Mail-Well Announces Continued Improved Profitability ENGLEWOOD,
Colo., Feb. 9 /PRNewswire-FirstCall/ -- Mail-Well, Inc., announced
its results for the fourth quarter and year ended December 31,
2003. The net income for the quarter was $5.7 million, or $0.12 per
share on a diluted basis, and $8.4 million, or $0.17 per share on a
diluted basis, for the year 2003, on sales of $424 million and
$1,672 million, respectively, compared to a net loss of $2.6
million, or $0.05 per share, and a net loss $202 million, or $4.24
per share, on sales of $436 and $1,729 million during the same
periods of 2002. In the three months ended December 31, 2003,
results included restructuring costs of $0.3 million and a loss on
discontinued operations of $0.4 million, net of tax. In the three
months ended December 31, 2002, Mail-Well's net loss included a
charge for restructuring of $11.3 million and a loss of $2.9
million, net of tax, on discontinued operations. (Logo:
http://www.newscom.com/cgi-bin/prnh/19990429/MAILWELLLOGO ) EBITDA
for the fourth quarter of 2003 was $39.5 million and for the full
year $131.6 million, compared to ongoing EBITDA of $121.0 million
achieved for the full year 2002 representing a 9% improvement. An
explanation of the Company's use of EBITDA for comparative purposes
is provided below. Net cash provided by operating activities in the
quarter ended December 31, 2003 was $25.8 million and $59.5 million
for the year then ended. Paul Reilly, Chairman, President and CEO,
stated, "These reported results represent the sixth consecutive
quarter where the company has achieved year over year improvement
in profitability in a difficult industry environment. They are very
much in line with the guidance we gave throughout 2003 and withthe
expectations of the analysts who follow our stock and our debt
instruments. During the year we have increased our market share,
increased our profitability and increased our return on capital
employed. We intend to continue on the same path in 2004." Reilly
also stated, "The activity in our markets is improving as the
economy is now strengthening, and we expect that, as some
overcapacity in our businesses is absorbed, prices will improve.
Our new organization around total customer solutions isalready
allowing us to achieve major customer gains. We will continue
investing significant time and resources to develop our people,
organization and facilities. We anticipate that the mobilization of
our employees to better serve our customers and the organization of
our operations around our customers' needs will generate top line
growth and allow us to grow our positions in all of our markets."
Mail-Well will hold a conference call today, Monday February 9th at
1:00 p.m. Eastern Time (12 noon Central, 11:00 a.m. Mountain, 10:00
a.m. Pacific Time). To participate in the Mail-Well conference
call, please dial in to 1-866-675-7686 and provide conference ID
3982499. Please call 5-7 minutes before the call is to begin. The
conference call willalso be available via webcast. To listen to the
webcast, go to http://www.mail-well.com/ ,
http://www.streetevents.com/ , or http://www.fulldisclosure.com/ .
If you are unable to join the Mail-Well conference call, you may
access a replay of the callstarting Monday, February 9th, 2004 at
4:00 pm Eastern Time until Midnight Eastern Time, February 16th,
2004. To access the replay, please dial 866-219-1444 and reference
the conference ID 3982499. EBITDA (earnings before interest, taxes,
depreciation and amortization) should not be considered as an
alternative to any measure of operating results as promulgated
under accounting principles generally accepted in the United States
(such as operating income or net income), nor should it be
considered as an indicator of our overall financial performance.
EBITDA does not fully consider the impact of investing or financing
transactions as it specifically excludes depreciation and interest
charges, which should also be considered in the overall evaluation
of results. Additionally, our method of calculating EBITDA may be
different from the method used by other companies and therefore
comparability may be limited. EBITDA has not been provided as a
measure of liquidity. The Supplemental Information tothe press
release includes the Company's Statement of Cash Flows. We use
EBITDA as a supplemental measure of performance because we believe
it gives the reader a more complete understanding of our operating
results before the impact of investing and financing transactions.
