in progress............................... 8,535 9,806
--------- ---------
675,273 685,619
Accumulated depreciation............................... (322,499) (318,359)
--------- ---------
$ 352,774 $ 367,260
========= =========
5. COMPREHENSIVE LOSS
A summary of the comprehensive loss is as follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
----------------------------
2005 2004
--------- ------------
Net loss............................................... $ (22,556) $ (16,535)
Other comprehensive loss:
Currency translation adjustment, net.............. (1,604) (1,978)
--------- ---------
Comprehensive loss..................................... $ (24,160) $ (18,513)
========= =========
5
CENVEO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. LONG-TERM DEBT
At March 31, 2005 and December 31, 2004, long-term debt consisted of
the following (in thousands):
MARCH 31, DECEMBER 31,
2005 2004
--------- ------------
Senior Secured Credit Facility, due 2008............... $110,910 $ 78,441
Senior Notes, due 2012................................. 350,000 350,000
Senior Subordinated Notes, due 2013.................... 320,000 320,000
Other.................................................. 20,902 21,328
-------- --------
801,812 769,769
Less current maturities................................ (2,861) (2,270)
-------- --------
Long-term debt...................................... $798,951 $767,499
======== ========
As of March 31, 2005, the Company was in compliance with all of the
covenants of its various debt agreements.
7. INCOME TAXES
Since our U.S. operations have incurred substantial net operating
losses over the last four years, we have recorded a valuation allowance to
offset the estimated tax benefit from the net operating loss incurred by
our U.S. operations in the three months ended March 31, 2005. The tax
expense reported for the three months ended March 31, 2005 relates to our
Canadian operations which are expected to generate taxable income in 2005
and to a valuation allowance of $3.7 million which was recorded in the
quarter for foreign tax credits generated that are not likely to be
utilized.
8. RESTRUCTURING AND IMPAIRMENT CHARGES
A summary of the restructuring and impairment charges recorded in the
three months ended March 31, 2005 follows:
Asset impairments....................................... $7,137
Employee separation and related expenses................ 396
Other charges........................................... 535
------
$8,068
======
The asset impairment charges relate to operations in our commercial
segment that operated at a loss throughout 2004 and continued to perform
poorly in the first quarter of 2005. It became apparent during the three
months ended March 31, 2005 that the plans that had been developed to make
these operations profitable were not likely to be successful as quickly as
we expected. It is now our current expectation that it is more likely than
not that the long-lived assets at these plants will be sold or otherwise
disposed of significantly before the end of their estimated useful lives.
These impairment charges are based on management's best estimates.
Additional impairment and restructuring charges related to these plants may
be required prior to the end of 2005.
During the three months ended March 31, 2005, the commercial segment
began the closure of a small printing operation located in Phoenix, Arizona
and the consolidation of its production into our Los Angeles, California
printing plant. We have accrued employee separation and related expenses of
$0.4 million to cover the separation of 45 employees, and $0.4 million of
other closure costs associated with the shut-down of this is plant which is
expected to be completed during the second quarter. We do not expect
significant additional charges related to this plant closure in the second
quarter.
6
CENVEO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. RESTRUCTURING AND IMPAIRMENT CHARGES (CONTINUED)
We substantially completed the consolidation of our printing operations
in Seattle, Washington and San Francisco, California during the three
months ended March 31, 2005. The restructuring expenses incurred during the
three months ended March 31, 2005 totaled $0.2 million.
A summary of the activity charged to the 2002 restructuring liability
during the three months ended March 31, 2005 is as follows (in thousands):
COMMERCIAL RESALE TOTAL
---------- ------ -----
Balance, December 31, 2004............................. $ 653 $ 14 $ 667
Payments for lease termination and property exit
costs............................................ (384) -- (384)
Payments for other exit costs...................... (69) -- (69)
Reversal of unused accrual......................... -- (14) (14)
----- ---- -----
Balance, March 31, 2005................................ $ 200 $ -- $ 200
===== ==== =====
A summary of the activity charged to the 2001 restructuring liability
during the three months ended March 31, 2005 is as follows (in thousands):
COMMERCIAL
----------
Balance, December 31, 2004.............................. $426
Payments for lease termination and property exit
costs............................................. (84)
----
Balance, March 31, 2005................................. $342
====
9. LOSS ON SALE OF NON-STRATEGIC BUSINESSES
The following is a summary of loss (gain) recognized as a result of the
sale of non-strategic businesses during the three months ended March 31,
3005 (in thousands):
Riviera Beach........................................... $620
Osage Beach............................................. (68)
Classic Envelope........................................ 170
----
$722
====
We received net cash proceeds of $3.1 million as a result of the sales
of these businesses. The following table summarizes the net sales and
operating losses of these businesses included in the condensed consolidated
statements of operations:
THREE MONTHS ENDED
MARCH 31,
-------------------
2005 2004
------ ------
Net sales.............................................. $3,226 $3,546
Operating losses....................................... (353) (13)
The Company has ongoing supply agreements with these entities;
accordingly, the dispositions of these non-strategic businesses have not
been accounted for as discontinued operations in the condensed consolidated
statements of operations.
