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.)




COLORADO
            84-1250533(State
      or other jurisdiction of
              incorporation
      or organization)
            (I.R.S.
      Employer Identification No.)ONE
      CANTERBURY GREEN
              201
      BROAD STREETSTAMFORD,
      CT
            06901(Address
      of principal executive offices)
            (Zip
      Code)203-595-3000(Registrant’s
      telephone number, including area
code)










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 oSmaller 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




Item
      1.   Financial
Statements




CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED BALANCE SHEETS


(in
thousands)






June
      27, 2009
                          
                          
                          January
      3, 2009Assets
                          
                          (unaudited)Current
      assets:Cash
      and cash equivalents
                          
                          $
                          8,365
                          
                          
                          $
                          10,444Accounts
      receivable, net
                          
                          
                          230,999
                          
                          
                          
                          270,145Inventories
                          
                          
                          140,341
                          
                          
                          
                          159,569Prepaid
      and other current assets
                          
                          
                          76,351
                          
                          
                          
                          74,890Total
      current assets
                          
                          
                          456,056
                          
                          
                          
                          515,048Property,
      plant and equipment, net
                          
                          
                          394,316
                          
                          
                          
                          420,457Goodwill
                          
                          
                          311,183
                          
                          
                          
                          311,183Other
      intangible assets, net
                          
                          
                          271,553
                          
                          
                          
                          276,944Other
      assets, net
                          
                          
                          26,801
                          
                          
                          
                          28,482Total
      assets
                          
                          $
                          1,459,909
                          
                          
                          $
                          1,552,114Liabilities
      and Shareholders’ DeficitCurrent
      liabilities:Current
      maturities of long-term debt
                          
                          $
                          16,808
                          
                          
                          $
                          24,314Accounts
      payable
                          
                          
                          146,328
                          
                          
                          
                          174,435Accrued
      compensation and related liabilities
                          
                          
                          25,389
                          
                          
                          
                          37,319Other
      current liabilities
                          
                          
                          81,364
                          
                          
                          
                          88,870Total
      current liabilities
                          
                          
                          269,889
                          
                          
                          
                          324,938Long-term
      debt
                          
                          
                          1,257,880
                          
                          
                          
                          1,282,041Deferred
      income taxes
                          
                          
                          18,989
                          
                          
                          
                          26,772Other
      liabilities
                          
                          
                          144,583
                          
                          
                          
                          139,318Commitments
      and contingenciesShareholders’
      deficit:Preferred
      stock
                          
                          
                          —
                          
                          
                          
                          —Common
      stock
                          
                          
                          546
                          
                          
                          
                          542Paid-in
      capital
                          
                          
                          278,199
                          
                          
                          
                          271,821Retained
      deficit
                          
                          
                          (469,529
                          )
                          
                          
                          (446,966
                          )Accumulated
      other comprehensive loss
                          
                          
                          (40,648
                          )
                          
                          
                          (46,352
                          )Total
      shareholders’ deficit
                          
                          
                          (231,432
                          )
                          
                          
                          (220,955
                          )Total
      liabilities and shareholders’ deficit
                          
                          $
                          1,459,909
                          
                          
                          $
                          1,552,114




See notes
to condensed consolidated financial statements.


2




CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS


(in
thousands, except per share data)


(unaudited)




Three
      Months Ended
              
              
              Six
      Months EndedJune
      27, 2009
              
              
              June
      28, 2008
              
              
              June
      27, 2009
              
              
              June
      28, 2008Net
      sales
              
              $
              397,644
              
              
              $
              524,501
              
              
              $
              809,744
              
              
              $
              1,058,829Cost
      of sales
              
              
              320,365
              
              
              
              417,406
              
              
              
              668,681
              
              
              
              853,704Selling,
      general and administrative expenses
              
              
              48,370
              
              
              
              63,240
              
              
              
              100,885
              
              
              
              126,366Amortization
      of intangible assets
              
              
              2,355
              
              
              
              2,279
              
              
              
              4,671
              
              
              
              4,454Restructuring,
      impairment and other charges
              
              
              32,031
              
              
              
              5,425
              
              
              
              40,763
              
              
              
              15,174Operating
      income (loss)
              
