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CENVEO 10-Q 2009 UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the quarterly period ended June 27, 2009
Commission
file number 1-12551
CENVEO,
INC.
(Exact
name of Registrant as specified in its charter.)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x
No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such
files). Yes o No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of “large accelerated filer”, “accelerated filer”, and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer o Accelerated
filer x
Non-accelerated filer o
Smaller reporting company o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o No
x
As
of August 4, 2009 the registrant had 54,606,238 shares of common stock
outstanding.
1
PART
I. FINANCIAL INFORMATION
CENVEO,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(in
thousands)
See notes
to condensed consolidated financial statements. 2
CENVEO,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in
thousands, except per share data)
(unaudited)
See notes
to condensed consolidated financial statements.
3
CENVEO,
INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in
thousands)
(unaudited)
See notes
to condensed consolidated financial statements. 4
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
Basis of Presentation
The
accompanying unaudited condensed consolidated financial statements (the
“Financial Statements”) of Cenveo, Inc. and subsidiaries (collectively, “Cenveo”
or the “Company”) have been prepared in accordance with Rule 10-01 of Regulation
S-X promulgated by the Securities and Exchange Commission (the “SEC”) and,
therefore, do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with accounting principles generally accepted in the United States of
America (“GAAP”). In the opinion of the Company, however, the unaudited
condensed consolidated financial statements contain all adjustments, consisting
only of normal recurring adjustments, necessary to present fairly the Company’s
financial position, results of operations and cash flows for the applicable
interim period. The results of operations for the three and six month periods
ended June 27, 2009 are generally not indicative of the results to be expected
for any interim period or for the full year. The January 3, 2009 consolidated
balance sheet has been derived from the audited consolidated financial
statements at that date. These condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company’s Annual Report on Form 10-K for the
fiscal year ended January 3, 2009 (the “Form 10-K”) filed with the
SEC.
It is the
Company’s practice to close its fiscal quarters on the Saturday closest to the
last day of the calendar quarter. The reporting periods for the second quarter
of 2009 and 2008 each consisted of 13 weeks, and our reporting periods for the
six months ended June 27, 2009 and June 28, 2008 consisted of 25 and 26 weeks,
respectively.
New
Accounting Pronouncements
SFAS
141R
Effective
January 4, 2009, the Company adopted Statement of Financial Accounting Standards
(“SFAS”) No. 141R, Business Combinations (“SFAS 141R”). SFAS 141R establishes
revised principles and requirements for how the Company will recognize and
measure assets and liabilities acquired in a business combination. SFAS 141R is
effective for business combinations completed by the Company on or after January
4, 2009. In accordance with the transition guidance in SFAS 141R, the
Company recorded a charge in the fourth quarter of 2008 to write-off
acquisition-related costs. Acquisition-related costs for the three and six
months ended June 27, 2009 were $2.3 million and are included in selling,
general and administrative expenses in the accompanying condensed consolidated
statements of operations.
FSP
FAS 132(R)-1
Effective
January 4, 2009, the Company adopted the Financial Accounting Standards Board’s
(“FASB”) FSP FAS 132(R)-1, “Employers’ Disclosure about Postretirement
Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 amends
SFAS 132 “Employers’ Disclosure about Postretirement Benefits”, to provide
guidance on an employer’s disclosures about plan assets of a defined benefit
pension or other retirement plan. As required by FSP FAS 132(R)-1, the
Company will provide the required additional disclosures in its annual financial
statements for the year ending January 2, 2010. FSP
FAS 142-3
Effective
January 4, 2009, the Company adopted FASB Standard Position (“FSP”)
FAS 142-3, “Determination of the Useful Life of Intangible Assets” (“FSP
FAS 142-3”). FSP FAS 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the
useful life of a recognized intangible asset under SFAS 142. The intent of
FSP FAS 142-3 is to improve the consistency between the useful life of a
recognized intangible asset under SFAS 142 and the period of expected cash
flows used to measure the fair value of the asset under SFAS 141(R) and
other applicable accounting literature. The adoption of FSP FAS 142-3 did
not have a material impact on the Company’s condensed consolidated financial
statements.