7
CENVEO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
10. PENSION PLANS
The components of the net periodic pension expense for the Company's
pension plans and the supplemental executive retirement plans were as
follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
-------------------
2005 2004
----- -----
Service cost........................................... $ 659 $ 544
Interest cost.......................................... 829 711
Expected return on plan assets......................... (928) (844)
Net amortization and deferral.......................... 175 53
----- -----
Net periodic pension expense........................... $ 734 $ 464
===== =====
We expect to contribute $3.0 million to the Company's pension plans in
2005. As of March 31, 2005, contributions of $0.7 million had been made.
11. LOSS PER SHARE
Basic loss per share excludes dilution and is computed by dividing net
loss by the weighted average number of common shares outstanding for the
period. Diluted loss per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised
or converted into common stock. A reconciliation of the amounts included in
the computation of basic loss per share and diluted loss per share is as
follows (in thousands, except per share amounts):
THREE MONTHS ENDED
MARCH 31,
-----------------------
2005 2004
-------- --------
Numerator:
Numerator for basic and diluted loss per share--net loss.... $(22,556) $(16,535)
======== ========
Denominator:
Denominator for basic and diluted loss per share--weighted
average shares............................................ 47,780 47,739
Loss per share--basic and diluted....................... $ (0.47) $ (0.35)
======== ========
In the three months ended March 31, 2005 and 2004, outstanding options
and shares of restricted stock in the amount of 6,950,000 and 6,468,000,
respectively, were excluded from the calculation of diluted earnings per
share because the effect would be antidilutive.
12. SEGMENT INFORMATION
The commercial segment specializes in printing annual reports, car
brochures, brand marketing collateral, financial communications and general
commercial printing and the manufacturing and printing of customized
envelopes for billing and remittance and direct mail advertising. The
commercial segment also offers services such as design, fulfillment,
eCommerce and inventory management. These products and services are sold
directly to national and local customers.
The resale segment produces business forms and labels, custom and stock
envelopes, and specialty packaging and mailers. These products are
generally sold through professional print distributors, business forms
suppliers, office-products retail chains and the Internet.
Operating income of each segment includes all costs and expenses
directly related to the segment's operations. Corporate expenses include
corporate general and administrative expenses. Inter-company
8
CENVEO, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. SEGMENT INFORMATION (CONTINUED)
sales for the three months ended March 31, 2005 and 2004 were $6.0 million
and $5.2 million, respectively. These amounts were eliminated in
consolidation and excluded from reported net sales.
The following tables present certain segment information for the three
months ended March 31, 2005 and 2004 (in thousands):
THREE MONTHS ENDED
MARCH 31,
-----------------------
2005 2004
-------- --------
Net sales:
Commercial.......................................... $346,408 $323,849
Resale.............................................. 103,194 99,893
-------- --------
Total............................................... $449,602 $423,742
======== ========
Operating income (expense):
Commercial.......................................... $ 2,263 $ 11,996
Resale.............................................. 8,739 11,463
Corporate........................................... (7,031) (4,545)
-------- --------
Total............................................... $ 3,971 $ 18,914
======== ========
Restructuring and impairment charges:
Commercial.......................................... $ 8,082 $ 103
Resale.............................................. (14) --
-------- --------
Total............................................... $ 8,068 $ 103
======== ========
Net sales by product line:
Commercial printing................................. $210,377 $198,647
Envelopes........................................... 189,939 173,764
Business forms and labels........................... 49,286 51,331
-------- --------
Total............................................... $449,602 $423,742
======== ========
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BUSINESS OVERVIEW
Cenveo is one of North America's leading providers of visual
communication solutions delivered through print and electronic media. Our
products include offset and digital printing, custom and stock envelopes,
and business documents and labels. We also provide communications
consulting, end-to-end project management and eServices. We have production
facilities and fulfillment and distribution centers strategically located
throughout North America. We are organized into two business segments--
commercial and resale.
Our commercial segment specializes in printing annual reports, car
brochures, brand marketing collateral, financial communications and general
commercial printing and in the manufacturing and printing of customized
envelopes for billing and remittance and direct mail advertising. The
commercial segment also offers services such as design, fulfillment,
eCommerce and inventory management. These products and services are
provided directly to national and local customers. Our commercial segment
consists of 34 printing plants, 27 envelope plants and five distribution
and fulfillment centers.
Our resale segment produces business forms and labels, custom and stock
envelopes, and specialty packaging and mailers. These products are
generally sold through professional print distributors, business forms
suppliers, office products retail chains and the Internet. The resale
segment operates 20 manufacturing facilities.
Management's Discussion and Analysis of Financial Condition and Results
of Operations is intended to provide an update on the financial condition
of Cenveo since December 31, 2004 and to discuss operating trends to the
extent known and considered relevant. This discussion should be read in
conjunction with the consolidated financial statements and related notes
and Management's Discussion and Analysis of Financial Condition and Results
of Operations included in our Annual Report on Form 10-K for the year ended
December 31, 2004.
