Mail-Well Announces Much Improved Q4 Results in Line With Guidance
Press release from the issuing company
ENGLEWOOD, Colo., Feb. 10 -- Mail-Well, Inc. announced its results for the quarter and year ended December 31, 2002. The pro forma net income of New Mail-Well which excludes restructuring and other charges, the results of operations of assets held for sale, extraordinary items and the cumulative effect of a change in accounting principle was $5.3 million, or $0.11 per share, on sales of $432 million during the fourth quarter of 2002, compared to pro forma net income of $0.7 million, on sales of $428 million during the same period of 2001. These results reflect performance at the high end of the guidance management had given. Pro forma net income of New Mail-Well for the twelve months ended December 31, 2002 was $2.0 million, or $0.04 per share, on $1.7 billion of sales, compared to pro forma net income of $5.6 million or $0.12 per share, on sales of $1.8 billion the previous year.
In connection with Mail-Well's previously announced consolidation of ten of its Envelope plants, charges of $4.8 million were recorded during the quarter, bringing the total cost of this consolidation to $36.3 million for the year. In August, additional restructuring plans, primarily in the Commercial Printing segment, were implemented. The Company closed its printing plant in New York, rightsized several underperforming printing plants, and began the consolidation of its web operations. The restructuring, impairment and other charges incurred as a result of these and other related actions taken in the quarter were $6.5 million. In total the Company incurred $93.9 million of such charges in 2002. Finally, the loss from discontinued operations increased $3.0 million due to adjustments to the loss from the sale of its prime label segment. As a result of the foregoing, the Company's net loss was $2.6 million, or $0.05 per share and $90 million, or $1.89 per share for the three and twelve months ended December 31, 2002, respectively prior to the cumulative effect of a change in accounting principle.
In early 2002, the Company adopted SFAS 142 and, in its Phase I review, determined that the goodwill of the Commercial Printing segment was impaired. In the fourth quarter the company completed the determination of the amount of the impairment and wrote off $111.7 million of the goodwill recorded by the Print segment. In accordance with Statement 142, this was recorded as a cumulative effect of a change in accounting principle. No further impairment during the year was necessary.
Paul Reilly, Chairman, President and CEO, stated, "The fourth quarter results confirmed the trends seen in the previous quarter. The quarter's EBITDA of $39 million, which was at the high end of the Company's guidance and exceeded analysts' expectations, was 9% above Q3 of 2002 and 11% above Q4 of 2001 on 1% higher sales. These encouraging results are a reflection of the many actions we have taken over the past year to improve our operations and reduce costs. The quarter over quarter increase in sales has continued as expected. This confirms our market share gains. The operating results of the Print segment continue to improve. In both the Envelope and Printed Office Products segments, EBITDA exceeded 13% of sales. While it remains difficult to forecast because of the continued uncertainty in the economy, we expect Q1 2003 to also show improvement over the same period in 2002."
Reilly also stated, "We continued to generate free cash flow from operations which was applied to debt reduction. Total free cash flow from continuing operations for the year was $49 million. Our ability to generate cash from operations and the fact that we now have no further maturities on our debt until June of 2005, allows us the financial stability to invest in our businesses and the flexibility that we require to continue developing our company through market share gains in all three of our segments."
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