SFAS
160
Effective
January 4, 2009, the Company adopted SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”).
SFAS 160 establishes accounting and reporting standards for the non-controlling
interests in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160
had no impact on the Company’s condensed consolidated financial statements at
January 4, 2009. 5
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1.
Basis of Presentation (Continued)
SFAS
161
Effective
January 4, 2009, the Company adopted SFAS No. 161, “Disclosures about
Derivative Instruments and Hedging Activities: an amendment of FASB Statement
No. 133” (“SFAS 161”). SFAS 161 changes the disclosure requirements for
derivative instruments and hedging activities. SFAS 161 had no impact on the
Company’s condensed consolidated financial statements.
FSP
107-1
Effective
April 9, 2009, the Company adopted FASB FSP No. 107-1, “Interim Disclosures
about Fair Value of Financial Instruments” (“FSP 107-1”). FSP 107-1 amends FASB
Statement No. 107, “Disclosures about Fair Value of Financial Instruments”
(“SFAS 107”), to require disclosures about the fair value of financial
instruments for interim reporting periods, as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, “Interim Financial
Reporting”, to require those disclosures in summarized financial information at
interim reporting periods. FSP 107-1 did not have a material impact on the
Company’s condensed consolidated financial statements.
SFAS
165
Effective
May 30, 2009, the Company adopted SFAS No. 165, “Subsequent Events” (“SFAS
165”). SFAS 165 requires the disclosure of the date through which an entity has
evaluated subsequent events and the basis for that date, whether that date
represents the date the financial statements were issued or were available to be
issued. The Company will recognize in its condensed consolidated financial
statements the effects of all subsequent events that provide additional evidence
about conditions that existed at the date of the balance sheet, including the
estimates inherent in the process of preparing its financial statements. Events
that provide evidence about conditions that did not exist at the date of the
balance sheet but arose after that date will be disclosed in a footnote. In
accordance with SFAS 165, the Company has evaluated events and transactions
after the close of its balance sheet on June 27, 2009, until the date of the
Company’s 10-Q filing with the SEC on August 5, 2009, for potential recognition
or disclosure in the Company’s condensed consolidated financial
statements.
SFAS
167
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)” (“SFAS 167”). SFAS 167 modifies the approach for determining the primary
beneficiary of a variable interest entity (“VIE”) by amending
Interpretation No. 46(R), “Consolidation of Variable Interest Entities – an
interpretation of ARB No. 51”.
Under SFAS 167, an enterprise is required to make a qualitative
assessment whether it has (i) the power to direct the activities of the VIE that
most significantly impact the entity’s economic performance and (ii) the
obligation to absorb losses of the VIE or the right to receive benefits from the
VIE that could potentially be significant to the VIE. If an enterprise has both
of these characteristics, the enterprise is considered primary beneficiary and
must consolidate the VIE. SFAS 167 is effective for the Company on January 3,
2010. The adoption of SFAS 167 is not expected to have a material impact on the
Company’s consolidated financial statements.
SFAS
168
In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
CodificationTM and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB
Statement No. 162 (“SFAS 162”)” (“SFAS 168”). SFAS 168 replaces SFAS 162 and
establishes The FASB Accounting Standards CodificationTM as the source
of authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with GAAP. Rules and interpretive releases of the SEC under federal
securities laws are also sources of authoritative GAAP for SEC registrants. SFAS
168 will become effective for the Company beginning on October 3, 2009. The
Company expects that SFAS 168 will not have a material impact on its condensed
consolidated financial statements.
6
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2.