REVIEW OF RESULTS
The discussion and analysis of the results of operations includes an
overview of our consolidated results for the first quarter of 2005 followed
by a discussion of the results of our two business segments for the first
quarter of 2005.
10
A summary of our condensed consolidated statements of operations is
presented below. The summary presents reported net sales and operating
income as well as the net sales and operating income data of our business
segments used internally to assess operating performance. Division net
sales exclude sales of divested operations and division operating income
excludes the costs associated with our corporate headquarters,
restructuring and impairment charges, operating losses of divested
operations and losses related to the dispositions of non-strategic
businesses.
THREE MONTHS ENDED
MARCH 31,
-----------------------
(IN THOUSANDS) 2005 2004
-------------- -------- --------
Division net sales.......................................... $446,376 $420,196
Divested operations.................................... 3,226 3,546
-------- --------
Net sales................................................... $449,602 $423,742
======== ========
Division operating income................................... $ 20,146 $ 23,575
Unallocated corporate expenses.......................... (7,032) (4,545)
Restructuring and impairment charges.................... (8,068) (103)
Divested operations..................................... (353) (13)
Loss on sale of non-strategic businesses................ (722) --
-------- --------
Operating income............................................ 3,971 18,914
Interest expense........................................ 18,192 18,399
Loss on early extinguishment of debt.................... -- 17,748
Other non operating (income) expenses................... (11) 441
-------- --------
Loss before income taxes.................................... (14,210) (17,674)
Income tax (expense) benefit............................ (8,346) 1,139
-------- --------
Net loss.................................................... $(22,556) $(16,535)
======== ========
Loss per share--basic and diluted........................... $ (0.47) $ (0.35)
======== ========
NET SALES
Net sales and division net sales increased 6% in the first quarter of
2005 reflecting strong growth of 7% in the commercial segment and 3% growth
in the resale segment. Our strategy of offering the full range of our
products and services is continuing to drive the sales performance of the
commercial segment. The sales growth in our resale segment reflects higher
sales of office products to our retail customers.
OPERATING INCOME
Operating income in the first quarter of 2005 declined $14.9 million
compared to the corresponding period of 2004. Division operating income
declined $3.4 million. This decline was driven by the following:
* As expected, the profits of our resale segment were lower since the
pricing concessions made in the second half of 2004 to defend and
grow our share of the office products market continued to have a
negative impact. We expect this to continue in the second quarter.
* The margins of our envelope products were lower since we have not
been able to fully recover the higher cost of paper and other
materials.
* Management incentives have been accrued in the first quarter of 2005.
The accrual required for management incentives in the first quarter
of 2004 was not significant since under the plan in effect during
2004 the incentives had not been earned.
11
UNALLOCATED CORPORATE EXPENSES. Unallocated corporate expenses include
the costs of our corporate headquarters and certain expenses not allocated
to our segments. The increase in unallocated corporate expenses in the
first quarter of 2005 compared to the first quarter of 2004 was due
primarily to the separation costs accrued as a result of the resignation of
our chief executive officer and the expenses incurred in connection with
the search for his replacement.
RESTRUCTURING AND IMPAIRMENT CHARGES. We continually evaluate our
operations for opportunities to optimize capacity and reduce costs. This
process is ongoing as our industry and markets continue to evolve. We
anticipate additional restructuring charges during 2005.
A summary of the restructuring and impairment charges recorded in the
first quarter of 2005 follows:
Asset impairments....................................... $7,137
Employee separation and related expenses................ 396
Other charges........................................... 535
------
$8,068
======
The asset impairment charges relate primarily to operations in our
commercial segment that operated at a loss throughout 2004 and continued to
perform poorly in the first quarter of 2005. It became apparent during the
quarter that the plans that had been developed to make these operations
profitable were not likely to be successful as quickly as we expected. It
is now our current expectation that it is more likely than not that the
long-lived assets at these plants will be sold or otherwise disposed of
significantly before the end of their estimated useful lives. These
impairment charges are based on management's best estimates. Additional
impairment and restructuring charges related to these plants may be
required prior to the end of 2005.
During the quarter, the commercial segment began the closure of a small
printing operation in Phoenix, Arizona and the consolidation of its
production into our Los Angeles, California printing plant. We have accrued
employee separation and other related expense of $0.4 million to cover the
separation of 45 employees and $0.4 million of other closures costs
associated with the shut-down of this is plant which is expected to be
completed during the second quarter. We do not expect significant
additional charges related to this plant closure in the second quarter.
We substantially completed the consolidation of our printing operations
in Seattle, Washington and San Francisco, California during the first
quarter of 2005. The restructuring expenses incurred during the quarter
totaled $0.2 million.
LOSS ON SALE OF NON-STRATEGIC BUSINESSES
During the first quarter of 2005 we sold our printing operations in
Riviera Beach, Florida and Osage Beach, Missouri and our Classic Envelope
business in Canada. The net sales and the operating losses of these
businesses were as follows:
THREE MONTHS ENDED
MARCH 31,
-------------------
2005 2004
------ ------
Net sales.............................................. $3,226 $3,546
Operating losses....................................... (353) (13)
The loss recognized on the sale of these non-strategic businesses was
primarily due to the write-off of the goodwill allocated to these
businesses as required by Statement of Financial Accounting Standards No.
