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Mail-Well Announces Q3 Net Loss, But 49% EBITDA Improvement

Press release from the issuing company

ENGLEWOOD, Colo., Nov. 4 -- Mail-Well, Inc., announced its results for the quarter and nine months ended September 30, 2002. The pro forma results of New Mail-Well which exclude restructuring and other charges and the results of operations of assets held for sale were $1.6 million, or $0.03 per share, on sales of $415 million during the third quarter as compared to breakeven results, on sales of $445 million during the same period of last year. Pro forma results of New Mail-Well for the nine months ended September 30, 2002 were a net loss of $2.7 million, or $0.06 per share, on $1.2 billion of sales, compared to net income of $5.2 million or $0.11 per share, on sales of $1.4 billion during the same period of last year. In connection with Mail-Well's previously announced consolidation of certain Envelope plants, charges of $9.8 million were recorded during the quarter, bringing the total cost of consolidation to $33.6 million for the first nine months of the year. In August, additional restructuring plans were implemented. The Company closed its printing plant in New York, rightsized some underperforming printing plants, and began the consolidation of its web operations. The additional restructuring and other charges incurred as a result of these and other related actions taken in the quarter were $7.7 million. Also during the quarter, the Company renegotiated its synthetic lease as a final step in completing the refinancing of its capital structure. A charge of $22 million was incurred in refinancing this lease primarily because of the reduced value of the assets subject to the lease. Finally, the loss from discontinued operations increased $5.8 million due principally to the final determination of the tax impact of the sale of the Prime Label business. As a result of the foregoing, the Company's net loss was $28 million, or $0.59 per share on sales of $429 million and $88 million, or $1.84 per share, on sales of $1.3 billion for the three and nine months ended September 30, 2002, respectively. Subsequent to quarter-end, Mail-Well retired all of the $139 million of its 5% convertible bonds which came due November 1st, 2002. With the repayment of this debt, the Company has no significant maturities on any of its debt until June 2005, when the Company's current bank credit agreement will need to be renewed. Paul Reilly, Chairman, President and CEO, stated, "The third quarter results were encouraging in many respects. The quarter's EBITDA of $35 million, which met the Company's guidance and exceeded analysts' expectations, was 49% above Q2 of 2002 and 9% above Q3 of 2001 on some 7% lower sales, a reflection of the impact of our many cost improvement activities over the past year. Just as importantly, the normal seasonality was apparent in our increased sales in the third quarter compared to the second quarter reversing a downward trend which started at the beginning of 2001. Also, the operating results of the Print segment were improved and the best since Q2 of 2001. In both the Envelope and Printed Office Products segments, EBITDA exceeded 13% of sales. Although direct mail volumes were a bit disappointing in our Envelope segment, Commercial Print volumes are today at their best level since Q4 of 2000 on a seasonally adjusted basis." "As we discussed during our second quarter conference call, the expected seasonal upturn in Envelope segment sales in the second half of the year, and particularly in the fourth quarter, does not appear to be occurring. However, sales in Print and Printed Office Products segments appear to be reflecting normal seasonality. Accordingly, our full-year forecast for EBITDA is expected to be in a range of $120 to $125 million." Reilly continued, "As we have maintained all along, our financial resources have allowed us to redeem all of the 5% convertible bonds that matured on November 1st 2002. We now have no further maturies on our debt until June of 2005. The nature of our debt gives us the financial stability and flexibility that we require to continue to ride out our industry's downturn while developing our business through market share gains in all three of our segments." The Company will file its Form 10-Q for the quarterly period ended September 30, 2002 and the required officer certifications with the SEC today.