Edgar Filing: CENVEO, INC

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

COMMISSION FILE NUMBER 1-12551

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CENVEO, INC.
(Exact name of Registrant as specified in its charter.)

COLORADO 84-1250533
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

8310 S. VALLEY HIGHWAY, #400
ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)

303-790-8023
(Registrant's telephone number, including area code)

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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 / /

Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes /X/ No / /

The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of July 29, 2005 was $264,448,081.

As of July 29, 2005 the Registrant had 50,735,041 shares of Common Stock,
$0.01 par value, outstanding.

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CENVEO, INC. AND SUBSIDIARIES

INDEX

PAGE
----

Part I. Financial Information

Item 1. Financial Statements

Condensed Consolidated Balance Sheets--
June 30, 2005 and December 31, 2004................. 1

Condensed Consolidated Statements of Operations--
Three and six months ended June 30, 2005 and 2004... 2

Condensed Consolidated Statements of Cash Flows--
Six months ended June 30, 2005 and 2004............. 3

Notes to Condensed Consolidated Financial
Statements.......................................... 4

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 11

Item 3. Quantitative and Qualitative Disclosures About
Market Risk....................................... 21

Item 4. Controls and Procedures........................... 22

Part II. Other Information

Item 2. Issuer Purchases of Equity Securities............. 23

Item 4. Submission of Matters to a Vote of Securities
Holders........................................... 23

Item 6. Exhibits.......................................... 23

Signatures.................................................... 27

PART I--FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CENVEO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(Unaudited)

JUNE 30, 2005 DECEMBER 31, 2004
------------- -----------------

ASSETS

CURRENT ASSETS:
Cash and cash equivalents............................... $ 1,844 $ 796
Accounts receivable..................................... 226,951 252,711
Inventories............................................. 113,585 112,219
Other current assets.................................... 46,881 46,019
---------- ----------
TOTAL CURRENT ASSETS................................ 389,261 411,745

Property, plant and equipment, net.......................... 345,061 367,260
Goodwill.................................................... 307,627 308,938
Other intangible assets, net................................ 29,853 28,788
Other assets................................................ 56,417 58,016
---------- ----------
TOTAL ASSETS................................................ $1,128,219 $1,174,747
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable........................................ $ 150,600 $ 172,731
Accrued compensation and related liabilities............ 60,249 58,639
Other current liabilities............................... 57,070 64,714
Current maturities of long-term debt.................... 2,841 2,270
---------- ----------
TOTAL CURRENT LIABILITIES........................... 270,760 298,354

Long-term debt, less current maturities..................... 780,734 767,499
Other liabilities........................................... 48,644 51,540
---------- ----------
TOTAL LIABILITIES................................... 1,100,138 1,117,393
Commitments and contingencies

SHAREHOLDERS' EQUITY:
Preferred stock, $0.01 par value; 25,000 shares
authorized, none issued............................... -- --
Common stock, $0.01 par value; 100,000,000 shares
authorized, 50,557,649 and 48,702,832 shares issued
and outstanding as of June 30, 2005 and December 31,
2004, respectively.................................... 505 487
Paid-in capital......................................... 224,100 214,902
Accumulated deficit..................................... (203,205) (170,039)
Deferred compensation................................... (2,885) (2,003)
Accumulated other comprehensive income.................. 9,566 14,007
---------- ----------
TOTAL SHAREHOLDERS' EQUITY.......................... 28,081 57,354
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................. $1,128,219 $1,174,747
========== ==========

See notes to condensed consolidated financial statements.

CENVEO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share amounts)
(Unaudited)

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2005 2004 2005 2004
-------- -------- -------- --------

Net sales................................... $421,736 $409,396 $871,338 $833,138
Cost of sales............................... 338,428 325,762 701,275 661,084
-------- -------- -------- --------
Gross profit................................ 83,308 83,634 170,063 172,054
Operating expenses:
Selling, general and administrative
expenses.............................. 64,559 66,415 137,224 134,413
Amortization of intangible assets....... 1,276 1,396 2,606 2,801
Loss on sale of non-strategic
businesses............................ 539 -- 1,260 --
Restructuring, impairment and other
charges............................... 4,922 1,018 12,990 1,121
-------- -------- -------- --------
Operating income............................ 12,012 14,805 15,983 33,719
Other expenses:
Interest expense........................ 18,802 17,513 36,995 35,912
Loss from the early extinguishment of
debt.................................. -- -- -- 17,748
Other................................... 445 527 434 968
-------- -------- -------- --------
Loss from continuing operations before
income taxes.............................. (7,235) (3,235) (21,446) (20,909)
Income tax expense (benefit)................ 3,374 61 11,721 (1,078)
-------- -------- -------- --------
Loss from continuing operations............. (10,609) (3,296) (33,167) (19,831)
Gain on disposal of discontinued operations,
net of taxes of $770...................... -- 1,230 -- 1,230
-------- -------- -------- --------
Net loss.................................... $(10,609) $ (2,066) $(33,167) $(18,601)
======== ======== ======== ========
Earnings (loss) per share--basic and
diluted:
Continuing operations................... $ (0.22) $ (0.07) $ (0.69) $ (0.42)
Discontinued operations................. -- 0.03 -- 0.03
-------- -------- -------- --------
Loss per share--basic and diluted........... $ (0.22) $ (0.04) $ (0.69) $ (0.39)
======== ======== ======== ========
Weighted average shares--basic and
diluted................................... 48,804 47,740 48,292 47,737

See notes to condensed consolidated financial statements.

CENVEO, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

SIX MONTHS ENDED
JUNE 30,
------------------------------
2005 2004
---------- -----------

Cash flows from operating activities:
Net loss from continuing operations....................... $ (33,167) $ (19,831)
Adjustments to reconcile net loss from continuing
operations to net cash used in operating activities:
Depreciation......................................... 23,289 22,841
Amortization......................................... 4,896 5,093
Asset impairment charges............................. 7,689 --
Loss on sale of non-strategic businesses............. 1,260 --
Write-off of deferred financing fees................. -- 4,220
Deferred income tax expense (benefit)................ 456 (7,949)
Loss on disposal of assets........................... 77 240
Other non-cash charges, net.......................... (703) (366)
Changes in operating assets and liabilities, excluding the
effects of operations acquired and sold:
Accounts receivable.................................. 25,723 4,210
Inventories.......................................... (2,247) (20,011)
Accounts payable and accrued compensation............ (20,077) 7,686
Income taxes payable................................. (476) (991)
Other working capital changes........................ (9,415) 211
Other, net........................................... (6,877) (76)
---------- -----------
Net cash used in operating activities.............. (9,572) (4,723)
Cash flows from investing activities:
Aquisitions, net of cash acquired..................... (3,995) --
Capital expenditures.................................. (12,652) (12,460)
Proceeds from divestitures............................ 4,158 2,000
Proceeds from sales of property, plant and
equipment............................................ 284 346
---------- -----------
Net cash used in investing activities.............. (12,205) (10,114)
Cash flows from financing activities:
Increase in borrowings under credit facility.......... 14,824 6,806
Proceeds from issuance of long-term debt.............. -- 320,000
Repayments of long-term debt.......................... (1,018) (302,809)
Proceeds from issuance of common stock................ 9,082 46
Capitalized loan fees................................. -- (8,936)
---------- -----------
Net cash provided by financing activities........... 22,888 15,107
Effect of exchange rate changes on cash and cash
equivalents................................................ (63) (412)
---------- -----------
Net increase (decrease) in cash and cash
equivalents........................................ 1,048 (142)
Cash and cash equivalents at beginning of year.............. 796 307
---------- -----------
Cash and cash equivalents at end of quarter................. $ 1,844 $ 165
========== ===========

See notes to condensed consolidated financial statements.