Stock-Based Compensation
During
the second quarter of 2009, the Company granted 89,000 stock options under its
2007 Long-Term Equity Incentive Plan. The only other changes to the
Company’s stock-based compensation awards from the amounts presented as of
January 3, 2009, were the vesting and exercise of 478,061 restricted stock units
(“RSUs”) for shares of the Company’s common stock and the cancellation or
forfeiture of 56,750 stock options and 40,598 RSUs.
Total
share-based compensation expense recognized in selling, general and
administrative expenses in the Company’s condensed consolidated statements of
operations was $3.4 million and $6.9 million for the three and six months ended
June 27, 2009, respectively, and $4.3 million and $7.0 million for the three and
six months ended June 28, 2008, respectively.
Nashua
On May 7,
2009, the Company and Nashua Corporation (“Nashua”) signed a definitive merger
agreement whereby the Company will acquire all of the common shares of Nashua.
Under the terms of the definitive agreement, each share of common stock of
Nashua will be converted into the right to receive (i) $0.75 per share in cash
and (ii) Cenveo common stock with a value of $6.13 per share, provided, that in
no event will a Nashua share be exchanged for less than 1.168 or more than 1.635
of a Cenveo share. Consummation of the merger is expected to occur in the third
quarter of 2009 and is subject to customary closing conditions, including
approval of Nashua’s shareholders.
Liabilities
Related to Exit Activities
The
Company recorded liabilities in the purchase price allocation in connection with
its plans to exit certain activities of previous acquisitions. A summary of the
activity recorded for these liabilities was as follows (in
thousands):
4.
Inventories
Inventories
by major category were as follows (in thousands):
7
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
In the
second quarter of 2009, the Company sold one of its envelope facilities which
had a net book value of $2.9 million for net proceeds of $3.7 million and
entered into a two year operating lease for the same facility. In connection
with the sale, the Company recorded a deferred gain of $0.8 million, which is
being amortized on a straight-line basis over the term of the lease as a
reduction to rent expense in cost of sales.
On June
24, 2008, the Company sold one of its envelope facilities for net proceeds of
$11.5 million and entered into an operating lease for the same facility. In
connection with the sale, the Company recorded a total gain of $7.8 million, of
which $2.3 million was recognized in cost of sales in the second quarter of
2008. The remaining gain was deferred and is being amortized on a straight-line
basis over the seven year term of the lease, as a reduction to rent expense in
cost of sales.
6.
Other Intangible Assets
Other
intangible assets were as follows (in thousands, except weighted average
years):
Annual
amortization expense for each of the five years in the period ending June 27,
2014 is estimated to be as follows: $9.5 million, $9.4 million, $9.2
million, $9.1 million and $8.8 million, respectively. 8
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.
Long-Term Debt
Long-term
debt was as follows (in thousands):
Extinguishments
From
January 4, 2009 through April 8, 2009, the Company purchased in the open market
and retired principal amounts of approximately $40.1 million, $7.1 million and
$5.0 million of its 8⅜% senior subordinated notes due 2014 (the “8⅜% Notes”),
7⅞% senior subordinated notes due 2013 (the “7⅞% Notes”), and 10½% senior notes
due 2016 (the “10½% Notes”), respectively, for approximately $23.0 million, $4.3
million and $3.3 million, respectively, plus accrued and unpaid
interest. These open market purchases were made within permitted
restricted payment limits under the Company’s debt agreements.
In
connection with these retirements, the Company recognized gains on early
extinguishment of debt of approximately $4.3 million and $21.9 million in the
three and six months ended June 27, 2009, respectively, which included the
write-off of $0.6 million of fair value increase related to the 8⅜% Notes, $0.2
million of previously unamortized debt issuance costs and fees paid of $0.1
million.
Debt
Compliance and Amendment of Amended Credit Facilities
The
Company’s revolving credit facility due 2012 (the “Revolving Credit Facility”),
and its term loans and delayed-draw term loans due 2013 (the “Term Loans” and
collectively with the Revolving Credit Facility the “Amended Credit
Facilities”), contain two financial covenants that must be complied with: a
minimum consolidated interest coverage ratio (“Interest Coverage Covenant”) and
a maximum consolidated leverage ratio (“Leverage Covenant”).