142, Goodwill and Other Intangible Assets.
12
INTEREST EXPENSE
Interest expense decreased slightly to $18.2 million in the first
quarter of 2005 from $18.4 million in the first quarter of 2004. Interest
expense in the first quarter of 2005 reflects average outstanding debt of
$828.2 million during the quarter and a weighted average interest rate of
8.2% compared to average outstanding debt of $817.7 million during the
first quarter of 2004 and a weighted average interest rate of 8.4%. Our
average outstanding debt and weighted average interest rate in 2004 reflect
the issuance of $320 million of 7 7/8% senior subordinated notes in
January, the proceeds of which were used to redeem the $300 million of
8 3/4% senior subordinated notes due in 2008.
LOSS FROM THE EARLY EXTINGUISHMENT OF DEBT
In January 2004, we sold $320 million of 7 7/8% senior subordinated
notes due 2013. The proceeds from the sale of these notes were used to
redeem our 8 3/4% senior subordinated notes due 2008. The premium paid to
redeem the 8 3/4% notes and the unamortized debt issuance costs on the
8 3/4% notes, which were written off, totaled $17.7 million.
INCOME TAXES
Since our U.S. operations have incurred substantial net operating
losses over the last four years, we have recorded a valuation allowance to
offset the estimated tax benefit from the net operating loss incurred by
our U.S. operations in the three months ended March 31, 2005. The tax
expense reported for the three months ended March 31, 2005 relates to our
Canadian operations which are expected to generate taxable income in 2005
and to a valuation allowance of $3.7 million which was recorded in the
quarter for foreign tax credits generated that are not likely to be
utilized.
NET LOSS AND NET LOSS PER SHARE
Our net loss of $22.6 million, or $0.47 per share, in the first quarter
of 2005 compared to a net loss of $16.5 million, or $0.35 per share, in the
first quarter of 2004 reflects lower operating income in 2005 and tax
expense related to our foreign operations despite the consolidated loss
before income taxes partially offset by the 2004 impact of the charge taken
for the early extinguishment of debt.
13
RELEVANT NON-GAAP MEASURE--EBITDA
In addition to the results presented in accordance with generally
accepted accounting principles (GAAP), we are also presenting EBITDA, a
non-GAAP measure, in this analysis. We define EBITDA as earnings before
interest, taxes, depreciation, amortization, non-cash impairment charges,
and gains and losses on divestitures. In 2004, we excluded the loss
incurred on the early extinguishment of debt. We use EBITDA internally to
monitor our overall performance and the performance of our segments and
believe that it provides useful supplemental information for comparative
purposes since it excludes the impact of investing or financing
transactions as well as the effect of asset impairments on our operating
results. A reconciliation of net income to EBITDA, as defined, is presented
below:
THREE MONTHS ENDED
MARCH 31,
-----------------------
2005 2004
-------- --------
Net loss.................................................... $(22,556) $(16,535)
Interest............................................... 18,192 18,399
Income taxes........................................... 8,346 (1,139)
Depreciation........................................... 11,649 11,465
Amortization........................................... 1,360 1,486
Impairment charges..................................... 7,137 --
Loss on sale of non-strategic businesses............... 722 --
Loss from the early extinguishment of debt............. -- 17,748
-------- --------
EBITDA, as defined.......................................... $ 24,850 $ 31,424
======== ========
EBITDA, as defined, by Segment
Commercial.............................................. $ 20,921 $ 22,207
Resale.................................................. 10,976 13,818
Corporate............................................... (7,047) (4,601)
-------- --------
$ 24,850 $ 31,424
======== ========
SEGMENT OPERATIONS
Our chief executive officer monitors the performance of the ongoing
operations of each of our business segments. The summaries of sales and
operating income of our two segments have been presented to show each
segment without the sales of divested operations ("Division net sales") and
to show the operating income of each segment without the operating losses
of divested operations and the loss incurred on the sale of non-strategic
businesses and excluding restructuring and impairment charges ("Division
operating income"). Net sales and operating losses of the operations
divested, the loss on sale of non-strategic businesses and restructuring
and impairment charges have been included in the tables below to reconcile
segment sales and segment operating income reported in Note 12 to our
condensed consolidated financial statements to division net sales and
division operating income on which our segments are evaluated.
14
COMMERCIAL
THREE MONTHS ENDED
MARCH 31,
-----------------------
(IN THOUSANDS) 2005 2004
-------------- -------- --------
Segment sales............................................... $346,408 $323,849
Divested operations.................................... (3,226) (3,546)
-------- --------
Division net sales.......................................... $343,182 $320,303
======== ========
Segment operating income.................................... $ 2,263 $ 11,996
Restructuring and impairment charges.................... 8,082 103
Loss on sale of non-strategic businesses................ 722 --
Divested operations..................................... 353 13
-------- --------
Division operating income................................... $ 11,420 $ 12,112
======== ========
Division operating income margin............................ 3% 4%
Net sales of our commercial segment increased $22.6 million, or 7%, in
the first quarter of 2005 compared to the first quarter of 2004. Division
net sales increased $22.9 million. This strong sales performance was driven
by the following:
* Sales to our strategic accounts grew $6.5 million, or an increase of
14% in these accounts. Sales in our local markets grew $6.4 million,
or an increase of 2.5% in these markets.