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
of Cenveo, Inc. and subsidiaries (collectively, "Cenveo", or the "Company")
have been prepared in accordance with generally accepted accounting
principles for interim financial statements and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position of Cenveo
at June 30, 2005, the results of operations for the three and six months
ended June 30, 2005, and the cash flows for the six months ended June 30,
2005. Operating results for the six months ended June 30, 2005 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2005. The condensed consolidated balance sheet at
December 31, 2004 has been derived from the audited financial statements at
that date but does not include all of the information and footnote
disclosures required by generally accepted accounting principles for
complete financial statements.

It has been our practice to close our quarters on the Saturday closest
to the last day of the calendar month so that each quarter has the same
number of days and 13 full weeks. The financial statements and other
financial information in this report are presented using a calendar
convention. The reporting periods, which consist of 13 and 26 weeks ending
on July 2, 2005 and June 26, 2004, are reported as ending on June 30, 2005
and 2004, respectively. The effects of this practice are generally not
significant.

The financial statements and other financial information presented in
this report should be read in conjunction with the financial statements
contained in our Annual Report on Form 10-K for 2004.

2. STOCK-BASED COMPENSATION

We account for our fixed stock option plans under Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25").
Under APB 25, we are not required to recognize compensation expense on the
stock options granted under our plans since the options are granted with an
exercise price equal to the market value of the underlying stock on the
grant date.

In December 2004, the FASB issued SFAS No. 123 (revised 2004),
Share-Based Payments: an amendment of FASB Statements No. 123 and 95 ("SFAS
No. 123R"). SFAS No. 123R requires all share-based payments to employees,
including grants of stock options, to be recognized in the financial
statements based on their fair value. The Company expects to implement SFAS
123R in the first quarter of 2006 and use the modified-prospective
transition method of implementation. Under the modified-prospective
transition method, the Company will recognize compensation expense in the
financial statements issued subsequent to the date of adoption, which will
be January 1, 2006, for all share-based payments granted, modified or
settled after January 1, 2006 as well as for any awards that were granted
prior to January 1, 2006 for which the requisite service has not been
provided as of January 1, 2006. The Company will recognize compensation
expense on awards granted subsequent to January 1, 2006 using the fair
values determined by a valuation model prescribed by SFAS 123R. The
compensation expense on awards granted prior to January 1, 2006 will be
recognized using the fair values determined for the pro forma disclosures
on stock-based compensation. The amount of compensation expense that will
be recognized on awards that have not fully vested will exclude the
compensation expense cumulatively recognized in the pro forma disclosures
on stock-based compensation. The Company has not determined the impact of
its adoption of SFAS No. 123R.

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. STOCK-BASED COMPENSATION (CONTINUED)

If we were to apply the fair value recognition provisions of Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation, the Company's reported and pro forma net loss and loss per
share would have been as follows (in thousands, except per share data):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
2005 2004 2005 2004
-------- ------- -------- --------

Net loss, as reported.................... $(10,609) $(2,066) $(33,167) $(18,601)
Adjustment for stock-based
compensation expense (expense
reversal) included in reported net
loss.............................. (939) 165 (747) 309
Less: stock-based compensation
expense determined under fair
value method for all awards....... (77) (805) (1,381) (1,374)
-------- ------- -------- --------
Pro forma net loss........................ $(11,625) $(2,706) $(35,295) $(19,666)
======== ======= ======== ========
Loss per share--basic and diluted:
As reported......................... $ (0.22) $ (0.04) $ (0.69) $ (0.39)
Pro forma........................... $ (0.24) $ (0.06) $ (0.73) $ (0.41)

3. INVENTORIES

Inventories consist of the following (in thousands):

JUNE 30, DECEMBER 31,
2005 2004
--------- ------------

Raw materials........................................... $ 35,173 $ 36,440
Work in process......................................... 28,064 30,357
Finished goods.......................................... 55,338 50,122
--------- ---------
118,575 116,919
Reserves................................................ (4,990) (4,700)
--------- ---------
$ 113,585 $ 112,219
========= =========

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following (in thousands):

JUNE 30, DECEMBER 31,
2005 2004
--------- ------------

Land and land improvements.............................. $ 18,820 $ 19,457
Buildings and building improvements..................... 109,330 109,889
Machinery and equipment................................. 524,184 532,470
Furniture and fixtures.................................. 14,016 13,997
Construction in progress................................ 9,734 9,806
--------- ---------
676,084 685,619
Accumulated depreciation................................ (331,023) (318,359)
--------- ---------
$ 345,061 $ 367,260
========= =========

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5. COMPREHENSIVE LOSS

A summary of the comprehensive loss is as follows (in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -----------------------
2005 2004 2005 2004
--------- --------- -------- --------

Net loss............................... $ (10,609) $ (2,066) $(33,167) $(18,601)
Other comprehensive loss:
Currency translation
adjustment...................... (2,837) (3,150) (4,441) (5,128)
--------- --------- -------- --------
Comprehensive loss..................... $ (13,446) $ (5,216) $(37,608) $(23,729)
========= ========= ======== ========

6. LONG-TERM DEBT

At June 30, 2005 and December 31, 2004, long-term debt consisted of the
following (in thousands):

JUNE 30, DECEMBER 31,
2005 2004
-------- ------------

Senior Secured Credit Facility, due 2008................ $ 93,265 $ 78,441
Senior Notes, due 2012.................................. 350,000 350,000
Senior Subordinated Notes, due 2013..................... 320,000 320,000
Other................................................... 20,310 21,328
-------- --------
783,575 769,769
Less current maturities................................. (2,841) (2,270)
-------- --------
Long-term debt...................................... $780,734 $767,499
======== ========

As of June 30, 2005, the Company was in compliance with all of the
covenants of its various debt agreements.

7. INCOME TAXES

Since our U.S. operations have incurred substantial net operating
losses over the last four years, we have recorded a valuation allowance to
offset the estimated tax benefit from the net operating loss incurred by
our U.S. operations in the three and six months ended June 30, 2005. The
tax expense reported for the three and six months ended June 30, 2005
relates to our Canadian operations which are expected to generate taxable
income in 2005. In addition, a valuation allowance of $3.7 million was
recorded in the first quarter for foreign tax credits generated that are
not likely to be used.

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES

A summary of the restructuring, impairment and other charges recorded
in the three and six months ended June 30, 2005 follows:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2005 JUNE 30, 2005
------------------ ----------------

Restructuring charges
Employee termination and related expenses...... $3,962 $ 4,357
Other.......................................... (180) 356
Impairment charges
Commercial..................................... -- 7,137
Resale......................................... 552 552
Other charges...................................... 588 588
------ -------
$4,922 $12,990
====== =======

In the first quarter of 2005, the commercial segment began the closure
of a small printing operation located in Phoenix, Arizona and the
consolidation of its production into our Los Angeles, California printing
plant. We have incurred employee separation and related expenses of $0.3
million to cover the separation of 45 employees, and $0.3 million of other
closure costs associated with the shut-down of this plant which was
completed during the second quarter. In addition, we have completed the
consolidation of our printing operations in Seattle, Washington and San
Francisco, California. The restructuring expenses incurred to complete
these consolidations totaled $0.2 million.

In July 2005, we began evaluating other opportunities to optimize
capacity and reduce operating expenses. We anticipate additional
restructuring charges during the remainder of 2005.

During the three months ended June 30, 2005, we determined the value of
certain equipment used in the resale segment for production of traditional
business documents to be impaired. This equipment will be taken out of
service during the second half of 2005 or the first quarter of 2006. The
commercial asset impairment charges relate to certain operations that
operated at a loss throughout 2004 and have continued to perform poorly in
2005. It became apparent early in 2005 that the plans that had been
developed to make these operations profitable were not likely to be
successful as quickly as we expected. In the first quarter of 2005, we
determined the value of certain assets at these operations to be impaired
since it was more likely than not that these assets would be sold or
otherwise disposed of significantly before the end of their estimated useful
lives. These impairment charges are based on management's best estimates.
Additional impairment and restructuring charges may be required prior to the
end of 2005.