On April
24, 2009, the Company amended its Amended Credit Facilities with the consent of
the lenders thereunder, which included, among other things, modifications to the
Leverage Covenant and the Interest Coverage Covenant (the
“Amendment”). The Company’s Leverage Covenant, with which it must be
in pro forma compliance at all times, has been increased to 6.25:1.00 through
March 31, 2010, and then proceeds to step down through the end of the term of
the Amended Credit Facilities. The Company’s Interest Coverage Covenant, with
which it must be in pro forma compliance on a quarterly basis, has been reduced
to 1.85:1.00 through December 31, 2009, and then proceeds to step up through the
end of the term of the Amended Credit Facilities. Additionally, the calculations
of these two financial covenants have been modified to permit the adding back of
certain amounts. The Company was in compliance with all debt agreement covenants
as of June 27, 2009.
As
conditions to the Amendment, the Company agreed, among other things, to increase
the pricing on all outstanding Revolving Credit Facility balances and Term Loans
to include interest at the three-month London Interbank Offered Rate (LIBOR)
plus a spread ranging from 400 basis points to 450 basis points, depending on
the quarterly Leverage Covenant then in effect. Previously, the Revolving Credit
Facility’s borrowing spread over LIBOR ranged from 175 basis points to 200 basis
points, based upon the Leverage Covenant, and the borrowing spread over LIBOR
for the Term Loans was 200 basis points. Further, the Amendment: (i) reduced the
Revolving Credit Facility from $200.0 million to $172.5 million; (ii) increased
the unfunded commitment fee paid to revolving credit lenders from 50 basis
points to 75 basis points; (iii) eliminated the Company’s ability to request
a 9
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7.
Long-Term Debt (Continued)
$300.0
million incremental term loan facility; (iv) limits new senior unsecured debt
and debt assumed from acquisitions to $50.0 million while leverage is above
4.50:1.00; (v) eliminated the restricted payments basket while leverage exceeds
certain thresholds; (vi) requires that certain additional financial information
be delivered; (vii) lowered the annual amount that can be spent on capital
expenditures to $30.0 million in 2009; and (viii) increased certain mandatory
prepayments. An amendment fee of 50 basis points was paid to all consenting
lenders who approved the Amendment. Except as provided in the Amendment, all
other provisions of the Company’s Amended Credit Facilities remain in full force
and effect, including its failure to operate within the revised Leverage
Covenant and Interest Coverage Covenant ratio thresholds, in certain
circumstances, or have effective internal controls would prevent the Company
from borrowing additional amounts and could result in a default under its
Amended Credit Facilities. Such default could cause the indebtedness outstanding
under its Amended Credit Facilities and, by reason of cross-acceleration or
cross-default provisions, its 7⅞% Notes, 8⅜% Notes, 10½% Notes and any other
indebtedness the Company may then have, to become immediately due and
payable.
In
connection with the Amendment, the Company incurred a loss on extinguishment of
debt of approximately $5.0 million, of which approximately $3.9 million relates
to fees paid to consenting lenders and approximately $1.1 million relates to the
write-off of previously unamortized debt issuance costs. In addition,
the Company capitalized approximately $3.4 million of third party costs and fees
paid to consenting lenders and is amortizing them over the remaining life of the
Amended Credit Facilities.
Interest
Rate Swaps
The
Company enters into interest rate swap agreements to hedge interest rate
exposure of notional amounts of its floating rate debt. As of June
27, 2009 and January 3, 2009, the Company had $500.0 million and $595.0 million,
respectively, of such interest rate swaps. On June 22, 2009, $220.0
million notional amount interest rate swap agreements matured, of which the
Company had previously entered into $125.0 million of forward-starting interest
rate swaps that went effective in June 2009 to partially replace these
maturing swap agreements. The Company’s hedges of interest rate risk were
designated and documented at inception as cash flow hedges and are evaluated for
effectiveness at least quarterly.