* Acquisitions completed in the second half of 2004 contributed $6.4
million in new sales.
* The favorable impact of the continued strength of the Canadian dollar
on the sales of our Canadian operations was $3.6 million.
The operating income of the commercial segment declined $9.7 million in
the first quarter of 2005 compared to the first quarter of 2004 due
primarily to asset impairment charges recorded in the quarter. Despite the
increase in sales, division operating income declined $0.7. The decline in
division operating income was primarily the result of the following
factors:
* We did not fully recover the higher cost of paper used to produce our
envelope products due to contractual commitments and competitive
pressures. We estimate the negative impact of lower margins on sales
of our envelope products was approximately $4.1 million in the first
quarter of 2005.
* The results at three plants that performed poorly in 2004 continued
to deteriorate in 2005 and were approximately $2.0 million lower than
the first quarter of 2004.
* Results in 2005 include higher employee incentive accruals than the
first quarter of 2004.
RESALE
THREE MONTHS ENDED
MARCH 31,
-----------------------
(IN THOUSANDS) 2005 2004
-------------- -------- --------
Net sales................................................... $103,194 $ 99,893
======== ========
Segment operating income.................................... $ 8,739 $ 11,463
Restructuring credit.................................... (14) --
-------- --------
Division operating income................................... $ 8,725 $ 11,463
======== ========
Division operating income margin............................ 8% 11%
15
Net sales of our resale segment increased $3.3 million, or 3%, in the
first quarter of 2005 compared to the first quarter of 2004. The sales
growth in resale reflects the following:
* Sales of office products to our retail, wholesale and trade customers
were up 22% from the first quarter of 2004. Lower net pricing,
however, reduced our overall revenue growth in these channels to $3.9
million.
* Sales of business labels and traditional documents to our
distribution customers declined in the quarter by $1.4 million
compared to the first quarter of 2004. This sales decline was
partially offset by higher sales of envelopes to our distribution
customers.
Division operating income of our resale segment declined $2.7 million,
or 24%, in the first quarter of 2005 compared to the first quarter of 2004.
This decline was driven by lower net selling prices for office products
sold to our retail and wholesale customers, higher paper prices, higher
distribution expenses and higher employee incentive accruals.
LIQUIDITY AND CAPITAL RESOURCES
Our cash flows from operating, investing and financing activities, as
reflected in the condensed consolidated statements of cash flows, are
summarized as follows:
THREE MONTHS ENDED
MARCH 31,
-----------------------
(IN THOUSANDS) 2005 2004
-------------- -------- --------
Cash provided by (used for):
Operating activities................................... $(26,499) $(14,478)
Investing activities................................... (3,399) (5,418)
Financing activities................................... 31,932 20,092
Effect of exchange rate changes on cash................ 67 (244)
-------- --------
Net increase (decrease) in cash and cash equivalents........ $ 2,101 $ (48)
======== ========
OPERATING ACTIVITIES. In the first quarter of 2005, our operations used
$12.0 million more cash than in the first quarter of 2004. This use of cash
was primarily the result of an increase in other working capital accounts.
INVESTING ACTIVITIES. Capital expenditures were $6.5 million in the
first quarter of 2005 compared to $5.6 million in first quarter of 2004.
Net proceeds from the sales of non-strategic businesses totaled $3.1
million in the quarter.
FINANCING ACTIVITIES. Our outstanding debt was $801.8 million at March
31, 2005, an increase of $32.0 million from December 31, 2004. Our debt
increased $28.4 million in the first quarter of 2004.
On March 31, 2005, we had outstanding letters of credit of
approximately $25.2 million related to performance and payment guarantees.
In addition, we have issued letters of credit of $1.0 million as credit
enhancements in conjunction with other debt. Based on our experience with
these arrangements, we do not believe that any obligations that may arise
will be significant.
Our current credit ratings are as follows:
SENIOR SENIOR
SECURED CREDIT SENIOR SUBORDINATED
REVIEW AGENCY FACILITY NOTES NOTES LAST UPDATE
----------------------------------- -------------- ------ ------------ -------------
Standard & Poor's.................. BB- B+ B- December 2004
Moody's............................ Ba3 B1 B3 April 2004
The terms of our existing debt do not have any rating triggers, and we
do not believe that our current ratings will impact our ability to raise
additional capital.
16
We expect internally generated cash flow and the financing available
under our senior secured credit facility will be sufficient to fund our
working capital needs and long-term growth; however, this cannot be
assured. Based on the certificate filed April 22, 2005, we had $119.9
million of unused credit available under our senior secured credit
facility.