Other charges include investment banking and legal fees incurred during
the second quarter of 2005 in connection with the evaluation of the
Company's strategic alternatives and in connection with the special meeting
of shareholders called by a dissident shareholder group. The evaluation has
not been completed and the proxy contest in connection with the special
meeting is ongoing; accordingly, additional expenses will be incurred
during the remainder of 2005.

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES (CONTINUED)

The 2001 and 2002 restructuring plans have been completed. The following
is a summary of the activity charged to the 2002 restructuring liability for
the six months ended June 30, 2005:

COMMERCIAL RESALE TOTAL
---------- ------ -----

Balance, December 31, 2004............................. $ 653 $ 14 $ 667
Payments for lease termination and property exit
costs............................................ (428) -- (428)
Payments for other exit costs...................... (127) -- (127)
Reversal of unused accrual......................... -- (14) (14)
----- ---- -----
Balance, June 30, 2005................................. $ 98 $ -- $ 98
===== ==== =====

A summary of the activity charged to the 2001 restructuring liability
during the six months ended June 30, 2005 is as follows (in thousands):

COMMERCIAL
----------

Balance, December 31, 2004.............................. $ 426
Payments for lease termination and property exit
costs............................................. (128)
-----
Balance, June 30, 2005.................................. $ 298
=====

9. LOSS ON SALE OF NON-STRATEGIC BUSINESSES

The following is a summary of the loss recognized as a result of the
sale of non-strategic businesses during the three and six months ended June
30, 3005 (in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2005 JUNE 30, 2005
------------------ ----------------

Commercial
Printing operations in Riviera Beach, FL and
Osage Beach, MO.............................. $313 $ 864
Envelope jet printing operation in Canada...... -- 170
Resale
Mailing supplies business...................... 226 226
---- ------
$539 $1,260
==== ======

The net proceeds as a result of these divestitures totaled $4.2
million. The following table summarizes the net sales and operating losses
of these businesses that are included in the condensed consolidated
statements of operations:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- --------------------
2005 2004 2005 2004
------ ------ ------ -------

Net sales..................................... $1,709 $6,735 $7,443 $12,624
Operating losses.............................. $ (90) $ (142) $ (630) $ (273)

The Company has ongoing supply agreements with these entities;
accordingly, the dispositions of these non-strategic businesses have not
been accounted for as discontinued operations in the condensed consolidated
statements of operations.

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. PENSION PLANS

The components of the net periodic pension expense for the Company's
pension plans and the supplemental executive retirement plans are as
follows (in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ---------------------
2005 2004 2005 2004
----- ----- ------- -------

Service cost.................................. $ 650 $ 521 $ 1,309 $ 1,065
Interest cost................................. 890 765 1,719 1,476
Expected return on plan assets................ (970) (812) (1,899) (1,656)
Net amortization and deferral................. 125 50 300 103
----- ----- ------- -------
Net periodic pension expense.................. $ 695 $ 524 $ 1,429 $ 988
===== ===== ======= =======

We expect to contribute $2.8 million to the Company's pension plans in
2005. As of June 30, 2005, contributions of $1.4 million had been made.

11. LOSS PER SHARE

Basic loss per share excludes dilution and is computed by dividing net
loss by the weighted average number of common shares outstanding for the
period. Diluted loss per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised
or converted into common stock. A reconciliation of the amounts included in
the computation of basic loss per share and diluted loss per share is as
follows (in thousands, except per share amounts):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
2005 2004 2005 2004
-------- ------- -------- --------

Numerator:
Numerator for basic and diluted loss per
share--net loss............................ $(10,609) $(2,066) $(33,167) $(18,601)
======== ======= ======== ========
Denominator:
Denominator for basic and diluted loss per
share--weighted average shares............. 48,804 47,740 48,292 47,737
Loss per share--basic and diluted........ $ (0.22) $ (0.04) $ (0.69) $ (0.39)
======== ======= ======== ========

In the three and six months ended June 30, 2005 and 2004, outstanding
options and shares of restricted stock in the amount of 4,644,000 and
7,330,000, respectively, were excluded from the calculation of diluted
earnings per share because the effect would be antidilutive.

12. SEGMENT INFORMATION

The commercial segment specializes in printing annual reports, car
brochures, brand marketing collateral, financial communications and general
commercial printing and the manufacturing and printing of customized
envelopes for billing and remittance and direct mail advertising. The
commercial segment also offers services such as design, fulfillment,
eCommerce and inventory management. These products and services are sold
directly to national and local customers.

The resale segment produces business documents and labels, custom and
stock envelopes, and specialty packaging and mailers. These products are
generally sold through professional print distributors, business forms
suppliers, office-products retail chains and the Internet.

CENVEO, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. SEGMENT INFORMATION (CONTINUED)

Operating income of each segment includes all costs and expenses
directly related to the segment's operations. Corporate expenses include
corporate general and administrative expenses. Inter-company sales for the
three months ended June 30, 2005 and 2004 were $6.9 million and $6.2
million, respectively. Inter-company sales for the six months ended June
30, 2005 and 2004 were $12.9 and $11.5 million, respectively. These amounts
were eliminated in consolidation and excluded from reported net sales.

The following tables present certain segment information for the three
and six months ended June 30, 2005 and 2004 (in thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2005 2004 2005 2004
-------- -------- -------- --------

Net sales:
Commercial.......................... $320,195 $307,583 $666,603 $631,432
Resale.............................. 101,541 101,813 204,735 201,706
-------- -------- -------- --------
Total............................... $421,736 $409,396 $871,338 $833,138
======== ======== ======== ========
Operating income (expense):
Commercial.......................... $ 7,918 $ 9,920 $ 10,181 $ 21,914
Resale.............................. 9,321 12,359 18,059 23,822
Corporate........................... (5,227) (7,474) (12,257) (12,017)
-------- -------- -------- --------
Total............................... $ 12,012 $ 14,805 $ 15,983 $ 33,719
======== ======== ======== ========
Restructuring, impairment and other
charges included in operating income:
Commercial.......................... $ 2,422 $ 1,018 $ 10,505 $ 1,121
Resale.............................. 1,676 -- 1,661 --
Corporate........................... 824 -- 824 --
-------- -------- -------- --------
Total............................... $ 4,922 $ 1,018 $ 12,990 $ 1,121
======== ======== ======== ========
Net sales by product line:
Commercial printing................. $188,748 $186,873 $399,125 $385,073
Envelopes........................... 183,322 172,077 373,093 346,180
Business documents and labels....... 49,666 50,446 99,120 101,885
-------- -------- -------- --------
Total............................... $421,736 $409,396 $871,338 $833,138
======== ======== ======== ========

In July 2005, we reorganized our management structure and our
manufacturing operations. We anticipate a change in our operating segments
as a result of this reorganization.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

BUSINESS OVERVIEW

Cenveo is one of North America's leading providers of visual
communication solutions delivered through print and electronic media. Our
products include offset and digital printing, custom and stock envelopes,
and business documents and labels. We also provide communications
consulting, end-to-end project management and eServices. We have production
facilities and fulfillment and distribution centers strategically located
throughout North America. We are organized into two business segments--
commercial and resale.

Our commercial segment specializes in printing annual reports, car
brochures, brand marketing collateral, financial communications and general
commercial printing and in the manufacturing and printing of customized
envelopes for billing and remittance and direct mail advertising. The
commercial segment also offers services such as design, fulfillment,
eCommerce and inventory management. These products and services are
provided directly to national and local customers. Our commercial segment
consists of 34 printing plants, 27 envelope plants and five distribution
and fulfillment centers.