              
              (5,477
              )
              
              
              36,151
              
              
              
              (5,256
              )
              
              
              59,131Interest
      expense, net
              
              
              27,807
              
              
              
              26,175
              
              
              
              50,352
              
              
              
              53,153(Gain)
      loss on early extinguishment of debt
              
              
              725
              
              
              
              4,242
              
              
              
              (16,917
              )
              
              
              4,242Other
      (income) expense, net
              
              
              (2,621
              )
              
              
              663
              
              
              
              (2,586
              )
              
              
              1,124Income
      (loss) from continuing operations before income taxes
              
              
              (31,388
              )
              
              
              5,071
              
              
              
              (36,105
              )
              
              
              612Income
      tax (benefit) expense
              
              
              (13,547
              )
              
              
              2,005
              
              
              
              (14,077
              )
              
              
              289Income
      (loss) from continuing operations
              
              
              (17,841
              )
              
              
              3,066
              
              
              
              (22,028
              )
              
              
              323Loss
      from discontinued operations, net of taxes
              
              
              (411
              )
              
              
              (399
              )
              
              
              (535
              )
              
              
              (1,055
              )Net
      income (loss)
              
              $
              (18,252
              )
              
              $
              2,667
              
              
              $
              (22,563
              )
              
              $
              (732
              )Income
      (loss) per share – basic and diluted:Continuing
      operations
              
              $
              (0.33
              )
              
              $
              0.06
              
              
              $
              (0.40
              )
              
              $
              0.01Discontinued
      operations
              
              
              (0.01
              )
              
              
              (0.01
              )
              
              
              (0.01
              )
              
              
              (0.02
              )Net
      income (loss)
              
              $
              (0.34
              )
              
              $
              0.05
              
              
              $
              (0.41
              )
              
              $
              (0.01
              )Weighted
      average shares outstanding:Basic
              
              
              54,551
              
              
              
              53,776
              
              
              
              54,456
              
              
              
              53,745Diluted
              
              
              54,551
              
              
              
              54,216
              
              
              
              54,456
              
              
              
              54,219






See notes
to condensed consolidated financial statements.




3




CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(in
thousands)


(unaudited)




Six
      Months EndedJune
      27, 2009
                    
                    
                    June
      28, 2008Cash
      flows from operating activities:Net
      income (loss)
                    
                    $
                    (22,563
                    )
                    
                    $
                    (732
                    )Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Loss
      from discontinued operations, net of taxes
                    
                    
                    535
                    
                    
                    
                    1,055Depreciation
      and amortization, excluding non-cash interest expense
                    
                    
                    33,627
                    
                    
                    
                    36,501Non-cash
      interest expense, net
                    
                    
                    1,064
                    
                    
                    
                    775(Gain)
      loss on early extinguishment of debt
                    
                    
                    (16,917
                    )
                    
                    
                    4,242Stock-based
      compensation provision
                    
                    
                    6,856
                    
                    
                    
                    6,961Non-cash
      restructuring, impairment and other charges
                    
                    
                    24,489
                    
                    
                    
                    2,952Deferred
      income taxes
                    
                    
                    (16,316
                    )
                    
                    
                    (990
                    )Gain
      on sale of assets
                    
                    
                    (3,907
                    )
                    
                    
                    (2,420
                    )Other
      non-cash charges, net
                    
                    
                    3,518
                    
                    
                    
                    5,575Changes
      in operating assets and liabilities, excluding the effects of acquired
      businesses:Accounts
      receivable
                    
                    
                    38,086
                    
                    
                    
                    60,965Inventories
                    
                    
                    17,509
                    
                    
                    
                    (1,487
                    )Accounts
      payable and accrued compensation and related liabilities
                    
                    
                    (39,267
                    )
                    
                    
                    10,774Other
      working capital changes
                    
                    
                    (4,797
                    )
                    
                    
                    7,891Other,
      net
                    
                    
                    120
                    
                    
                    
                    (5,679
                    )Net
      cash provided by operating activities
                    
                    
                    22,037
                    
                    
                    
                    126,383Cash
      flows from investing activities:Capital
      expenditures
                    
                    
                    (16,075
                    )
                    