Effectiveness of the hedges is calculated
by comparing the fair value of the derivatives to hypothetical derivatives that
would be a perfect hedge of floating rate debt. The accounting for gains and
losses associated with changes in the fair value of cash flow hedges and the
effect on the Company’s condensed consolidated financial statements depends on
whether the hedge is highly effective in achieving offsetting changes in fair
value of cash flows of the liability hedged. As of June 27, 2009, the Company
does not anticipate reclassifying any ineffectiveness into its results of
operations for the next twelve months.
The
Company’s interest rate swaps are valued using discounted cash flows, as no
quoted market prices exist for the specific instruments. The primary inputs to
the valuation are maturity and interest rate yield curves, specifically
three-month LIBOR, using commercially available market sources. The interest
rate swaps are categorized as Level 2 under SFAS No. 157, Fair value Measurements
(“SFAS 157”). The table below presents the fair value of the Company’s interest
rate swaps (in thousands):
10
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Restructuring, Impairment and Other Charges
The
Company has one active and two residual cost savings plans: (i) the 2009 Cost
Savings and Restructuring Plan and (ii) the 2007 Cost Savings and Integration
Plan and the 2005 Cost Savings and Restructuring Plan.
2009 Cost
Savings and Restructuring Plan
In the
first quarter of 2009, the Company developed and implemented a cost savings and
restructuring plan to reduce its operating costs and realign its manufacturing
platform in order to compete effectively during the current economic downturn.
In the first quarter of 2009, the Company implemented cost savings initiatives
throughout its operations and announced the closure of three envelope plants in
Deer Park, New York, Boone, Iowa and Carlstadt, New Jersey, as well as one
journal printing plant in Easton, Maryland and consolidated them into existing
operations. In the second quarter of 2009, the Company continued its
cost savings initiatives and closed one commercial printing plant in Los
Angeles, California and a forms plant in Jaffrey, New Hampshire and consolidated
them into existing operations. As a result of these actions in 2009, the Company
has reduced its headcount by approximately 1,300. The Company anticipates being
substantially complete with the implementation of these cost savings initiatives
in the fourth quarter of 2009. The following tables present the details of the
expenses recognized as a result of this plan.
2009
Activity
Restructuring
and impairment charges for the three months ended June 27, 2009 were as follows
(in thousands):
Restructuring
and impairment charges for the six months ended June 27, 2009 were as follows
(in thousands):
11
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Restructuring, Impairment and Other Charges (Continued)
A summary
of the activity charged to the restructuring liabilities for the 2009 Cost
Savings and Restructuring Plan was as follows (in thousands):
2007 Cost
Savings and Integration Plan
The
following tables present the details of the expenses recognized as a result of
this plan.
2009
Activity
Restructuring
and impairment charges for the three months ended June 27, 2009 were as follows
(in thousands):
Restructuring
and impairment charges for the six months ended June 27, 2009 were as follows
(in thousands):
12
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Restructuring, Impairment and Other Charges (Continued)
2008
Activity
Restructuring
and impairment charges for the three months ended June 28, 2008 were as follows
(in thousands):
Restructuring
and impairment charges for the six months ended June 28, 2008 were as follows
(in thousands):
A summary
of the activity charged to the restructuring liabilities for the 2007 Cost
Savings and Integration Plan was as follows (in thousands):
2005 Cost
Savings and Restructuring Plan
The
following tables present the details of the expenses recognized as a result of
this plan.
2009
Activity
Restructuring
and impairment charges (income) for the three months ended June 27, 2009 were as
follows (in thousands):
13
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8.
