SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
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Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the quarterly period ended September 30, 2003 |
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or |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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For the transition period from to |
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Commission File Number: 333-97721 |
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Vertis, Inc.
(Exact Names of Registrants as Specified in Their Charters)
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Delaware |
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13-3768322 |
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(State of incorporation) |
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(I.R.S. Employer |
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250
West Pratt Street |
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21201 |
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(Address of Registrant’s Principal Executive Office) |
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(Zip Code) |
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(410) 528-9800 |
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(Registrant’s telephone number, including area code) |
Indicate by check mark whether the Registrants (1) have 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 Registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days
Yes ý No o
Indicated by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act)
Yes o No ý
As of October 31, 2003 there were 1,000 shares of the registrant’s common stock outstanding.
INDEX
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Notes to Condensed Consolidated Financial Statements of Vertis, Inc. and Subsidiaries |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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1
Part I - FINANCIAL INFORMATION
Item 1: Financial Statements
Vertis, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
In thousands, except share amounts
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September
30, |
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December
31, |
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(Unaudited) |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
8,427 |
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$ |
5,735 |
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Accounts receivable, net |
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179,831 |
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131,525 |
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Inventories |
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43,653 |
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37,189 |
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Maintenance parts |
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19,776 |
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18,861 |
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Deferred income taxes |
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7,806 |
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Prepaid expenses and other current assets |
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11,797 |
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15,890 |
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Total current assets |
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263,484 |
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217,006 |
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Property, plant and equipment, net |
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407,532 |
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445,493 |
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Goodwill |
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351,238 |
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342,304 |
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Investments |
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73,587 |
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72,411 |
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Deferred financing costs, net |
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32,064 |
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37,113 |
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Other assets, net |
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19,187 |
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20,671 |
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Total Assets |
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$ |
1,147,092 |
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$ |
1,134,998 |
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LIABILITIES AND STOCKHOLDER’S DEFICIT |
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Current Liabilities: |
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Accounts payable |
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$ |
195,011 |
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$ |
133,177 |
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Compensation and benefits payable |
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32,666 |
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37,834 |
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Accrued interest |
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35,107 |
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16,588 |
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Accrued income taxes |
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6,953 |
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5,951 |
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Current portion of long-term debt |
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611 |
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5,384 |
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Other current liabilities |
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28,100 |
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36,587 |
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Total current liabilities |
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298,448 |
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235,521 |
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Due to parent |
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7,506 |
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7,822 |
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Long-term debt, net of current portion |
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1,089,958 |
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1,087,684 |
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Deferred income taxes |
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65,837 |
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26,073 |
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Other long-term liabilities |
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31,775 |
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27,890 |
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Total liabilities |
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1,493,524 |
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1,384,990 |
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Stockholder’s deficit: |
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Common stock - authorized 3,000 shares; $0.01 par value; issued and outstanding 1,000 shares |
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Contributed capital |
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408,963 |
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408,965 |
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Accumulated deficit |
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(748,370 |
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(646,579 |
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Accumulated other comprehensive loss |
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(7,025 |
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(12,378 |
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Total stockholder’s deficit |
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(346,432 |
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(249,992 |
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Total Liabilities and Stockholder’s Deficit |
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$ |
1,147,092 |
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$ |
1,134,998 |
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See Notes to Condensed Consolidated Financial Statements.
2
Vertis, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
In thousands
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Three Months Ended September 30, |
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2003 |
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2002 |
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(Unaudited) |
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Net sales |
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$ |
390,943 |
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$ |
409,583 |
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Operating expenses: |
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Costs of production |
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305,977 |
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311,613 |
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Selling, general and administrative |
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46,071 |
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46,891 |
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Restructuring charges |
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6,762 |
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2,770 |
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Depreciation and amortization of intangibles |
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20,705 |
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22,817 |
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379,515 |
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384,091 |
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Operating income |
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11,428 |
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25,492 |
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Other expenses (income): |
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Interest expense, net |
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33,508 |
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31,598 |
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Other, net |
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740 |
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1,891 |
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34,248 |
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33,489 |
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Loss before income taxes |
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(22,820 |
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(7,997 |
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Income tax expense (benefit) |
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1,206 |
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(2,733 |
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Net loss |
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$ |
(24,026 |
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(5,264 |
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See Notes to Condensed Consolidated Financial Statements.
3
Vertis, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
In thousands
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Nine Months Ended September 30, |
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2003 |
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2002 |
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(Unaudited) |
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Net sales |
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$ |
1,139,506 |
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$ |
1,220,355 |
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Operating expenses: |
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Costs of production |
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889,298 |
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922,306 |
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