                    
                    (25,387
                    )Proceeds
      from sale of property, plant and equipment
                    
                    
                    5,159
                    
                    
                    
                    12,014Proceeds
      from sale of investment
                    
                    
                    4,032
                    
                    
                    
                    —Cost
      of business acquisitions, net of cash acquired
                    
                    
                    —
                    
                    
                    
                    (38,453
                    )Acquisition
      payments
                    
                    
                    —
                    
                    
                    
                    (3,653
                    )Net
      cash used in investing activities
                    
                    
                    (6,884
                    )
                    
                    
                    (55,479
                    )Cash
      flows from financing activities:Repayment
      of 83⁄8% senior
      subordinated notes
                    
                    
                    (23,024
                    )
                    
                    
                    —Repayment
      of term loans
                    
                    
                    (21,083
                    )
                    
                    
                    (3,600
                    )Payment
      of amendment and debt issuance costs
                    
                    
                    (7,296
                    )
                    
                    
                    (5,297
                    )Repayments
      of other long-term debt
                    
                    
                    (4,870
                    )
                    
                    
                    (11,624
                    )Repayment
      of 77⁄8% senior subordinated notes
                    
                    
                    (4,295
                    )
                    
                    
                    —Repayment
      of 101⁄2% senior notes
                    
                    
                    (3,250
                    )
                    
                    
                    —Purchase
      and retirement of common stock upon vesting  of
    RSUs
                    
                    
                    (478
                    )
                    
                    
                    —Payment
      of refinancing fees, redemption premiums and expenses
                    
                    
                    (94
                    )
                    
                    
                    —Borrowings
      (repayments) under revolving credit facility, net
                    
                    
                    47,200
                    
                    
                    
                    (64,200
                    )Repayment
      of senior unsecured loan
                    
                    
                    —
                    
                    
                    
                    (175,000
                    )Proceeds
      from issuance of 101⁄2% senior
      notes
                    
                    
                    —
                    
                    
                    
                    175,000Proceeds
      from issuance of other long-term debt
                    
                    
                    —
                    
                    
                    
                    9,311Proceeds
      from exercise of stock options
                    
                    
                    —
                    
                    
                    
                    1,154Net
      cash used in financing activities
                    
                    
                    (17,190
                    )
                    
                    
                    (74,256
                    )Effect
      of exchange rate changes on cash and cash equivalents
                    
                    
                    (42
                    )
                    
                    
                    9Net
      decrease in cash and cash equivalents
                    
                    
                    (2,079
                    )
                    
                    
                    (3,343
                    )Cash
      and cash equivalents at beginning of period
                    
                    
                    10,444
                    
                    
                    
                    15,882Cash
      and cash equivalents at end of period
                    
                    $
                    8,365
                    
                    
                    $
                    12,539




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.





3. Acquisitions




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):




Lease
                        Termination
                        CostsLiabilities
      recorded at January 3, 2009
                      
                      $
                      2,264Payments
                      
                      
                      (391
                      )Balance
      at June 27, 2009
                      
                      $
                      1,873




4.
Inventories




Inventories
by major category were as follows (in thousands):




June
      27,
                        2009
                      
                      
                      January
      3,
                        2009Raw
      materials
                      
                      $
                      55,526
                      
                      
                      $
                      67,236Work
      in process
                      
                      
                      25,504
                      
                      
                      
                      27,011Finished
      goods
                      
                      
                      59,311
                      
                      
                      
                      65,322$
                      140,341
                      
                      
                      $
                      159,569


7




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




5. Property, Plant and
Equipment




Property,
      plant and equipment were as follows (in
  thousands):




June
      27,
                    2009
                  
                  
                  January
      3,
                    2009Land
      and land improvements
                  
                  $
                  19,766
                  
                  
                  $
                  21,421Building
      and building improvements
                  
                  
                  104,588
                  
                  
                  
                  111,208Machinery
      and equipment
                  
                  
                  618,493
                  
                  
                  
                  622,929Furniture
      and fixtures
                  
                  
                  12,842
                  
                  
                  
                  12,589Construction
      in progress
                  
                  
                  18,346
                  
                  
                  
                  14,558774,035
                  
                  
                  