CRITICAL ACCOUNTING ESTIMATES
In preparing our condensed consolidated financial statements, we make
estimates based on 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 periods. We evaluate these estimates on
an ongoing basis. We base our estimates on historical experience and
various other assumptions that are considered reasonable in view of
relevant facts and circumstances. Because these accounting estimates and
assumptions inherently involve significant judgments and the most
uncertainty, the nature of these accounting estimates and assumptions are
important to an understanding of our financial statements. Because future
events rarely develop exactly as anticipated, even the best estimates
routinely require adjustment.
There were no significant changes in the application of the critical
accounting policies and estimates in preparing our condensed consolidated
financial statements for the first quarter of 2005 from those disclosed in
our Annual Report on Form 10-K for the year ended December 31, 2004. The
critical accounting policies and estimates disclosed in the Management's
Discussion and Analysis of Financial Condition and Results of Operations of
the Form 10-K were allowance for losses on accounts receivable, impairment
of long-lived assets, goodwill, self-insurance and accounting for income
taxes.
NEW ACCOUNTING STANDARDS
In April 2005, the Securities and Exchange Commission adopted a rule
that amended the compliance dates for Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 123 (revised 2004),
Share-Based Payment ("SFAS No. 123R"). The rule permits companies to
implement SFAS No. 123R at the beginning of their next fiscal year, instead
of the beginning of the reporting period subsequent to June 15, 2005. We
will not implement SFAS No. 123R until required to do so on January 1,
2006.
SEASONALITY AND ENVIRONMENT
Our commercial segment experiences seasonal variations. Revenues from
annual reports are generally concentrated from February through April.
Revenues associated with holiday catalogs and automobile brochures tend to
be concentrated from July through October. As a result of these seasonal
variations, some of our commercial printing operations are at or near
capacity at certain times during these periods.
In addition, several envelope market segments and certain segments of
the direct mail market experience seasonality, with a higher percentage of
the volume of products sold to these markets occurring during the fourth
quarter of the year. This seasonality is due to the increase in sales to
the direct mail market due to holiday purchases.
The mailer operations of our resale segment are at or near capacity at
times during the fourth quarter.
Seasonality is offset by the diversity of our other products and
markets, which are not materially affected by seasonal conditions.
Environmental matters have not had a material financial impact on our
historical operations and are not expected to have a material impact in the
future.
17
AVAILABLE INFORMATION
Our Internet address is: www.cenveo.com. We make available free of
charge through our website our Annual Report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 as soon as reasonably practicable after such documents are
filed electronically with the Securities and Exchange Commission. In
addition, our earnings conference calls are archived for replay on our
website and presentations to securities analysts are also included on our
website.
LEGAL PROCEEDINGS
From time to time we may be involved in claims or lawsuits that arise
in the ordinary course of business. Accruals for claims or lawsuits have
been provided for to the extent that losses are deemed probable and can be
estimated. Although the ultimate outcome of these claims or lawsuits cannot
be ascertained, on the basis of present information and advice received
from counsel, it is our opinion that the disposition or ultimate
determination of such claims or lawsuits will not have a material adverse
effect on us.
CAUTIONARY STATEMENTS
Certain statements in this report, and in particular, statements found
in Management's Discussion and Analysis of Financial Condition and Results
of Operations, constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. We believe these
forward-looking statements are based upon reasonable assumptions within the
bounds of our knowledge of Cenveo. All such statements involve risks and
uncertainties, and as a result, actual results could differ materially from
those projected, anticipated or implied by these statements. Such
forward-looking statements involve known and unknown risks, including but
not limited to, general economic, business and labor conditions; the
ability to implement our strategic initiatives; the ability to be
profitable on a consistent basis; dependence on sales that are not subject
to long term contracts; dependence on suppliers; the ability to recover the
rising cost of key raw materials in markets that are highly price
competitive; the ability to meet customer demand for additional value-added
products and services; fluctuations in currency exchange rates,
particularly with respect to the Canadian dollar; the ability to timely or
adequately respond to technological changes in the industry; the impact of
the Internet and other electronic media on the demand for envelopes and
printed material; postage rates; the ability to manage operating expenses;
the ability to manage financing costs and interest rate risk; a decline in
business volume and profitability that could result in a further impairment
of goodwill; the ability to retain key management personnel; the ability to
identify, manage or integrate future acquisitions; the costs associated
with and the outcome of outstanding and future litigation; and changes in
government regulations.
In view of such uncertainties, investors should not place undue
reliance on our forward-looking statements since such statements speak only
as of the date when made. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks such as changes in interest and foreign
currency exchange rates, which may adversely affect results of our
operations and our financial position. Risks from interest and foreign
currency exchange rate fluctuations are managed through normal operating
and financing activities. We do not utilize derivatives for speculative
purposes, nor have we hedged interest rate exposure through the use of
swaps and options or foreign exchange exposure through the use of forward
contracts.
Exposure to market risk from changes in interest rates relates
primarily to our variable rate debt obligations. The interest on this debt
is the London Interbank Offered Rate ("LIBOR") plus a margin. At March 31,
2005, we had variable rate debt outstanding of $125.5 million. A 1%
increase in LIBOR
18
on the maximum amount of debt subject to variable interest rates, which was
$314.6 million, would increase our annual interest expense by $3.1 million.
