Mail-Well to close 9 U.S. plants, consolidate ops

Mail-Well Inc. will close nine plants in the U.S. and consolidate operations to post 15% to 20% earnings growth over the next five years. It will sell its label and printed office products units, and focus on envelopes and commercial printing operations. Mail-Well expects $38 million yearly savings, and a cost of $43 million in 2001 and $4 million in 2002. The company expects revenues of about $1.6 billion, excluding divestitures in 2001.

Rajesh S. Kurup, BridgeNews

Mail-Well to Concentrate Resources on General Commercial Printing and Envelope
Segments; 15-20% annual EPS Growth Targeted With Strengthened Balance Sheet ENGLEWOOD, COLO., JUNE 13 — WITH THE GOAL OF INCREASING VALUE FOR SHAREOWNERS, MAIL-WELL, INC. (NYSE: MWL) ANNOUNCED TODAY ITS NEW STRATEGIC DIRECTION.
(PHOTO: HTTP://WWW.NEWSCOM.COM/CGI-BIN/PRNH/19990429/MAILWELLLOGO )
FOLLOWING A 90 DAY REVIEW OF HOW BEST TO SERVE CUSTOMER, EMPLOYEE AND
SHAREHOLDER INTERESTS, THE NEW DIRECTION WILL RESULT IN THE FOLLOWING CHANGES
WITH THE FINANCIAL GOAL OF ACHIEVING 15-20% ANNUAL EPS GROWTH OVER THE NEXT
FIVE YEARS:
— MAIL-WELL WILL CONCENTRATE RESOURCES ON ITS TWO LARGEST SEGMENTS:
ENVELOPES AND COMMERCIAL PRINTING.
— MAIL-WELL WILL SELL ITS SMALLER LABEL AND PRINTED OFFICE PRODUCTS
SEGMENTS.
— MAIL-WELL'S 2001 SALES, EXCLUDING THE BUSINESS UNIT DIVESTITURES, ARE
EXPECTED TO BE APPROXIMATELY $1.6 BILLION.
— THE PROCEEDS FROM THE DIVESTITURES, WHICH THE COMPANY EXPECTS TO
COMPLETE WITHIN THE NEXT 12 MONTHS, WILL BE USED TO DECREASE
MAIL-WELL'S DEBT, WITH A DEBT-TO-TOTAL CAPITAL GOAL OF LESS THAN 55% BY
THE END OF 2003.
— TO IMPROVE PRODUCTIVITY, UTILIZATION, AND SALES COORDINATION,
MAIL-WELL ENVELOPE WILL CLOSE NINE EXISTING U.S. PLANTS AND MOVE THE
BUSINESS AND NECESSARY EQUIPMENT INTO THE REMAINING 27 ENVELOPE
OPERATIONS. THE PLAN IS TO GROW TOTAL ENVELOPE SALES WHILE
CONSOLIDATING. THE CONSOLIDATION PLAN, TOGETHER WITH THE
IMPLEMENTATION OF BEST PRACTICES WITHIN THE REMAINING ENVELOPE PLANTS
AND THE COMMERCIAL PRINT PLANTS, ARE EXPECTED TO PROVIDE ESTIMATED
ANNUAL OPERATING SAVINGS OF $38 MILLION WHEN FULLY IMPLEMENTED. THE
ONE-TIME CASH COST OF THE CONSOLIDATION WILL BE $43 MILLION IN
2001 AND $4 MILLION TO COMPLETE THE CONSOLIDATION IN 2002.
— MAIL-WELL WILL CONTINUE ITS ACQUISITION PROGRAM, BUT WITH A SHARPENED
FOCUS ON BUILDING LOCAL GENERAL COMMERCIAL PRINTING MARKET SHARE AND
ON FURTHER CONSOLIDATING THE ENVELOPE INDUSTRY.
— ALL ACQUISITIONS WILL BE EVALUATED WITH STRICT LEVERAGE AND COST OF
CAPITAL CRITERIA — 45%-55% DEBT-TO-TOTAL CAPITAL RATIO TARGET AND
EARNINGS IN EXCESS OF MAIL-WELL'S 12% AFTER-TAX COST OF CAPITAL.
"Growing in seven years from $16 million in annual sales to $2.4 billion is a major achievement for any public company," said Paul Reilly, chief executive officer and president of Mail-Well. "But the Mail-Well of the
future, while still committed to growth in multi-billion dollar markets, must be a more disciplined and strategically focused Mail-Well with even greater emphasis on improving our competitive position and return on capital."
Reilly emphasized that the label and printed office products businesses
are well-managed, profitable organizations and are leaders in their respective markets.
"We must simplify our business and sharpen our strategic focus to compete
more effectively as one company and to address investor confusion over
multiple product lines," he explained. "The general commercial printing and envelope markets offer Mail-Well the best opportunities to leverage our
current size and leadership position for sales growth and profit expansion
going forward." Mail-Well (NYSE: MWL) specializes in four growing multibillion-dollar market segments in the highly fragmented printing industry: commercial printing, envelopes, labels and printed office products. Mail-Well currently has approximately 15,000 employees and more than 140 printing facilities and numerous sales offices throughout North America and the United Kingdom.
Mail-Well reported sales of $2.4 billion in 2000. The company is
headquartered in Englewood, Colo. This press release may make forward-looking statements, which are subject to various uncertainties and risks that could affect their outcome. Factors which could cause or contribute to differences include, but are not limited to, the ability to execute the strategic initiatives discussed herein including selling certain assets at favorable prices, economic conditions, product demand and sales, ability to obtain assumed productivity savings, availability of acquisition opportunities, interest rates, foreign currency exchange rates, paper and raw material costs, waste paper prices, ability to pass through paper costs to customers, postage rates, union relations, competitors' actions, and changes in the direct mail industry. Please refer to the company's 10-K, 10-Qs and other SEC filings for a more detailed discussion of the risks. This press release does not constitute an offer to sell or solicitation of an offer to buy Mail-Well securities.
NOTE: Webcast links, News Releases and other information on Mail-Well,
can be Accessed at www.mail-well.com