                  782,705Accumulated
      depreciation
                  
                  
                  (379,719
                  )
                  
                  
                  (362,248
                  )$
                  394,316
                  
                  
                  $
                  420,457





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):





June
      27, 2009
                            
                            
                            January
      3, 2009Weighted
      Average Remaining Amortization Period (Years)
                            
                            
                            Gross
                              Carrying
                              Amount
                            
                            
                            Accumulated
                              Amortization
                            
                            
                            Net
                              Carrying
                              Amount
                            
                            
                            Gross
                              Carrying
                              Amount
                            
                            
                            Accumulated
                              Amortization
                            
                            
                            Net
                              Carrying
                              AmountIntangible
      assets with determinable lives:Customer
      relationships
                            
                            17
                            
                            
                            $
                            159,206
                            
                            
                            $
                            (33,797
                            )
                            
                            $
                            125,409
                            
                            
                            $
                            159,206
                            
                            
                            $
                            (29,875
                            )
                            
                            $
                            129,331Trademarks
      and tradenames
                            
                            24
                            
                            
                            
                            21,011
                            
                            
                            
                            (4,533
                            )
                            
                            
                            16,478
                            
                            
                            
                            21,011
                            
                            
                            
                            (4,089
                            )
                            
                            
                            16,922Patents
                            
                            5
                            
                            
                            
                            3,028
                            
                            
                            
                            (1,884
                            )
                            
                            
                            1,144
                            
                            
                            
                            3,028
                            
                            
                            
                            (1,755
                            )
                            
                            
                            1,273Non-compete
      agreements
                            
                            2
                            
                            
                            
                            2,456
                            
                            
                            
                            (1,794
                            )
                            
                            
                            662
                            
                            
                            
                            2,456
                            
                            
                            
                            (1,634
                            )
                            
                            
                            822Other
                            
                            27
                            
                            
                            
                            702
                            
                            
                            
                            (342
                            )
                            
                            
                            360
                            
                            
                            
                            768
                            
                            
                            
                            (392
                            )
                            
                            
                            376186,403
                            
                            
                            
                            (42,350
                            )
                            
                            
                            144,053
                            
                            
                            
                            186,469
                            
                            
                            
                            (37,745
                            )
                            
                            
                            148,724Intangible
      assets with indefinite lives:Trademarks
                            
                            
                            
                            
                            
                            
                            127,500
                            
                            
                            
                            —
                            
                            
                            
                            127,500
                            
                            
                            
                            127,500
                            
                            
                            
                            —
                            
                            
                            
                            127,500Pollution
      credits
                            
                            
                            
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            —
                            
                            
                            
                            720
                            
                            
                            
                            —
                            
                            
                            
                            720Total
                            
                            
                            
                            
                            
                            $
                            313,903
                            
                            
                            $
                            (42,350
                            )
                            
                            $
                            271,553
                            
                            
                            $
                            314,689
                            
                            
                            $
                            (37,745
                            )
                            
                            $
                            276,944




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):




June
      27,
                    2009
                  
                  
                  January
      3,
                    2009Term
      loans, due 2013
                  
                  $
                  686,817
                  
                  
                  $
                  707,90077⁄8%
      senior subordinated notes, due 2013
                  
                  
                  296,270
                  
                  
                  
                  303,370101⁄2%
      senior notes, due 2016
                  
                  
                  170,000
                  
                  
                  
                  175,00083⁄8%
      senior subordinated notes, due 2014 ($32.2 million and $72.3 million
      outstanding principal amount as of June 27, 2009 and January 3, 2009,
      respectively)
                  
                  
                  32,767
                  
                  
                  
                  73,581Revolving
      credit facility, due 2012
                  
                  
                  55,200
                  
                  
                  
                  8,000Other
                  
                  
                  33,634
                  
                  
                  
                  38,5041,274,688
                  
                  
                  
                  1,306,355Less
      current maturities
                  
                  
                  (16,808
                  )
                  
                  
                  (24,314
                  )Long-term
      debt
                  
                  $
                  1,257,880
                  
                  
                  $
                  1,282,041




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 83⁄8% senior subordinated notes due 2014 (the “83⁄8% Notes”),
77⁄8% senior subordinated notes due 2013 (the “77⁄8% Notes”), and 101⁄2% senior notes
due 2016 (the “101⁄2% 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 83⁄8% 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 77⁄8% Notes, 83⁄8% Notes, 101⁄2% 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 ofthe 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):