We have operations in Canada, and thus are exposed to market risk for
changes in foreign currency exchange rates of the Canadian dollar. In the
three months ended March 31, 2005, a uniform 10% strengthening of the U.S.
dollar relative to the Canadian dollar would have resulted in a decrease in
sales and net income of approximately $5.2 million and $0.6 million,
respectively. The effects of foreign currency exchange rates on future
results would also be impacted by changes in sales levels or local currency
prices.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's
management, including the Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) as of the end of the period covered by this report. Based
upon that evaluation, the Company's management, including the Chief
Executive Officer and Chief Financial Officer, concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
any material information relating to the Company and its subsidiaries
required to be included in the Company's Exchange Act filings.
CHANGES IN INTERNAL CONTROLS. There were no changes made in the
Company's internal controls over financial reporting that occurred during
the Company's most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, the Company's internal controls
over financial reporting.
19
PART II
ITEM 6. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Articles of Incorporation of the Company--incorporated by
reference from Exhibit 3(i) of the Company's Form 10-Q for the
quarter ended June 30, 1997.
3.2 Articles of Amendment to the Articles of Incorporation of the
Company dated May 17, 2004--incorporated by reference to Exhibit
3.2 to Cenveo Inc.'s quarterly report on Form 10-Q for the quarter
ended June 30, 2004.
3.3 Bylaws of the Company as amended and restated effective April 17,
2005--incorporated by reference to Exhibit 3.2 of the Company's
Form 8-K filed April 18, 2005.
3.4 Certificate of Amendment of Certificate of Incorporation of Cenveo
Corporation (formerly known as Mail-Well I Corporation) dated May
14, 2004--incorporated by reference to Exhibit 3.4 to Cenveo Inc.'s
quarterly report on Form 10-Q for the quarter ended June 30, 2004.
3.5 Amendment to Articles of Incorporation and Certificate of Designations
of Series A Junior Participating Preferred Stock of Cenveo, Inc.
dated April 20, 2005--incorporated by reference to Exhibit 3.1 of the
Company's Form 8-K filed April 21, 2005.
4.1 Indenture dated as of March 13, 2002 between Mail-Well I Corporation
and State Street Bank and Trust Company, as Trustee relating to Mail-Well
I Corporation's $350,000,000 aggregate principal amount of 9 5/8% Senior
Notes due 2012--incorporated by reference to Exhibit 10.30 to Mail-Well,
Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002.
4.2 Form of Senior Note and Guarantee relating to Mail-Well I Corporation's
$350,000,000 aggregate principal amount 9 5/8% due 2012--incorporated by
reference to Exhibit 10.31 to Mail-Well, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended March 31, 2002.
4.3 Indenture dated as of February 4, 2004 between Mail-Well I Corporation
and U.S. Bank National Association, as Trustee, and Form of Senior
Subordinated Note and Guarantee relating to Mail-Well I Corporation's
$320,000,000 aggregate principal amount of 7 7/8 Senior Subordinated
Notes due 2013--incorporated by reference to Exhibit 4.5 to Mail-Well,
Inc.'s Annual Form 10-K filed February 27, 2004.
4.4 Rights Agreement dated April 20, 2005 between Cenveo, Inc. and Computershare
Trust Company, Inc.--incorporated by reference to Exhibit 4.1 of the Company's
Form 8-K filed April 21, 2005.
10.1 Form of Indemnity Agreement between Mail-Well, Inc. and each of its officers
and directors--incorporated by reference from Exhibit 10.17 of Mail-Well,
Inc.'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
Mail-Well, Inc.'s Registration Statement on Form S-1 dated March 25, 1994.
10.3 Form of M-W Corp. Employee Stock Ownership Plan effective as of February
23, 1994 and related Employee Stock Ownership Plan Trust Agreement--incorporated
by reference from Exhibit 10.19 of Mail-Well, Inc.'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 Mail-Well, Inc.'s Registration Statement on
Form S-1 dated March 25, 1994.
20
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.5 Form of Mail-Well, Inc. Incentive Stock Option
Agreement--incorporated by reference from Exhibit 10.22 of
Mail-Well, Inc.'s Registration Statement on Form S-1 dated
March 25, 1994.
10.6 Form of Mail-Well, Inc. Nonqualified Stock Option
Agreement--incorporated by reference from Exhibit 10.23 of
Mail-Well, Inc.'s Registration Statement on Form S-1 dated
March 25, 1994.
10.7 1997 Non-Qualified Stock Option Agreement--incorporated by
reference from Exhibit 10.54 of Mail-Well, Inc.'s Form 10-Q
for the quarter ended March 31, 1997.
10.8 Mail-Well, Inc. 1998 Incentive Stock Option Plan 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.
10.9 Mail-Well, Inc. 2001 Long-Term Equity Incentive
Plan--incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2001.
10.10 Form of Non-Qualified Stock Option Agreement under 2001
Long-Term Equity Incentive Plan--incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.