The comparison presented is net of certain adjustments made in 2002
for divested operations and restructuring charges. A reconciliation
of net income (loss) under GAAP to EBITDA, and a reconciliation of
EBITDA as reported to ongoing EBITDA in 2002, are presented in the
Supplemental Information to this press release. Mail-Well
(NYSE:MWL) is one of North America's leading providers of visual
communications with one-stop services from design to fulfillment.
The company's broad portfolio of services and products include
e-services, envelopes, offset and digital printing, as well as
printed office products. The company is uniquely positioned by
serving both direct customers through its commercial segment as
well as wholesalers and value-added resellers through its resale
segment. Mail-Well currently has approximately 10,000 employees and
operates more than 80 printing facilities and five state-of-the-art
print fulfillment and distribution centers strategically located
throughout North America. The company is headquartered in
Englewood, Colorado. This press release may contain certain
forward-looking statements of management. It should be understood
that all such statements are subject to various uncertainties and
risks that could affect their outcome. Factors which could cause or
contribute to such differences include, but are not limited to, the
ability to execute strategic initiatives, economic conditions,
product demand and sales, ability to obtain assumed productivity
and cost savings, interest rates, foreign currency exchange rates,
paper and raw material costs and the ability to pass them through
to customers, waste paper prices, postage rates, union relations,
competition and competitors' actions, availability of financing,
and changes in the direct mail industry. Please refer to the
company's 10-K, 10-Q and other SEC filings for a more detailed
discussion of the risks. None of management's statements in this
release should be considered an offer to sellor a solicitation of
an offer to buy Mail-Well securities. NOTE: News Releases and other
information on Mail-Well can be accessed at
http://www.mail-well.com/ . Financial Highlights (dollars in
thousands, except per share data) (unaudited) Three months ended
Year Ended December 31 December 31 2003 2002 2003 2002 Consolidated
Results Net sales $424,300 $435,536 $1,671,664 $1,728,705 Gross
profit 89,624 91,239 334,546 343,344 Operating income (loss) 28,618
13,976 85,545 (32,919) Income (loss) from continuing operations
6,117 337 7,138 (73,488) Gain (loss) on disposal of discontinued
operations (372) (2,910) 1,548 (16,868) Cumulative effect of change
in accounting principle -- -- (322) (111,748) Net income (loss)
$5,745 $(2,573) $8,364 $(202,104) Income (loss) per share from
continuing operations - assuming dilution $0.13 $0.01 $0.15 $(1.54)
Net income (loss) per share - assuming dilution $0.12 $(0.05) $0.17
$(4.24) Segment Information Net sales: Commercial $326,826 $331,606
$1,272,525 $1,268,367 Resale 97,474 103,930 399,139 460,338 Total
$424,300 $435,536 $1,671,664 $1,728,705 Operating income (loss):
Commercial $19,063 $10,119 $58,703 $1,514 Resale 12,446 9,865
44,704 43,299 Corporate services and other charges (2,891) (6,008)
(17,862) (77,732) Total $28,618 $13,976 $85,545 $(32,919) EBITDA*:
Commercial $27,843 $18,862 $94,920 $37,626 Resale 14,823 12,740
54,499 55,446 Corporate (3,167) (3,393) (17,843) (41,948) Total
$39,499 $28,209 $131,576 $51,124 Operating income margins:
Commercial 5.83% 3.05% 4.61% 0.12% Resale 12.77% 9.49% 11.20% 9.41%
EBITDA margins*: Commercial 8.52% 5.69% 7.46% 2.97% Resale 15.21%
12.26% 13.65% 12.04% Financial Position December 31, December 31,
2003 2002 Working capital $108,103 $100,330 Total assets 1,107,393
1,107,367 Total debt 748,961 763,899 Shareholders' equity 71,233
42,768 * See Appendix 2 in the Supplemental Information to the
Press Release for the definition of EBITDA, reconciliation to net
income and the reasons why EBITDA is a relevant non-GAAP financial