June
      27,
                                            2009
                                          
                                          
                                          
                                          January
      3,
                                            2009Current
      Liabilities:Interest
      Rate Swaps
                                          
                                          $
                                          84
                                          
                                          
                                          $
                                          4,483Long-Term
      Liabilities:Interest Rate Swaps
                                          
                                          
                                          21,643
                                          
                                          
                                          
                                          23,180Forward Starting Swaps
                                          
                                          
                                          —
                                          
                                          
                                          
                                          943


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):





Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  1,450
                  
                  
                  $
                  4,834
                  
                  
                  $
                  720
                  
                  
                  $
                  7,004Asset
      impairments, net of gain on sale
                  
                  
                  10
                  
                  
                  
                  3,941
                  
                  
                  
                  —
                  
                  
                  
                  3,951Equipment
      moving expenses
                  
                  
                  591
                  
                  
                  
                  480
                  
                  
                  
                  —
                  
                  
                  
                  1,071Lease
      termination expenses
                  
                  
                  3,986
                  
                  
                  
                  426
                  
                  
                  
                  179
                  
                  
                  
                  4,591Multi-employer
      pension withdrawal expenses
                  
                  
                  —
                  
                  
                  
                  11,303
                  
                  
                  
                  —
                  
                  
                  
                  11,303Building
      clean-up and other expenses
                  
                  
                  1,175
                  
                  
                  
                  296
                  
                  
                  
                  —
                  
                  
                  
                  1,471Total
      restructuring and impairment charges
                  
                  $
                  7,212
                  
                  
                  $
                  21,280
                  
                  
                  $
                  899
                  
                  
                  $
                  29,391




Restructuring
and impairment charges for the six months ended June 27, 2009 were as follows
(in thousands):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  3,449
                  
                  
                  $
                  8,028
                  
                  
                  $
                  720
                  
                  
                  $
                  12,197Asset
      impairments, net of gain on sale
                  
                  
                  2,581
                  
                  
                  
                  4,088
                  
                  
                  
                  —
                  
                  
                  
                  6,669Equipment
      moving expenses
                  
                  
                  724
                  
                  
                  
                  498
                  
                  
                  
                  —
                  
                  
                  
                  1,222Lease
      termination expenses
                  
                  
                  3,986
                  
                  
                  
                  610
                  
                  
                  
                  179
                  
                  
                  
                  4,775Multi-employer
      pension withdrawal expenses
                  
                  
                  —
                  
                  
                  
                  11,303
                  
                  
                  
                  —
                  
                  
                  
                  11,303Building
      clean-up and other expenses
                  
                  
                  1,181
                  
                  
                  
                  483
                  
                  
                  
                  —
                  
                  
                  
                  1,664Total
      restructuring and impairment charges
                  
                  $
                  11,921
                  
                  
                  $
                  25,010
                  
                  
                  $
                  899
                  
                  
                  $
                  37,830


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):





Lease
                    Termination
                  
                  
                  Employee
                    Separation
                    Costs
                  
                  
                  Pension
                    Withdrawal
                    Liabilities
                  
                  
                  TotalBalance
      at January 3, 2009
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —
                  
                  
                  $
                  —Accruals,
      net
                  
                  
                  4,775
                  
                  
                  
                  12,197
                  
                  
                  
                  11,303
                  
                  
                  
                  28,275Payments
                  
                  
                  (191
                  )
                  
                  
                  (7,681
                  )
                  
                  
                  —
                  
                  
                  
                  (7,872
                  )Balance
      at June 27, 2009
                  
                  $
                  4,584
                  
                  
                  $
                  4,516
                  
                  
                  $
                  11,303
                  
                  
                  $
                  20,403




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):





Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  28
                  
                  
                  $
                  24
                  
                  
                  $
                  —
                  
                  
                  $
                  52Asset
      impairments, net of gain on sale
                  
                  
                  (76
                  )
                  
                  
                  (115
                  )
                  
                  
                  —
                  
                  
                  