Our resale segment produces business documents and labels, custom and
stock envelopes, and specialty packaging and mailers. These products are
generally sold through professional print distributors, business forms
suppliers, office products retail chains and the Internet. The resale
segment operates 18 manufacturing facilities.

Management's Discussion and Analysis of Financial Condition and Results
of Operations is intended to provide an update on the financial condition
of Cenveo since December 31, 2004 and to discuss operating trends to the
extent known and considered relevant. This discussion should be read in
conjunction with the consolidated financial statements and related notes
and Management's Discussion and Analysis of Financial Condition and Results
of Operations included in our Annual Report on Form 10-K for the year ended
December 31, 2004.

REVIEW OF RESULTS

The discussion and analysis of the results of operations includes an
overview of our consolidated results for the second quarter and the first
six months of 2005 followed by a discussion of the results of our two
business segments.

A summary of our consolidated statements of operations is presented
below. The summary presents reported net sales and operating income as well
as the net sales and operating income data of our business segments used
internally to assess operating performance of our business segments.
Division sales exclude sales of divested operations and division operating
income excludes the costs associated with our corporate headquarters,
operating losses of divested operations, losses incurred on the
divestitures of non-strategic businesses, charges related to restructuring
and impairments and expenses incurred that are unrelated to operations.

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2005 2004 2005 2004
---------------------------------------- -------- -------- -------- --------

Division net sales.......................... $420,027 $402,661 $863,895 $820,515
Divested operations..................... 1,709 6,735 7,443 12,623
-------- -------- -------- --------
Net sales................................... $421,736 $409,396 $871,338 $833,138
======== ======== ======== ========
Division operating income................... $ 21,965 $ 23,439 $ 42,296 $ 47,130
Unallocated corporate expenses.......... (4,402) (7,474) (11,433) (12,017)
Restructuring, impairment and other
charges............................... (4,922) (1,018) (12,990) (1,121)
Divested operations..................... (90) (142) (630) (273)
Loss on sale of non-strategic
businesses............................ (539) -- (1,260) --
-------- -------- -------- --------
Operating income............................ 12,012 14,805 15,983 33,719
Interest expense........................ 18,802 17,513 36,995 35,912
Loss on early extinguishment of debt.... -- -- -- 17,748
Other non operating expenses............ 445 527 434 968
-------- -------- -------- --------
Loss before income taxes.................... (7,235) (3,235) (21,446) (20,909)
Income tax expense (benefit)............ 3,374 61 11,721 (1,078)
-------- -------- -------- --------
Loss from continuing operations............. (10,609) (3,296) (33,167) (19,831)
Gain from discontinued operations....... -- 1,230 -- 1,230
-------- -------- -------- --------
Net loss.................................... $(10,609) $ (2,066) $(33,167) $(18,601)
======== ======== ======== ========
Loss per share--diluted..................... $ (0.22) $ (0.04) $ (0.69) $ (0.39)
======== ======== ======== ========

NET SALES

Consolidated net sales in the second quarter of 2005 were 3% higher
than the second quarter of 2004. For the first six months of 2005,
consolidated net sales increased 5% over the comparable period of 2004.
Growth of division net sales was slightly better. Our strategy of offering
the full range of our products and services is continuing to drive the
sales performance of the commercial segment. Sales growth in our resale
segment has been dampened in 2005 by a decline in sales of traditional
business documents, especially continuous forms.

OPERATING INCOME

Consolidated operating income in the second quarter of 2005 declined
$2.8 million compared to the second quarter of 2004 and declined $17.7
million in the first six months of 2004 compared to the corresponding
period of 2004.

DIVISION OPERATING INCOME. Division operating income declined $1.5
million in the second quarter of 2005 and $4.8 million in the first half of
2005 compared to the corresponding periods of 2004. These reductions in
profitability were primarily the result of the following:

* As expected, the profits of our resale segment were lower during the
first half of 2005 compared to the first half of 2004 due to the
pricing concessions made in the second half of 2004 to defend and
grow our share of the office products markets.

* The cost of the paper used to produce envelopes increased
approximately 9% at the beginning of 2005. This increase in the cost
of paper has had a negative impact on the margins of our envelope
products in 2005 as we experienced delays in passing the higher cost
of raw materials to our customers.

* Management incentives have been accrued in 2005. The accrual required
for incentive compensation was not significant in the first six
months of 2004 since, under the plan in effect during 2004, the
incentives had not been earned.

UNALLOCATED CORPORATE EXPENSES. Unallocated corporate expenses include
the costs of our corporate headquarters and certain expenses not allocated
to our segments. Unallocated corporate expenses in 2005 were lower than
2004, because unallocated corporate expenses in the second quarter of 2004
reflected a $2.0 million charge related to a change in our estimate of the
cost of workers' compensation claims incurred prior to 2004. As a result of
the change in our chief executive officer we incurred expenses totaling
approximately $2.1 million. The majority of these expenses were incurred in
the first quarter of the year.

RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES. A summary of the
restructuring, impairment and other charges recorded in the second quarter
and first six months of 2005 follows:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2005 JUNE 30, 2005
------------------ ----------------

Restructuring charges
Employee termination and related expenses.......... $3,962 $ 4,357
Other.............................................. (180) 356
Impairment charges
Commercial......................................... -- 7,137
Resale............................................. 552 552
Other charges.......................................... 588 588
------ -------
$4,922 $12,990
====== =======

In June 2005, we announced a corporate-wide initiative to reduce
selling, general and administrative expenses by $20 million. We recorded
employee separation and related expenses of $4.0 million in the second
quarter as a result of the elimination of 114 jobs. We estimate the annual
savings from the elimination of these positions as well as other actions
taken as of June 30, 2005 will be approximately $17.1 million. There will
be additional charges of approximately $1.0 million in the third quarter to
coincide with the remaining actions to be taken to complete this
initiative which will bring the total annual savings to $20.0 million.

In the first quarter of 2005, the commercial segment began the closure
of a small printing operation in Phoenix, Arizona and the consolidation of
its production in our Los Angeles, California printing plant. We have
incurred employee separation and other related expenses of $0.3 million to
cover the separation of 45 employees and $0.3 million of other closure
costs associated with the shut-down of this plant which was completed
during the second quarter. In addition, we have completed the
consolidations of our printing operations in Seattle, Washington and San
Francisco, California during the first quarter of 2005. The cost incurred
to complete these consolidations was $0.2 million.

In July 2005, we began evaluating other opportunities to optimize
capacity and reduce operating expenses. We anticipate additional
restructuring charges during the remainder of 2005.

In the second quarter of 2005, we determined the value of certain
equipment used in the resale segment for the production of traditional
business documents to be impaired. This equipment will be taken out of
service during the second half of 2005 or the first quarter of 2006. In the
first quarter, we determined the value of the equipment at certain
operations in our commercial segment that operated at a loss throughout
2004 and continued to perform poorly in 2005 to be impaired. It became
apparent in early 2005 that the plans that had been developed to make these
operations profitable were not likely to be successful. We intend to exit
these businesses by the end of 2005 and have written down the carrying
value of equipment that will be held and used until the operations are
either sold or closed.

LOSS ON SALE OF NON-STRATEGIC BUSINESSES

In the second quarter of 2005, the resale segment sold its mailing
supplies business. In the first quarter of 2005, the commercial segment
sold its printing operations in Riviera Beach, Florida and Osage Beach,
Missouri and a jet printing operation in Canada. The net sales and the
operating income of these businesses were as follows:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- --------------------
2005 2004 2005 2004
------ ------ ------ -------

Sales.......................................... $1,709 $6,735 $7,443 $12,624
Operating income............................... (90) (142) (630) (273)

The total loss of $1.3 million recorded as a result of the
divestitures of these non-strategic businesses was primarily due to the
write-off of the goodwill allocated to these businesses as required by
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets.