measure for Mail-Well. Supplemental Information to the Press
Release For the Fourth Quarter Ended December 31, 2003 Released
February 9, 2004 Page Financial and Operational Summary and Recent
Developments 1 Consolidated Balance Sheets 3 Consolidated
Statements of Operations 4 Consolidated Cash Flow Statements 5
Segment Results 6 Appendix 1 - Impacts of Divestitures and
Restructuring Activities on Ongoing Operations 7 Appendix 2 -
Reconciliation of Net Income to EBITDA 8 Financial and Operational
Summary and Recent Developments Three months ended December 31,
2003 Financial and Operational Summary Consolidated results:
Excluding restructuring expenses and other related charges recorded
in 2002, consolidated operating income improved $2.0 million during
this quarter and $11.8 million for the year. Commercial: Excluding
restructuring expenses recorded in 2002, the operating income of
the commercial segment was flat in this quarter and improved $14.5
million for the year. Resale: Excluding restructuring expenses
recorded in 2002, the operating income of the resale segment
decreased $0.6 million in this quarter and decreased $2.1 million
for theyear. Debt: Cash flow used to reduce debt in the quarter was
approximately $12.4 million. On a year-to-date basis, cash flow
used to reduce debt was $33.6 million (including payments on a
synthetic lease which increased debt by $17.0 million on the 2003
balance sheet due to the adoption of Financial Accounting Standards
Board Interpretation No. 46, Consolidation of Variable Interest
Entities, and Interpretation of Accounting Research Bulletin No. 51
on January 1, 2003.) Capital expenditures: During the year ended
December 31, 2003, capital expenditures were $31.6 million as
compared to $30.9 million last year. Availability: Credit available
under our credit facility was $111.6 million based on the
certificate filed for the activity ending December 31, 2003.
Financial and Operational Summary and Recent Developments Recent
Developments * On January 21, 2004, we announced the offer of
$320,000,000 million in aggregate principal amount of 7 7/8% senior
subordinated notes due December 2013. The Company intends to use
the proceeds to consummate the cash tender offer and consent
solicitation for any and all of its $300,000,000 outstanding
principal amount of its 8 3/4% Senior Subordinated Notes due 2008.
* On October 27, 2003, we announced a company-wide reorganization
by which the company is aligning itself more closely to suit its
customers' needs. The company is now organized into two business
segments: commercial (serving the needs of direct customers) and
resale (serving wholesalers and value-added resellers). Prior to
this change, Mail-Well was organized around three product lines:
commercial printing, envelopes and printed office products. We
believe the new structure will greatly improve our ability to
deliver quality products and services with the speed, reliability,
and efficiency that our customers demand. * We secured two major
customer agreements in the quarter. One of the top mailers in
America signed a three year multi-million dollar contract for
envelopes and printed products. In addition, a top tier direct
mailer, signed a four year multi-million dollar contract which made
Mail-Well their primary supplier of envelopes and printed products.
* Our 360 degree Enterprise Solutions Sales Group implemented a
contract with Starwood Hotels and Resorts Worldwide, Inc. This is
the model of the future for all Enterprise accounts and 22 sales
people are supporting this contract. Starwood has named Mail-Well
their exclusive supplier of envelopes, printing and printed office
products. * We had two major equipment installations in Chicago
during this quarter; a Comco six color high-resolution flexo press
and a state of the art jumbo envelope machine. * We also installed
the fourth Hewlett Packard Indigo Digital press at our
Massachusetts facility. Consolidated Balance Sheets Mail-Well, Inc.