Restructuring, Impairment and Other Charges (Continued)
Restructuring
and impairment charges (income) for the six months ended June 27, 2009 were as
follows (in thousands):
2008
Activity
Restructuring
and impairment charges for the three months ended June 28, 2008 were as follows
(in thousands):
Restructuring
and impairment charges for the six months ended June 28, 2008 were as follows
(in thousands):
A summary
of the activity charged to the restructuring liabilities for the 2005 Cost
Savings and Restructuring Plan was as follows (in thousands):
Other
Charges
In
connection with the internal review conducted by outside counsel under the
direction of the Company’s audit committee in the first quarter of 2008, the
Company incurred a non-recurring charge in 2008 of approximately $6.7 million
for professional fees.
14
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9.
Pension and Other Postretirement Plans
The
following table provides components of net periodic pension expense for the
Company’s pension plans and other postretirement benefit plans (in
thousands):
Interest
cost on the projected benefit obligation related to the Company’s other
postretirement plans includes $0.2 million and $0.1 million in the three months
ended June 27, 2009 and June 28, 2008, respectively, and $0.4 million in the six
months ended June 27, 2009 and June 28, 2008.
During
the six months ended June 27, 2009, the Company made contributions of $2.7
million to its pension plans and other postretirement plans. The Company expects
to contribute approximately $4.6 million to its pension plans and other
postretirement plans for the remainder of 2009.
10.
Commitments and Contingencies
The
Company is party to various legal actions that are ordinary and incidental to
its business. While the outcome of pending legal actions cannot be predicted
with certainty, management believes the outcome of these various legal
proceedings will not have a material adverse effect on the Company’s
consolidated financial condition or results of operations.
11.
Comprehensive Income (Loss)
A summary
of comprehensive income (loss) was as follows (in thousands):
12. Income
(Loss) Per Share
Basic
income (loss) per share is computed based upon the weighted average number of
common shares outstanding for the period. Diluted income (loss) per share
reflects the potential dilution that could occur if stock options, restricted
stock and RSUs to issue common stock were exercised under the treasury stock
method. The only Company securities as of June 27, 2009 that could dilute basic
income (loss) per share for periods subsequent to June 27, 2009, that were not
included in the computation of diluted earnings per share for the three and six
months ended June 27, 2009 are: (i) outstanding stock options, which are
exercisable into 2,954,225 shares, respectively, of the Company’s common stock,
and (ii) 2,062,130 shares, respectively, of restricted stock and
RSUs.
15
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. Income
(Loss) per Share (Continued)
The
following table sets forth the computation of basic and diluted income (loss)
per share (in thousands, except per share data):
13.
Segment Information
The
Company operates in two segments: the envelopes, forms and labels segment and
the commercial printing segment. The envelopes, forms and labels segment
specializes in the design, manufacturing and printing of: (i) custom and direct
mail envelopes developed for the advertising, billing and remittance needs of a
variety of customers, including financial services companies; (ii) custom labels
and specialty forms sold through an extensive network of resale distributors for
industries including food and beverage, manufacturing and pharmacy chains; and
(iii) stock envelopes, labels and business forms generally sold to independent
distributors, office-products suppliers and office-products retail
chains. The commercial printing segment provides print, design and
content management offerings, including: (i) high-end printed materials, which
includes a wide range of premium products for major national and regional
customers; (ii) general commercial printing products for regional and local
customers; (iii) scientific, technical and medical journals and special interest
and trade magazines for non-profit organizations, educational institutions and
specialty publishers; and (iv) specialty packaging and high quality promotional
materials for multinational consumer products companies.
Operating
income (loss) of each segment includes substantially all costs and expenses
directly related to the segment’s operations. Corporate expenses include
corporate general and administrative expenses (Note 2).
Corporate
identifiable assets primarily consist of cash and cash equivalents, deferred
financing fees, deferred tax assets and other assets.
16
CENVEO,
INC. AND SUBSIDIARIES
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. Segment
Information (Continued)
The
following tables present certain segment information (in
thousands):
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