                  (191
                  )Equipment
      moving expenses
                  
                  
                  —
                  
                  
                  
                  49
                  
                  
                  
                  —
                  
                  
                  
                  49Lease
      termination expenses
                  
                  
                  18
                  
                  
                  
                  (546
                  )
                  
                  
                  —
                  
                  
                  
                  (528
                  )Multi-employer
      pension withdrawal expenses
                  
                  
                  —
                  
                  
                  
                  2,122
                  
                  
                  
                  —
                  
                  
                  
                  2,122Building
      clean-up and other expenses
                  
                  
                  71
                  
                  
                  
                  172
                  
                  
                  
                  12
                  
                  
                  
                  255Total
      restructuring and impairment charges
                  
                  $
                  41
                  
                  
                  $
                  1,706
                  
                  
                  $
                  12
                  
                  
                  $
                  1,759




Restructuring
and impairment charges for the six months ended June 27, 2009 were as follows
(in thousands):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  89
                  
                  
                  $
                  106
                  
                  
                  $
                  29
                  
                  
                  $
                  224Asset
      impairments, net of gain on sale
                  
                  
                  (76
                  )
                  
                  
                  (98
                  )
                  
                  
                  —
                  
                  
                  
                  (174
                  )Equipment
      moving expenses
                  
                  
                  —
                  
                  
                  
                  57
                  
                  
                  
                  —
                  
                  
                  
                  57Lease
      termination expenses
                  
                  
                  31
                  
                  
                  
                  (492
                  )
                  
                  
                  3
                  
                  
                  
                  (458
                  )Multi-employer
      pension withdrawal expenses
                  
                  
                  —
                  
                  
                  
                  2,122
                  
                  
                  
                  —
                  
                  
                  
                  2,122Building
      clean-up and other expenses
                  
                  
                  80
                  
                  
                  
                  364
                  
                  
                  
                  30
                  
                  
                  
                  474Total
      restructuring and impairment charges
                  
                  $
                  124
                  
                  
                  $
                  2,059
                  
                  
                  $
                  62
                  
                  
                  $
                  2,245


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):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  130
                  
                  
                  $
                  1,935
                  
                  
                  $
                  230
                  
                  
                  $
                  2,295Asset
      impairments
                  
                  
                  360
                  
                  
                  
                  433
                  
                  
                  
                  —
                  
                  
                  
                  793Equipment
      moving expenses
                  
                  
                  24
                  
                  
                  
                  18
                  
                  
                  
                  —
                  
                  
                  
                  42Lease
      termination expenses
                  
                  
                  127
                  
                  
                  
                  816
                  
                  
                  
                  —
                  
                  
                  
                  943Building
      clean-up and other expenses
                  
                  
                  239
                  
                  
                  
                  400
                  
                  
                  
                  —
                  
                  
                  
                  639Total
      restructuring and impairment charges
                  
                  $
                  880
                  
                  
                  $
                  3,602
                  
                  
                  $
                  230
                  
                  
                  $
                  4,712




Restructuring
and impairment charges for the six months ended June 28, 2008 were as follows
(in thousands):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  943
                  
                  
                  $
                  2,665
                  
                  
                  $
                  230
                  
                  
                  $
                  3,838Asset
      impairments
                  
                  
                  512
                  
                  
                  
                  433
                  
                  
                  
                  —
                  
                  
                  
                  945Equipment
      moving expenses
                  
                  
                  72
                  
                  
                  
                  85
                  
                  
                  
                  —
                  
                  
                  
                  157Lease
      termination expenses
                  
                  
                  421
                  
                  
                  
                  816
                  
                  
                  
                  —
                  
                  
                  
                  1,237Building
      clean-up and other expenses
                  
                  
                  394
                  
                  
                  
                  628
                  
                  
                  
                  —
                  
                  
                  
                  1,022Total
      restructuring and impairment charges
                  
                  $
                  2,342
                  
                  
                  $
                  4,627
                  
                  
                  $
                  230
                  
                  
                  $
                  7,199




A summary
of the activity charged to the restructuring liabilities for the 2007 Cost
Savings and Integration Plan was as follows (in thousands):