INTEREST EXPENSE

Interest expense increased $1.3 million to $18.8 million in the second
quarter of 2005 from $17.5 million in the second quarter of 2004. Interest
expense in the second quarter reflects average outstanding debt of $817.7
million during the quarter and a weighted average interest rate of 8.3%
compared to average outstanding debt of $807.1 million during the second
quarter of 2004 and a weighted average interest rate of 8.06%.

Interest expense increased $1.1 million to $37.0 million during the
first six months of 2005 compared to the first six months of 2004. Interest
expense during this period reflects our average outstanding debt of $822.9
million and a weighted average interest rate of 8.25% compared to the
average outstanding debt of $812.4 million and a weighted average interest
rate of 8.19% during the first six months of 2004.

LOSS FROM THE EARLY EXTINGUISHMENT OF DEBT

In January 2004, we sold $320 million of 7 7/8% senior subordinated
notes due 2013. The proceeds from the sale of these notes were used to
redeem our 8 3/4% senior subordinated notes due 2008. The premium paid to
redeem the 8 3/4% notes and the unamortized debt issuance costs on the
8 3/4% notes, which were written off, totaled $17.7 million.

INCOME TAXES

Since our U.S. operations have incurred substantial net operating
losses over the last four years, we have recorded a valuation allowance to
offset the estimated tax benefit from the net operating losses incurred by
our U.S. operations. The tax expense reported for 2005 relates to our
Canadian operations which are expected to generate taxable income in 2005.
In addition, a valuation allowance of $3.7 million was recorded in the
first quarter of 2005 for foreign tax credits generated that are not likely
to be used.

GAIN ON DISPOSAL OF DISCONTINUED OPERATIONS

In September 2000, we sold the extrusion coating and laminating
business segment of American Business Products, Inc., a company we acquired
in February 2000. The consideration received for this business included an
unsecured note which was fully reserved at the time of the sale. This note
was redeemed by the issuer in June 2004 for $2.0 million. The proceeds, net
of tax, were recorded as a gain on disposal of discontinued operations.

NET LOSS AND NET LOSS PER SHARE

The net loss of $10.6 million, or $0.22 per share, for the second
quarter of 2005 and the net loss of $33.2 million, or $0.69 per share, for
the first six months of 2005 reflect lower division operating income,
higher restructuring and impairment charges, higher interest expense and
higher tax expense than during the comparable periods of 2004.

RELEVANT NON-GAAP MEASURE--EBITDA

We use EBITDA, a non-GAAP measure, internally to monitor our overall
performance and the performance of our segments. We define EBITDA as
earnings before interest, taxes, depreciation, amortization, impairment
charges, and losses on the sale of non-strategic businesses. Additionally,
we exclude the impacts of restructuring and related charges and the EBITDA
of divested operations. In 2004, we excluded the loss incurred on the early
extinguishment of debt. We believe EBITDA, as defined, provides useful
supplemental information for comparative purposes since it excludes the
impact of investing and financing transactions as well as the effect of
asset impairments and restructuring and related charges on our operating
results. A reconciliation of net income to EBITDA, as defined, is presented
below:

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- -----------------------
2005 2004 2005 2004
-------- ------- -------- --------

Net loss..................................... $(10,609) $(2,066) $(33,167) $(18,601)
Interest................................. 18,802 17,513 36,995 35,912
Income taxes............................. 3,374 61 11,721 (1,078)
Depreciation............................. 11,640 11,375 23,289 22,841
Amortization............................. 1,306 1,416 2,667 2,901
Retructuring, impairment and other
charges................................ 4,922 1,018 12,990 1,121
Loss on sale of non-strategic
businesses............................. 539 -- 1,260 --
Divested operations...................... 71 (86) 442 (194)
Loss from the early extinguishment of
debt................................... -- -- -- 17,748
Gain on discontinued operations.......... -- (1,230) -- (1,230)
-------- ------- -------- --------
EBITDA, as defined........................... $ 30,045 $28,001 $ 56,197 $ 59,420
======== ======= ======== ========
EBITDA, as defined, by segment:
Commercial............................... $ 21,436 $21,419 $ 43,513 $ 43,545
Resale................................... 13,496 14,409 24,618 28,303
Corporate................................ (4,887) (7,827) (11,934) (12,428)
-------- ------- -------- --------
$ 30,045 $28,001 $ 56,197 $ 59,420
======== ======= ======== ========

SEGMENT OPERATIONS

Our chief executive officer monitors the performance of the ongoing
operations of each of our business segments. The summaries of sales and
operating income of our two segments have been presented to show each
segment without the sales of divested operations ("Division net sales") and
to show the operating income of each segment without the operating income
of divested operations, restructuring and impairment charges and the losses
incurred on divestitures ("Division operating income"). Net sales and
operating income of the operations divested, restructuring and impairment
charges and the losses incurred on divestitures have been included in the
tables that follow to reconcile segment sales and segment operating income
reported in Note 12 to our condensed consolidated financial statements to
division net sales and division operating income on which our segments are
evaluated.

COMMERCIAL

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
(IN THOUSANDS) 2005 2004 2005 2004
-------------- -------- -------- -------- --------

Segment sales............................... $320,195 $307,583 $666,603 $631,432
Divested operations..................... -- (3,294) (3,285) (6,938)
-------- -------- -------- --------
Division net sales.......................... $320,195 $304,289 $663,318 $624,494
======== ======== ======== ========

Segment operating income.................... $ 7,918 $ 9,920 $ 10,181 $ 21,914
Restructuring and impairment charges.... 2,422 1,018 10,505 1,121
Loss on sale of non-strategic
businesses............................ 313 -- 1,034 --
Divested operations..................... -- 377 353 391
-------- -------- -------- --------
Division operating income................... $ 10,653 $ 11,315 $ 22,073 $ 23,426
======== ======== ======== ========
Division operating income margin............ 3% 4% 3% 4%

Net sales of our commercial segment increased $12.6 million, or 4%, in
the second quarter of 2005 compared to the second quarter of 2004. Division
net sales increased $15.9 million, or 5%. Net sales increased $35.2
million, or 6%, in the first six months of 2005 compared to the
corresponding period of 2004. Division net sales increased $38.8 million,
or 6%. Division net sales for the second quarter of 2005 and the first six
months of the year reflect the following:

* Sales to our strategic accounts grew 34% in the second quarter and
24% during the first half of the year.

* Sales in our local markets declined 1.3% in the second quarter and
were less than 1% lower on a year-to-date basis.

* There was a favorable foreign exchange impact on sales of $4.0
million in the second quarter of 2005 and $7.7 million for the first
six months of the year. This trend could reverse in the second half
of 2005 since the Canadian dollar has declined since the end of 2004.

Operating income of the commercial segment declined $2.0 million in the
second quarter of 2005 and $11.7 million in the first six months of 2005
when compared to the corresponding periods of 2004. These declines in
profitability were driven primarily by restructuring and asset impairment
charges and losses on the sale of non-strategic businesses. Despite the
increase in sales, division operating income declined $0.7 million in the
second quarter of 2005 and $1.4 million in the first six months of 2005.
The significant factors contributing to this performance were as follows:

* Due to contractual commitments and competitive pressures, we have not
fully recovered the higher cost of paper and other materials used to
produce our envelope products. We estimate the negative impact of the
lower margins of our envelope products to have been approximately
$2.2 million in the second quarter of 2005 which is less than the
impact of $4.1 million estimated in the first quarter.

* The results at three plants that performed poorly in 2004 improved in
the second quarter of 2005 compared to the second quarter of 2004;
however, for the first six months of 2005, the results at these
plants have been $1.4 million lower than the first six months of
2004.