and Subsidiaries (in thousands) December 31 December 31 2003 2002
Assets Current assets: Cash and cash equivalents $307 $2,650
Accounts receivable, net 223,541 219,924 Inventories, net 91,402
103,533 Net assets held for sale -- 4,492 Other current assets
48,135 45,762 Total current assets 363,385 376,361 Property, plant
and equipment, net 388,240 379,624 Goodwill and other intangible
assets, net 319,079 308,947 Other assets, net 36,689 42,435 Total
assets $1,107,393 $1,107,367 Liabilities and shareholders' equity
Current liabilities: Accounts payable $140,468 $151,930 Accrued
compensation and related liabilities 53,209 53,292 Other current
liabilities 59,030 67,848 Current maturities of long-term debt
2,575 2,961 Total current liabilities 255,282 276,031 Long-term
debt 746,386 760,938 Deferred income taxes 8,833 10,336 Other
liabilities 25,659 17,294 Total liabilities 1,036,160 1,064,599
Shareholders' equity: Common Stock 484 483 Paid in capital 213,850
213,826 Accumulated deficit (147,117) (155,481) Deferred
compensation (1,714) (2,471) Accumulated other comprehensive income
(loss) 5,730 (13,589) Total shareholders' equity 71,233 42,768
Total liabilities and shareholders' equity $1,107,393 $1,107,367
Consolidated Statements of Operations Mail-Well, Inc. and
Subsidiaries (in thousands, except per share data) (unaudited)
Three months Ended Year Ended December 31 December 31 2003 2002
2003 2002 Net sales $424,300 $435,536 $1,671,664 $1,728,705 Cost of
sales 334,676 344,297 1,337,118 1,385,361 Gross profit 89,624
91,239 334,546 343,344 Operating expenses: Selling, general and
administrative expenses 60,258 65,226 245,689 263,734 Amortization
of intangibles 536 695 1,899 2,237 Loss on early extinguishment of
debt -- -- -- 16,463 Impairment loss (gain) on assets held for sale
(117) -- (117) 6,436 Impairment loss on former discontinued
operation -- -- -- 12,842 Restructuring and other charges 329
11,342 1,530 74,551 Operating income (loss) 28,618 13,976 85,545
(32,919) Other expense: Interest expense 17,728 17,908 71,891
70,461 Other 755 (308) 1,819 1,754 Income (loss) from continuing
operations before income taxes and cumulative effect of a change in
accounting principle 10,135 (3,624) 11,835 (105,134) Provision for
income taxes 4,018 (3,961) 4,697 (31,646) Income (loss) from
continuing operations before cumulative effect ofa change in
accounting principle 6,117 337 7,138 (73,488) Loss (gain) on
disposal of discontinued operations 372 2,910 (1,548) 16,868
Cumulative effect of a change in accounting principle -- -- 322
111,748 Net income (loss) $5,745 $(2,573) $8,364 $(202,104) Income
(loss) per share - basic: Continuing operations $0.13 $0.01 $0.15
$(1.54) Discontinued operations (0.01) (0.06) 0.04 (0.35)
Cumulative effect of a change in accounting principle -- -- (0.01)
(2.35) Income (loss) per share - basic $0.12 $(0.05) $0.18 $(4.24)
Income (loss) per share - diluted: Continuing operations $0.13
$0.01 $0.15 $(1.54) Discontinued operations (0.01) (0.06) 0.03
(0.35) Cumulative effect of a change in accounting principle -- --
(0.01) (2.35) Income (loss) per share - diluted $0.12 $(0.05) $0.17
$(4.24) Weighted averages shares - basic 47,719 47,668 47,687
47,665 Weighted averages shares - diluted 48,540 48,305 48,315
47,665 Consolidated Cash Flow Statements Mail-Well, Inc.and
Subsidiaries (in thousands) (unaudited) Year Ended December 31,
2003 2002 Cash flows from operating activities: Income (loss) from
continuing operations $7,138 $(73,488) Adjustments to reconcile net
income (loss) to cash provided by operating activities:
Depreciation 46,069 47,818 Amortization 5,883 7,635 Write-off of
deferred financing costs -- 16,463 Noncash portion of
restructuring, impairment and other charges -- 42,282 Loss on
assets held for sale -- 6,436 Deferred income taxes (8,738)
(27,726) Loss on disposal of assets 1,221 346 Other noncash
charges, net 435 91 Changes in operating assets and liabilities,
excluding effects of business sold: Accounts receivables 3,414