Lease
                    Termination
                    Costs
                  
                  
                  Employee
                    Separation
                    Costs
                  
                  
                  Pension
                    Withdrawal
                    Liabilities
                  
                  
                  TotalBalance
      at January 3, 2009
                  
                  $
                  3,589
                  
                  
                  $
                  1,975
                  
                  
                  $
                  1,800
                  
                  
                  $
                  7,364Accruals,
      net
                  
                  
                  (458
                  )
                  
                  
                  224
                  
                  
                  
                  2,122
                  
                  
                  
                  1,888Payments
                  
                  
                  (1,057
                  )
                  
                  
                  (1,916
                  )
                  
                  
                  —
                  
                  
                  
                  (2,973
                  )Balance
      at June 27, 2009
                  
                  $
                  2,074
                  
                  
                  $
                  283
                  
                  
                  $
                  3,922
                  
                  
                  $
                  6,279




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):




Envelopes,
                      Forms
      and
                      Labels
                    
                    
                    Commercial
                      Printing
                    
                    
                    Corporate
                    
                    
                    TotalAsset
      impairments
                    
                    $
                    —
                    
                    
                    $
                    (10
                    )
                    
                    $
                    —
                    
                    
                    $
                    (10
                    )


Lease
      termination expenses
                        
                        
                        19
                        
                        
                        
                        334
                        
                        
                        
                        (111
                        )
                        
                        
                        242Building
      clean-up and other expenses
                        
                        
                        188
                        
                        
                        
                        461
                        
                        
                        
                        —
                        
                        
                        
                        649Total
      restructuring and impairment charges (income)
                        
                        $
                        207
                        
                        
                        $
                        785
                        
                        
                        $
                        (111
                        )
                        
                        $
                        881




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):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalAsset
      impairments
                  
                  $
                  —
                  
                  
                  $
                  (10
                  )
                  
                  $
                  —
                  
                  
                  $
                  (10
                  )Lease
      termination expenses
                  
                  
                  (22
                  )
                  
                  
                  354
                  
                  
                  
                  (44
                  )
                  
                  
                  288Building
      clean-up and other expenses
                  
                  
                  193
                  
                  
                  
                  217
                  
                  
                  
                  —
                  
                  
                  
                  410Total
      restructuring and impairment charges (income)
                  
                  $
                  171
                  
                  
                  $
                  561
                  
                  
                  $
                  (44
                  )
                  
                  $
                  688




2008
Activity




Restructuring
and impairment charges for the three months ended June 28, 2008 were as follows
(in thousands):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  14
                  
                  
                  $
                  28
                  
                  
                  $
                  (52
                  )
                  
                  $
                  (10
                  )Asset
      impairments, net of gain on sale
                  
                  
                  —
                  
                  
                  
                  224
                  
                  
                  
                  —
                  
                  
                  
                  224Equipment
      moving expenses
                  
                  
                  —
                  
                  
                  
                  140
                  
                  
                  
                  —
                  
                  
                  
                  140Lease
      termination expenses
                  
                  
                  (35
                  )
                  
                  
                  —
                  
                  
                  
                  47
                  
                  
                  
                  12Building
      clean-up and other expenses
                  
                  
                  8
                  
                  
                  
                  339
                  
                  
                  
                  —
                  
                  
                  
                  347Total
      restructuring and impairment charges
                  
                  $
                  (13
                  )
                  
                  $
                  731
                  
                  
                  $
                  (5
                  )
                  
                  $
                  713




Restructuring
and impairment charges for the six months ended June 28, 2008 were as follows
(in thousands):




Envelopes,
                    Forms
      and
                    Labels
                  
                  
                  Commercial
                    Printing
                  
                  
                  Corporate
                  
                  
                  TotalEmployee
      separation costs
                  
                  $
                  27
                  
                  
                  $
                  150
                  
                  
                  $
                  16
                  
                  
                  $
                  193Asset
      impairments, net of gain on sale
                  
                  
                  —
                  
                  
                  
                  (252
                  )
                  
                  
                  —
                  
                  
                  
                  (252
                  )Equipment
      moving expenses
                  
                  
                  —
                  
                  
                  
                  462
                  
                  
                  
                  —
                  
                  
                  
                  462Lease
      termination expenses
                  
                  
                  (3
                  )
                  
