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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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