12,756 Inventories 14,647 8,906 Accounts payable and accrued
compensation (15,417) (11,036) Income tax payable 12,212 4,193
Other working capital changes (7,282) (7,130) Other, net (123)
(4,575) Net cash provided by operating activities 59,459 22,971
Cash flows from investing activities: Acquisitions (2,800) (2,610)
Capital expenditures (31,602) (30,896) Proceeds from divestitures,
net 3,864 122,330 Proceeds from sales of property, plant and
equipment 682 11,995 Net cash (used in) provided by investing
activities (29,856) 100,819 Cash flows from financing activities:
Proceeds from the issuance of long- term debt 1,915,452 1,635,102
Repayment of long-term debt (1,948,299) (1,726,718) Proceeds from
the issuance of common stock 75 18 Capitalized loan fees (484)
(18,624) Net cash used in financing activities (33,256) (110,222)
Effect of exchange rate changes on cash and cash equivalents 1,310
(985) Net (decrease) increasein cash and cash equivalents (2,343)
12,583 Cash flows from discontinued operations -- (10,827) Cash and
cash equivalents at beginning of year 2,650 894 Cash and cash
equivalents at end of period $307 $2,650 Segment Results Mail-Well,
Inc. and Subsidiaries (in thousands) (unaudited) Three months Ended
Year Ended December 31 December 31 2003 2002 2003 2002 Net sales:
Commercial $326,826 $331,606 $1,272,525 $1,268,367 Resale 97,474
103,930 399,139 460,338 Total net sales $424,300 $435,536
$1,671,664 $1,728,705 Operating income (loss): Commercial $19,063
$10,119 $58,703 $1,514 Resale 12,446 9,865 44,704 43,299 Corporate
services (2,891) (6,008) (17,862) (77,732) Total operating income
(loss) $28,618 $13,976 $85,545 $(32,919) EBITDA (1): Commercial
$27,843 $18,862 $94,920 $37,626 Resale 14,823 12,740 54,499 55,446
Corporate services (3,167) (3,393) (17,843) (41,948) Total EBITDA
$39,499 $28,209 $131,576 $51,124 Net sales by product line:
Commercial printing $201,320 $205,264 $781,010 $764,404 Envelopes
174,457 180,992 691,968 760,487 Business forms and labels 48,523
49,280 198,686 203,814 Total net sales $424,300 $435,536 $1,671,664
$1,728,705 (1) See Appendix 2in the Supplemental Information to the
Press Release for the definition of EBITDA, reconciliation to net
income and the reasons why EBITDA is a relevant non-GAAP financial
measure for Mail-Well. Appendix 1 - Reported Results Less the
Impacts of Divestitures and Restructuring Activities (1) Mail-Well,
Inc. and Subsidiaries Note: The impact on the results in 2003 of
restructuring and divestitures are not included in this analysis
due to the fact that these amounts do not significantly impact the
reported amounts in 2003, and therefore, are not needed for
comparability of results (on a year-to-date basis, restructuring
was $1.5 million, offset by income of the divested operations of
$1.5 million). These charges were significant in 2002, and
therefore, are excluded for comparability purposes. Any such
charges in 2004 will be included in ongoing operations unless they
again become significant and affect comparability of results. (in
thousands) (unaudited) Three months Ended Year Ended December 31
December 31 2003 2002 2003 2002 Net sales: Reported $424,300
$435,536 $1,671,664 $1,728,705 Less divested operations: Filing
products division - Resale -- -- -- (42,340) Digital graphics
operations - Commercial -- (3,407) -- ( 14,105) Ongoing revenues
$424,300 $432,129 $1,671,664 $1,672,260 Operating income: Reported
$28,618 $13,976 $85,545 $(32,919) Less divested operations: Filing
products division - Resale -- -- -- (3,429) Digital graphics
operations - Commercial -- 1,280 -- (50) Restructuring and other
charges -- 11,342 -- 74,551 Impairments and write- off of deferred
financing fees (2) -- -- -- 35,741 Ongoing operating income $28,618
$26,598 $85,545 $73,894 EBITDA : EBITDA as defined (3) $39,499
$28,209 $131,576 $51,124 Less divested operations: Filing products
division - Resale -- -- -- (3,314) Digital graphics operations -
Commercial -- (619) -- (1,337) Restructuring and other charges --
