By Trevor Shackelford November 9, 2005 -- Cenveo, Inc., (NYSE: CVO) announced their third quarter results today. Total revenue for the quarter was $430.8 million, a slight increase from the $428.1 million reported for the third quarter of 2004. The growth primarily reflects improved sales for envelope products somewhat mostly offset by deterioration in the commercial print business. The company incurred a net loss of $64.1 million, or $1.28 per share compared to net income of $2.5 million, or $0.05 per share, in the third quarter of 2004. Third quarter results also included restructuring and other charges of $15.2 million, asset impairments of $2.1 million, loss on sale of non-strategic businesses of $0.8 million, and proxy contest related expenses of $7 million, which total $25.1 million. Chairman and CEO Robert Burton, who successfully took control of the company during the quarter, said that the results of 2005 so far have been “completely unacceptable.� He believes the company can eliminate at least $75 million from the company’s cost structure by the end of 2006, including a headcount reduction of approximately 1,400. The company is also exploring the possibility of selling its Canadian operations. Contents of this Summary Quarter Highlights Segment Performance Guidance Raine Radar Q & A Quarter Highlights EBITDA excluding restructuring and other charges, asset impairments, loss on sale of non-strategic businesses, and proxy contest related expenses for the third quarter of 2005 was $31.5 million compared to $33.5 million reported in the same period last year. Restructuring charges of $15.2 million were directly attributable to employee termination or related expenses. Asset impairment charges of $2.1 million related to evaluation of operations within the envelopes, forms, and labels segment. Loss on sale of non-strategic business in the quarter for $0.8 million, resulting from the divestiture of envelope operations in Ontario, Canada. Income tax expense for the third quarter was $39.4 million. This expense includes a non-cash charge of $35.3 million related to the elimination of the remaining net U.S deferred tax asset. Total debt as of September 30, 2005 was $792.4 million, an increase of $8.9 million during the quarter. Segment Performance In September 2005, the company changed its management structure and realigned its manufacturing operations into two operating segments: Envelope, forms and labels segment and the commercial printing segment. Envelope, Forms and Labels Segment Cenveo reported Q3 revenue for the segment of $231 million, compared to $218 million reported for the same period in 2004. Operating income for the segment was $17.3 million, compared to $20.9 million reported for the same period in the last year. Restructuring and other charges for the quarter was $3.6 million. Commercial Printing Segment Cenveo reported Q3 revenue for the segment of $200 million, compared to $210.3 million reported for the same period in 2004. Operating loss for the segment was $0.9 million, compared to operating income of $4.9 million reported for the same period in the last year. Restructuring and other charges for the quarter was $3 million. Guidance It was too early for the new management team to provide any specific earnings guidance, but the company did state that it expects the EBITDA at the end of the year to be around $128 to $130 million. Raine Radar Cenveo has been the center of quite a drama for the last 6 months or so. It appears that rather than be unseated by their shareholders, the board of directors opted to give in to Robert Burton’s demands and hand over control of the company. Not surprisingly, Burton was quick to denounce the handling of the company so far and has already identified a substantial amount of restructuring to undertake, as well as the possible sale of Canadian operations. Regardless of the outcome of these changes, the one thing that can be said for certain is that investors are feeling more confidence now then they have in a long time. It will probably be a while before Burton’s long term strategy becomes apparent, and in the meantime the measures which have been planned should get the company closer to the black. Q & A The new management believes the current debt level is too much. To reduce debt, management is focused on its cost savings plan, incremental cash flow generation and the successful divesting of Canadian operations. Cenveo believes that its Canadian business is a totally self sufficient operation. It is independent from the rest of Cenveo and so its divestiture should not negatively impact the rest of the business. The company does not intend to invest heavily in capital expenditures, unless they are sure of a good payback. Cenveo is not currently aware of any income tax implications for the potential sale of Canadian operations. Out of the total restructuring expense of $15.2 million, cash expenditures were $4.4 million. Historically, Canadian operations have generated approximately $40 million of EBITDA. Cenveo’s new management team stated that they did not find any savings from cost cutting steps taken by the prior team and therefore did not include anything from those steps in the stated cost savings of $75 million.