* Results in 2005 include higher incentive accruals than the results
reported in 2004.

RESALE

THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
(IN THOUSANDS) 2005 2004 2005 2004
-------------- -------- -------- -------- --------

Segment sales............................... $101,541 $101,813 $204,735 $201,706
Divested operations..................... (1,709) (3,441) (4,158) (5,686)
-------- -------- -------- --------
Division net sales.......................... $ 99,832 $ 98,372 $200,577 $196,020
======== ======== ======== ========

Segment operating income.................... $ 9,321 $ 12,359 $ 18,059 $ 23,822
Restructuring and impairment charges.... 1,676 -- 1,661 --
Loss on sale of non-strategic
business.............................. 226 -- 226 --
Divested operations..................... 90 (235) 277 (118)
-------- -------- -------- --------
Division operating income................... $ 11,313 $ 12,124 $ 20,223 $ 23,704
======== ======== ======== ========
Division operating income margin............ 11% 12% 10% 12%

Net sales of our resale segment were slightly lower in the second
quarter of 2005 than the second quarter of 2004 due primarily to lower
sales of the mailing supplies business that was sold during the quarter.
Division net sales increased $1.5 million. For the first six months of
2005, net sales increased $3.0 million compared to 2004, while division net
sales increased $4.6 million. Division net sales for the second quarter of
2005 and the first six months of the year reflect the following:

* Sales of office products to our retail, wholesale and trade customers
grew 17% in the second quarter of 2005 and 20% in the first six
months of 2005. Lower net pricing, however, reduced our overall
revenue growth in these markets to $3.0 million in the second quarter
and $6.7 million in the first six months of 2005.

* Sales of labels, documents and envelopes to our distribution
customers declined $1.7 million in the second quarter of 2005 and
$2.3 million for the first six months of 2005. These declines were
primarily due to lower sales of traditional business documents,
specifically continuous forms, and lower prices for our specialty
forms.

The operating income of the resale segment declined $3.0 million, or
25%, in the second quarter of 2005. Division operating income declined $0.8
million, or 7%. For the first six months of 2005 operating income declined
$5.8 million, or 24%, while division operating income declined $3.5
million, or 15%. The declines in division operating income were primarily
due to lower net selling prices for office products and higher distribution
expenses in the retail and wholesale market segment. Higher incentive
accruals in 2005 also contributed to lower operating income in 2005.
Operating income of our operations selling labels, documents and envelopes
through distributors has improved in 2005 despite lower sales. This
improvement was achieved by controlling manufacturing costs and reducing
selling, general and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

Our cash flows from operating, investing and financing activities, as
reflected in the consolidated statements of cash flows, are summarized as
follows:

SIX MONTHS ENDED
JUNE 30,
-----------------------
(IN THOUSANDS) 2005 2004
-------------- -------- --------

Cash provided by (used for):
Operating activities.................................... $ (9,572) $ (4,723)
Investing activities.................................... (12,205) (10,114)
Financing activities.................................... 22,888 15,107
Effect of exchange rate changes on cash................. (63) (412)
-------- --------
Net increase (decrease) in cash and cash equivalents........ $ 1,048 $ (142)
======== ========

OPERATING ACTIVITIES. During the first six months of 2005, our
operations used $6.3 million more cash than in the first six months of
2004. This increased use of cash was primarily due to payments made to
customers for rebates earned in 2004, a payment made related to a long-term
customer contract and deferred compensation payments.

INVESTING ACTIVITIES. Capital expenditures were $12.7 million in the
first six months of 2005 compared to $12.5 million in the first six months
of 2004. Proceeds from divestitures were $4.2 million in 2005 compared to
$2.0 million in 2004. Acquisition spending in 2005 included a $1.4 million
payment on an acquisition completed in 2004 and $2.5 million paid to
acquire a small operation that has been consolidated with our printing
operation in Philadelphia, Pennsylvania.

FINANCING ACTIVITIES. Our outstanding debt was $783.6 million at June
30, 2005, an increase of $13.8 million from December 31, 2004. Proceeds
received from the exercise of stock options during the six months ended
June 30, 2005 totaled $9.1 million.

On June 30, 2005, we had outstanding letters of credit of approximately
$25.2 million related to performance and payment guarantees. In addition,
we have issued letters of credit of $1.0 million as credit enhancements in
conjunction with other debt. Based on our experience with these
arrangements, we do not believe that any obligations that may arise will be
significant.

Our current credit ratings are as follows:

SENIOR SENIOR
SECURED CREDIT SENIOR SUBORDINATED
REVIEW AGENCY FACILITY NOTES NOTES LAST UPDATE
----------------------------------- -------------- ------ ------------ -------------

Standard & Poor's.................. BB- B+ B December 2004
Moody's............................ Ba3 B1 B3 April 2004

The terms of our existing debt do not have any rating triggers, and we
do not believe that our current ratings will impact our ability to raise
additional capital.

We expect internally generated cash flow and the financing available
under our senior secured credit facility will be sufficient to fund our
working capital needs and long-term growth; however, this cannot be
assured. Based on the certificate filed July 22, 2005, we had $97.3 million
of unused credit available under our senior secured credit facility.

CRITICAL ACCOUNTING ESTIMATES

In preparing the consolidated condensed financial statements, we make
estimates based on assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. We evaluate these estimates on
an ongoing basis. We base our

estimates on historical experience and various other assumptions that are
considered reasonable in view of relevant facts and circumstances. Because
these accounting estimates and assumptions inherently involve significant
judgments and the most uncertainty, the nature of these accounting
estimates and assumptions are important to an understanding of our
financial statements. Because future events rarely develop exactly as
anticipated, even the best estimates routinely require adjustment.

There were no significant changes in the application of the critical
accounting policies and estimates in preparing our consolidated condensed
financial statements for the second quarter of 2005 from those disclosed in
our Annual Report on Form 10-K for the year ended December 31, 2004. The
critical accounting policies and estimates disclosed in the Management's
Discussion and Analysis of Financial Condition and Results of Operations
were allowances for losses on accounts receivable, impairment of long-lived
assets, goodwill, self-insurance and accounting for income taxes.

NEW ACCOUNTING STANDARDS

SEASONALITY AND ENVIRONMENT

Our commercial segment experiences seasonal variations. Revenues from
annual reports are generally concentrated from February through April.
Revenues associated with holiday catalogs and automobile brochures tend to
be concentrated from July through October. As a result of these seasonal
variations, some of our commercial printing operations are at or near
capacity at certain times during these periods.

In addition, several envelope market segments and certain segments of
the direct mail market experience seasonality, with a higher percentage of
the volume of products sold to these markets occurring during the fourth
quarter of the year. This seasonality is due to the increase in sales to
the direct mail market due to holiday purchases.

The mailer operations of our resale segment are at or near capacity at
times during the fourth quarter.

Seasonality is offset by the diversity of our other products and
markets, which are not materially affected by seasonal conditions.

Environmental matters have not had a material financial impact on our
historical operations and are not expected to have a material impact in the
future.

AVAILABLE INFORMATION

Our Internet address is: www.cenveo.com. We make available free of
charge through our website our Annual Report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 as soon as reasonably practicable after such documents are
filed electronically with the Securities and Exchange Commission. In
addition, our earnings conference calls are archived for replay on our
website and presentations to securities analysts are also included on our
website.

LEGAL PROCEEDINGS

From time to time we may be involved in claims or lawsuits that arise
in the ordinary course of business. Accruals for claims or lawsuits have
been provided for to the extent that losses are deemed probable and can be
estimated. Although the ultimate outcome of these claims or lawsuits cannot
be ascertained, on the basis of present information and advice received
from counsel, it is our opinion that the disposition or ultimate
determination of such claims or lawsuits will not have a material adverse
effect on us.