11,342 -- 74,551 Ongoing EBITDA $39,499 $38,932 $131,576 $121,024
(1) This schedule provides an analysis of the results of operations
excluding restructuring expenses, operations divested in 2002 and
2003 and other charges that resulted primarily fromour 2001
strategic plan and other strategic initiatives. We believe this
information is useful in understanding our operating results and
the ongoing performance of our underlying businesses. (2) Non-cash
write-offs excluded from EBITDA (3) See Appendix 2 in the
Supplemental Information to the Press Release for the definition of
EBITDA, reconciliation to net income and the reasons why EBITDA is
a relevant non-GAAP financial measure for Mail-Well. Appendix 2 -
Reconciliation of Net Income to EBITDA (1) for the three months
ended December 31, 2003 and 2002 Mail-Well, Inc. and Subsidiaries
(in thousands) (unaudited) For the three months ended December 31,
2003 Commercial Resale Corporate Total Net income (loss) $18,676
$12,366 $(25,297) $5,745 Gain on sale of assets held for sale (2)
-- -- (117) (117) Loss on disposal of discontinued operations (2)
-- -- 372 372 Interest -- -- 17,728 17,728 Taxes -- -- 4,018 4,018
Depreciation 8,865 2,223 129 11,217 Amortization 302 234 -- 536
EBITDA $27,843 $14,823 $(3,167) $39,499 For the three months ended
December 31, 2002 Commercial Resale Corporate Total Net income
(loss) $9,864 $9,786 $(22,223) $(2,573) Loss on disposal of
discontinued operations (2) -- -- 2,910 2,910 Interest -- -- 17,908
17,908 Taxes -- -- (3,961) (3,961) Depreciation 8,806 2,719 1,705
13,230 Amortization 192 235 268 695 EBITDA $18,862 $12,740 $(3,393)
$28,209 (1) This is a reconciliation of net income to earnings from
continuing operations before interest, taxes, depreciation and
amortization ("EBITDA") is presented above. We believe EBITDA
provides useful supplemental information to investors since it
excludes the impact of investing or financing transactions on our
operating results. (2) Non-cash charges (credits) excluded from
EBITDA Appendix 2 - Reconciliation of Net Income to EBITDA (1) for
the year ended December 31, 2003 and 2002 Mail-Well, Inc. and
Subsidiaries (in thousands) (unaudited) For the year ended December
31, 2003 Commercial Resale Corporate Total Net income $57,527
$44,457 $(93,620) $8,364 Gain on sale of assetsheld for sale (2) --
-- (117) (117) Gain from disposal of discontinued operations -- --
(1,548) (1,548) Cumulative effect of a change in accounting
principle (2) -- -- 322 322 Interest -- -- 71,891 71,891 Taxes --
-- 4,697 4,697 Depreciation 36,430 9,106 532 46,068 Amortization
963 936 -- 1,899 EBITDA $94,920 $54,499 $(17,843) $131,576 For the
year ended December 31, 2002 Commercial Resale Corporate Total Net
income $701 $43,057 $(245,862) $(202,104) Impairment loss on assets
held for sale (2) -- -- 6,436 6,436 Impairment loss on former
discontinued operation (2) -- -- 12,842 12,842 Loss on early
extinguishment of debt (2) -- -- 16,463 16,463 Loss on disposal of
discontinued operations (2) -- --16,868 16,868 Cumulative effect of
a change in accounting principle (2) -- -- 111,748 111,748 Interest
-- -- 70,461 70,461 Taxes -- -- (31,646) (31,646) Depreciation
36,015 11,389 415 47,819 Amortization 910 1,000 327 2,237 EBITDA
$37,626 $55,446 $(41,948) $51,124 (1) This is a reconciliation of
net income to earnings from continuing operations before interest,
taxes, depreciation and amortization ("EBITDA") is presented above.
We believe EBITDA provides useful supplementalinformation to
investors since it excludes the impact of investing or financing
transactions on our operating results. (2) Non-cash charges
(credits) excluded from EBITDA
http://www.newscom.com/cgi-bin/prnh/19990429/MAILWELLLOGO
http://photoarchive.ap.org/ DATASOURCE: Mail-Well, Inc. CONTACT:
Mr. Michel P. Salbaing, Senior Vice President and Chief Financial
Officer of Mail-Well, Inc., +1-303-790-8023 Web site:
http://www.mail-well.com/
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