10.11 Form of Incentive Stock Option Agreement under 2001
Long-Term Equity Incentive Plan--incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.
10.12 Form of Restricted Stock Award Agreement under 2001
Long-Term Equity Incentive Plan--incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.
10.13 Second Amended and Restated Equipment Lease dated as of
August 6, 2002 between Wells Fargo Bank Northwest, National
Association, as trustee under MW 1997-1 Trust, and Mail-
Well I Corporation--incorporated by reference to Exhibit
10.26 of Mail-Well, Inc.'s Form 10-Q for the quarter ended
September 30, 2002.
10.14 Second Amended and Restated Guaranty Agreement dated as of
August 6, 2002, among Mail-Well I Corporation as Lessee,
certain of its subsidiaries and Mail-Well, Inc. as
Guarantors, Fleet Capital Corporation as Agent, and the
Trust Certificate Purchasers named therein--incorporated by
reference to Exhibit 10.27 of Mail-Well, Inc.'s Form 10-Q
for the quarter ended September 30, 2002.
10.15 Second Amended and Restated Participation Agreement dated as
of August 6, 2002, among Mail-Well I Corporation as Lessee,
Fleet Capital Corporation as Arranger and Agent, and the
Trust Certificate Purchasers named therein--incorporated by
reference to Exhibit 10.28 of Mail-Well, Inc.'s Form 10-Q
for the quarter ended September 30, 2002.
10.16 Amendment Agreement No. 1 dated as of September 25, 2002,
among Mail-Well I Corporation as Lessee, certain of its
subsidiaries and Mail-Well, Inc. as Guarantors, Fleet
Capital Corporation as Agent, and the Trust Certificate
Purchasers named therein--incorporated by reference to
Exhibit 10.29 of Mail-Well, Inc.'s Form 10-Q for the quarter
ended September 30, 2002.
10.17 Employment and Executive Severance Agreement dated as of
March 10, 2003, between the Company and Paul V.
Reilly--incorporated by reference to Exhibit 10.26 of the
Company's Annual Form 10-K filed March 31, 2003.
10.18 Form of Executive Severance Agreement entered into between
the Company and each of the following: Michel Salbaing,
Gordon Griffiths, Brian Hairston, Keith Pratt, William
Huffman,
21
EXHIBIT
NUMBER DESCRIPTION
------- -----------
D. Robert Meyer and Mark Zoeller--incorporated by reference
to Exhibit 10.27 of the Company's Annual Form 10-K filed
March 31, 2003.
10.19 Amendment Agreement No. 2 dated as of March 25, 2004 among
Mail-Well I Corporation as Lessee, certain of its
subsidiaries and Mail-Well, Inc. as Guarantor, Fleet Capital
Corporation as Agent, and the Trust Purchasers named
therein--incorporated by reference to Exhibit 10.21 of the
Company's Form 10-Q for quarter ended March 31, 2004.
10.20 Second Amended and Restated Credit Agreement dated March 25,
2004 among Mail-Well, Inc., Mail-Well I Corporation, certain
subsidiaries of Mail-Well I, the lenders under the Second
Amended and Restated Credit Agreement, and Bank of America,
N.A., as administrative agent for the lenders--incorporated
by reference to Exhibit 10.22 of the Company's Form 10-Q for
quarter ended March 31, 2004.
10.21 Second Amended and Restated Security Agreement dated March
25, 2004 among Mail-Well, Inc., Mail-Well I Corporation,
certain subsidiaries of Mail-Well I, the lenders under the
Second Amended and Restated Credit Agreement, and Bank of
America, N.A., as administrative agent for the
lenders--incorporated by reference to Exhibit 10.23 of the
Company's Form 10-Q for quarter ended March 31, 2004.
10.22 Cenveo, Inc. 2001 Long-Term Equity Incentive Plan, as
amended--incorporated by reference to Exhibit 10.24 to
Cenveo Inc.'s quarterly report on Form 10-Q for the quarter
ended June 30, 2004.
10.23 Amendment No. 1 to Second Amended and Restated Credit
Agreement dated February 8, 2005 among Cenveo, Inc., Cenveo
Corporation, certain subsidiaries of Cenveo Corporation, the
lenders under the Second Amended and Restated Credit
Agreement, and Bank of America, N.A., as administrative
agent for the lenders--incorporated by reference to Exhibit
10.23 of the Company's Annual Form 10-K filed February 28,
2005.
31.1* Certification of Periodic Report by Michel P. Salbaing,
Senior Vice President--Finance and Chief Financial Officer
and acting Chief Executive Officer, pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1** Certification of Periodic Report by Michel P. Salbaing,
Senior Vice President--Finance and Chief Financial Officer
and acting Chief Executive Officer, pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
------------------------
* Filed herewith.
** Furnished herewith.
22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the
city of Englewood, state of Colorado, on May 3, 2005.
CENVEO, INC.
By: /S/ MICHEL P. SALBAING
--------------------------------
Michel P. Salbaing
Senior Vice President--
Finance and Chief Financial
Officer and acting Chief Executive
Officer (Principal Executive Officer
and Principal Financial Officer)
23