CAUTIONARY STATEMENTS

Certain statements in this report, and in particular, statements found
in Management's Discussion and Analysis of Financial Condition and Results
of Operations, constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. We believe these
forward-looking statements are based upon reasonable assumptions within the
bounds of our knowledge of Cenveo. All such statements involve risks and
uncertainties, and as a result, actual results could differ materially from
those projected, anticipated or implied by these statements. Such
forward-looking statements involve known and unknown risks, including but
not limited to, general economic, business and labor conditions; the
ability to be profitable on a consistent basis; the impact of a new CEO and
changes in management and strategic direction that may be made; the impact
of a special shareholders' meeting to be held September 14, 2005 called by
a dissident shareholder group to replace the current board of directors and
the potential triggering of certain change of control provisions under our
debt instruments as a result thereof; the ability to effectively execute
cost reduction programs and management reorganizations; dependence on sales
that are not subject to long-term contracts; dependence on suppliers; the
ability to recover the rising cost of key raw materials in markets that are
highly price competitive; the ability to meet customer demand for
additional value-added products and services; fluctuations in currency
exchange rates, particularly with respect to the Canadian dollar; the
ability to timely or adequately respond to technological changes in the
industry; the impact of the Internet and other electronic media on the
demand for envelopes and printed material; postage rates; the ability to
manage operating expenses; the ability to manage financing costs and
interest rate risk; a decline in business volume and profitability that
could result in a further impairment of goodwill; the ability to retain key
management personnel; the ability to identify, manage or integrate future
acquisitions; the costs associated with and the outcome of outstanding and
future litigation; and changes in government regulations.

In view of such uncertainties, investors should not place undue
reliance on our forward-looking statements since such statements speak only
as of the date when made. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks such as changes in interest and foreign
currency exchange rates, which may adversely affect results of our
operations and our financial position. Risks from interest and foreign
currency exchange rate fluctuations are managed through normal operating
and financing activities. We do not utilize derivatives for speculative
purposes, nor have we hedged interest rate

exposure through the use of swaps and options or foreign exchange exposure
through the use of forward contracts.

Exposure to market risk from changes in interest rates relates
primarily to our variable rate debt obligations. The interest on this debt
is the London Interbank Offered Rate ("LIBOR") plus a margin. At June 30,
2005, we had variable rate debt outstanding of $107.4 million. A 1%
increase in LIBOR on the maximum amount of debt subject to variable
interest rates, which was $314.2 million, would increase our annual
interest expense by $3.1 million.

We have operations in Canada, and thus are exposed to market risk for
changes in foreign currency exchange rates of the Canadian dollar. In the
three and six months ended June 30, 2005, a uniform 10% strengthening of
the U.S. dollar relative to the Canadian dollar would have resulted in a
decrease in sales of approximately $4.7 million and $10.0 million,
respectively, and a decrease in net income of approximately $0.5 and $1.1
million, respectively. The effects of foreign currency exchange rates on
future results would also be impacted by changes in sales levels or local
currency prices.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. The Company's
management, including the Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures (as defined in Rule 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) as of the end of the period covered by this report. Based
upon that evaluation, the Company's management, including the Chief
Executive Officer and Chief Financial Officer, concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
any material information relating to the Company and its subsidiaries
required to be included in the Company's Exchange Act filings.

CHANGES IN INTERNAL CONTROLS. There were no changes made in the
Company's internal controls over financial reporting that occurred during
the Company's most recent fiscal quarter that have materially affected, or
are reasonably likely to materially affect, the Company's internal controls
over financial reporting.

PART II

ITEM 2. ISSUER PURCHASES OF EQUITY SECURITIES

(d) MAXIMUM NUMBER
(OR APPROXIMATE
(a) TOTAL (b) (c) TOTAL NUMBER OF DOLLAR VALUE) OF
NUMBER OF AVERAGE PRICE SHARES (OR UNITS) SHARES (OR UNITS) THAT
SHARES (OR PAID PER PURCHASED AS PART OF MAY YET BE PURCHASED
UNITS) SHARE (OR PUBLICLY ANNOUNCED UNDER THE PLANS OR
PERIOD PURCHASED* UNIT) PLANS OR PROGRAMS PROGRAMS
------ ---------- ------------- -------------------- ----------------------

05/01/05 - 05/31/05 24,733 $7.56/share
06/01/2005 - 06/30/2005
07/01/2005 - 07/31/2005
------ -----------
TOTAL 24,733 $7.56/SHARE
====== ===========

--------
* All 24,733 shares were forfeited to the Company by certain executives in respect
of certain withholding tax payments, made by the Company on the executives' behalf,
that became due upon the vesting of certain restricted shares.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On April 27, 2005, the Company held its Annual Meeting of Shareholders,
at which the following matters were voted upon:

ELECTION OF DIRECTORS--The following individuals were elected or
re-elected to the Board of Directors by the following vote:

NAME FOR WITHHELD
------------------- ---------- ----------

Thomas E. Costello 29,956,635 13,511,401
Paul F. Kocourek 29,316,738 14,151,298
Martin J. Maloney 29,284,858 14,183,178
David M. Olivier 29,835,556 13,632,480
Jerome W. Pickholz 29,253,442 14,214,594
Alister W. Reynolds 29,881,248 13,586,788
Susan O. Rheney 29,259,566 14,208,470
Wellington E. Webb 28,871,777 14,596,259

SELECTION OF AUDITORS--The selection by the Audit Committee of Ernst &
Young LLP as independent auditors of the Company for the fiscal year ending
December 31, 2005 was ratified by the following vote: 41,951,917 For,
1,071,388 Against, 444,730 Abstentions.

ITEM 6. EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
------- -----------

3.1 Articles of Incorporation of the Company--incorporated by reference
from Exhibit 3(i) of the Company's Form 10-Q for the quarter ended
June 30, 1997.

3.2 Articles of Amendment to the Articles of Incorporation of the Company
dated May 17, 2004--incorporated by reference to Exhibit 3.2 to
Cenveo Inc.'s quarterly report on Form 10-Q for the quarter ended
June 30, 2004.

3.3 Bylaws of the Company as amended and restated effective April 17,
2005--incorporated by reference to Exhibit 3.2 of the Company's
Form 8-K filed April 18, 2005.

3.4 Certificate of Amendment of Certificate of Incorporation of
Cenveo Corporation (formerly known as Mail-Well I
Corporation) dated May 14, 2004--incorporated by reference to

EXHIBIT
NUMBER DESCRIPTION
------- -----------

Exhibit 3.4 to Cenveo Inc.'s quarterly report on Form
10-Q for the quarter ended June 30, 2004.

3.5 Amendment to Articles of Incorporation and Certificate of
Designations of Series A Junior Participating Preferred
Stock of Cenveo, Inc. dated April 20, 2005--incorporated by
reference to Exhibit 3.1 of the Company's Form 8-K filed
April 21, 2005.

4.1 Indenture dated as of March 13, 2002 between Mail-Well I
Corporation and State Street Bank and Trust Company, as
Trustee relating to Mail-Well I Corporation's $350,000,000
aggregate principal amount of 9 5/8% Senior Notes due
2012--incorporated by reference to Exhibit 10.30 to
Mail-Well, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2002.

4.2 Form of Senior Note and Guarantee relating to Mail-Well I
Corporation's $350,000,000 aggregate principal amount 9 5/8%
due 2012--incorporated by reference to Exhibit 10.31 to
Mail-Well, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2002.

4.3 Indenture dated as of February 4, 2004 between Mail-Well I
Corporation and U.S. Bank National Association, as Trustee,
and Form of Senior Subordinated Note and Guarantee relating
to Mail-Well I Corporation's $320,000,000 aggregate
principal amount of 7 7/8 Senior Subordinated Notes due
2013--incorporated by reference to Exhibit 4.5 to Mail-Well,
Inc.'s Annual Form 10-K filed February 27, 2004.

4.4 Rights Agreement dated April 20, 2005 between Cenveo, Inc.
and Computershare Trust Company, Inc.--incorporated by
reference to Exhibit 4.1 of the Company's Form 8-K filed
April 21, 2005.

10.1 Form of Indemnity Agreement between Mail-Well, Inc. and each
of its officers and directors--incorporated by reference
from Exhibit 10.17 of Mail-Well, Inc.'s Registration
Statement on Form S-1 dated March 25, 1994.

10.2 Form of Indemnity Agreement between Mail-Well I Corporation
and each of its officers and directors--incorporated by
reference from Exhibit 10.18 of Mail-Well, Inc.'s
Registration Statement on Form S-1 dated March 25, 1994.

10.3 Form of M-W Corp. Employee Stock Ownership Plan effective as
of February 23, 1994 and related Employee Stock Ownership
Plan Trust Agreement--incorporated by reference from Exhibit
10.19 of Mail-Well, Inc.'s Registration Statement on Form
S-1 dated March 25, 1994.

10.4 Form of M-W Corp. 401(k) Savings Retirement
Plan--incorporated by reference from Exhibit 10.20 of
Mail-Well, Inc.'s Registration Statement on Form S-1 dated
March 25, 1994.

10.5 Form of Mail-Well, Inc. Incentive Stock Option
Agreement--incorporated by reference from Exhibit 10.22 of
Mail-Well, Inc.'s Registration Statement on Form S-1 dated
March 25, 1994.

10.6 Form of Mail-Well, Inc. Nonqualified Stock Option
Agreement--incorporated by reference from Exhibit 10.23 of
Mail-Well, Inc.'s Registration Statement on Form S-1 dated
March 25, 1994.

10.7 1997 Non-Qualified Stock Option Agreement--incorporated by
reference from Exhibit 10.54 of Mail-Well, Inc.'s Form 10-Q
for the quarter ended March 31, 1997.

10.8 Mail-Well, Inc. 1998 Incentive Stock Option Plan Incentive
Stock Option Agreement--incorporated by reference from
Exhibit 10.59 to the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1998.

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.9 Mail-Well, Inc. 2001 Long-Term Equity Incentive
Plan--incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2001.

10.10 Form of Non-Qualified Stock Option Agreement under 2001
Long-Term Equity Incentive Plan--incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.

10.11 Form of Incentive Stock Option Agreement under 2001
Long-Term Equity Incentive Plan--incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.

10.12 Form of Restricted Stock Award Agreement under 2001
Long-Term Equity Incentive Plan--incorporated by reference
from the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.

10.13 Second Amended and Restated Equipment Lease dated as of
August 6, 2002 between Wells Fargo Bank Northwest, National
Association, as trustee under MW 1997-1 Trust, and Mail-
Well I Corporation--incorporated by reference to Exhibit
10.26 of Mail-Well, Inc.'s Form 10-Q for the quarter ended
September 30, 2002.

10.14 Second Amended and Restated Guaranty Agreement dated as of
August 6, 2002, among Mail-Well I Corporation as Lessee,
certain of its subsidiaries and Mail-Well, Inc. as
Guarantors, Fleet Capital Corporation as Agent, and the
Trust Certificate Purchasers named therein--incorporated by
reference to Exhibit 10.27 of Mail-Well, Inc.'s Form 10-Q
for the quarter ended September 30, 2002.

10.15 Second Amended and Restated Participation Agreement dated as
of August 6, 2002, among Mail-Well I Corporation as Lessee,
Fleet Capital Corporation as Arranger and Agent, and the
Trust Certificate Purchasers named therein--incorporated by
reference to Exhibit 10.28 of Mail-Well, Inc.'s Form 10-Q
for the quarter ended September 30, 2002.

10.16 Amendment Agreement No. 1 dated as of September 25, 2002,
among Mail-Well I Corporation as Lessee, certain of its
subsidiaries and Mail-Well, Inc. as Guarantors, Fleet
Capital Corporation as Agent, and the Trust Certificate
Purchasers named therein--incorporated by reference to
Exhibit 10.29 of Mail-Well, Inc.'s Form 10-Q for the quarter
ended September 30, 2002.

10.17 Employment and Executive Severance Agreement dated as of
March 10, 2003, between the Company and Paul V.
Reilly--incorporated by reference to Exhibit 10.26 of the
Company's Annual Form 10-K filed March 31, 2003.

10.18 Form of Executive Severance Agreement entered into between
the Company and each of the following: Michel Salbaing,
Gordon Griffiths, Brian Hairston, Keith Pratt, William
Huffman, D. Robert Meyer and Mark Zoeller--incorporated by
reference to Exhibit 10.27 of the Company's Annual Form 10-K
filed March 31, 2003.

10.19 Amendment Agreement No. 2 dated as of March 25, 2004 among
Mail-Well I Corporation as Lessee, certain of its
subsidiaries and Mail-Well, Inc. as Guarantor, Fleet Capital
Corporation as Agent, and the Trust Purchasers named
therein--incorporated by reference to Exhibit 10.21 of the
Company's Form 10-Q for quarter ended March 31, 2004.

10.20 Second Amended and Restated Credit Agreement dated March 25,
2004 among Mail-Well, Inc., Mail-Well I Corporation, certain
subsidiaries of Mail-Well I, the lenders under the Second
Amended and Restated Credit Agreement, and Bank of America,
N.A., as administrative agent for the lenders--incorporated
by reference to Exhibit 10.22 of the Company's Form 10-Q for
quarter ended March 31, 2004.

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.21 Second Amended and Restated Security Agreement dated March
25, 2004 among Mail-Well, Inc., Mail-Well I Corporation,
certain subsidiaries of Mail-Well I, the lenders under the
Second Amended and Restated Credit Agreement, and Bank of
America, N.A., as administrative agent for the
lenders--incorporated by reference to Exhibit 10.23 of the
Company's Form 10-Q for quarter ended March 31, 2004.

10.22 Cenveo, Inc. 2001 Long-Term Equity Incentive Plan, as
amended--incorporated by reference to Exhibit 10.24 to
Cenveo Inc.'s quarterly report on Form 10-Q for the quarter
ended June 30, 2004.

10.23 Amendment No. 1 to Second Amended and Restated Credit
Agreement dated February 8, 2005 among Cenveo, Inc., Cenveo
Corporation, certain subsidiaries of Cenveo Corporation, the
lenders under the Second Amended and Restated Credit
Agreement, and Bank of America, N.A., as administrative
agent for the lenders--incorporated by reference to Exhibit
10.23 of the Company's Annual Form 10-K filed February 28,
2005.

10.24 Employment Agreement dated as of June 22, 2005 between the
Company and James R. Malone--incorporated by reference to
Exhibit 99.1 of the Company's Form 8-K filed June 24, 2005.

31.1* Certification of Periodic Report by James R. Malone,
President and Chief Executive Officer, pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of Periodic Report by Michel P. Salbaing,
Senior Vice President--Finance and Chief Financial Officer,
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1** Certification of Periodic Report by James R. Malone,
President and Chief Executive Officer, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.

32.2** Certification of Periodic Report by Michel P. Salbaing,
Senior Vice President--Finance and Chief Financial Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

--------
* Filed herewith.
** Furnished herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
city of Englewood, state of Colorado, on August 1, 2005.

CENVEO, INC.

By: /s/ JAMES R. MALONE
-----------------------------------
James R. Malone, President
and Chief Executive Officer
(Principal Executive Officer)

By: /s/ MICHEL P. SALBAING
-----------------------------------
Michel P. Salbaing
Senior Vice President--
Finance and Chief Financial Officer
(Principal Financial Officer)