                  
                  —
                  
                  
                  
                  81
                  
                  
                  
                  78Building
      clean-up and other expenses
                  
                  
                  156
                  
                  
                  
                  700
                  
                  
                  
                  —
                  
                  
                  
                  856Total
      restructuring and impairment charges
                  
                  $
                  180
                  
                  
                  $
                  1,060
                  
                  
                  $
                  97
                  
                  
                  $
                  1,337





A summary
of the activity charged to the restructuring liabilities for the 2005 Cost
Savings and Restructuring Plan was as follows (in thousands):





Lease
                                Termination
                                Costs
                              
                              
                              Pension
                                Withdrawal
                                Liabilities
                              
                              
                              TotalBalance
      at January 3, 2009
                              
                              $
                              3,877
                              
                              
                              $
                              208
                              
                              
                              $
                              4,085Accruals,
      net
                              
                              
                              288
                              
                              
                              
                              —
                              
                              
                              
                              288Payments
                              
                              
                              (1,886
                              )
                              
                              
                              (59
                              )
                              
                              
                              (1,945
                              )Balance
      at June 27, 2009
                              
                              $
                              2,279
                              
                              
                              $
                              149
                              
                              
                              $
                              2,428




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):





Three
      Months Ended
                  
                  
                  Six
      Months EndedJune
      27, 2009
                  
                  
                  June
      28, 2008
                  
                  
                  June
      27, 2009
                  
                  
                  June
      28, 2008Service
      cost
                  
                  $
                  98
                  
                  
                  $
                  121
                  
                  
                  $
                  197
                  
                  
                  $
                  240Interest
      cost
                  
                  
                  2,503
                  
                  
                  
                  2,378
                  
                  
                  
                  4,996
                  
                  
                  
                  4,959Expected
      return on plan assets
                  
                  
                  (1,926
                  )
                  
                  
                  (2,628
                  )
                  
                  
                  (3,852
                  )
                  
                  
                  (5,313
                  )Net
      amortization and deferral
                  
                  
                  1
                  
                  
                  
                  2
                  
                  
                  
                  1
                  
                  
                  
                  4Recognized
      net actuarial loss
                  
                  
                  588
                  
                  
                  
                  55
                  
                  
                  
                  1,176
                  
                  
                  
                  111Net
      periodic pension expense
                  
                  $
                  1,264
                  
                  
                  $
                  (72
                  )
                  
                  $
                  2,518
                  
                  
                  $
                  1




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):


Three
      Months Ended
                        
                        
                        Six
      Months EndedJune
      27, 2009
                        
                        
                        June
      28, 2008
                        
                        
                        June
      27, 2009
                        
                        
                        June
      28, 2008Net
      income (loss)
                        
                        $
                        (18,252
                        )
                        
                        $
                        2,667
                        
                        
                        $
                        (22,563
                        )
                        
                        $
                        (732
                        )Other
      comprehensive income (loss):Unrealized
      gain (loss) on cash flow hedges, net of taxes
                        
                        
                        2,635
                        
                        
                        
                        8,887
                        
                        
                        
                        4,190
                        
                        
                        
                        (472
                        )Currency
      translation adjustment
                        
                        
                        2,214
                        
                        
                        
                        (239
                        )
                        
                        
                        1,514
                        
                        
                        
                        (1,489
                        )Comprehensive
      income (loss)
                        
                        $
                        (13,403
                        )
                        
                        $
                        11,315
                        
                        
                        $
                        (16,859
                        )
                        
                        $
                        (2,693
                        )




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):





Three
      Months Ended
                    
                    
                    Six
      Months EndedJune
      27,
                      2009
                    
                    
                    June
      28,
                      2008
                    
                    
                    June
      27,
                      2009
                    
                    
                    June
      28,
                      2008Numerator
      for basic and diluted income (loss) per shareIncome
      (loss) from continuing operations
                    
                    $
                    (17,841
                    )
                    
                    $
                    3,066
                    
                    
                    $
                    (22,028
                    )
                    
                    $
                    323Loss
      from discontinued operations, net of taxes
                    
                    
                    (411
                    )
                    
                    
                    (399
                    )
                    
                    
                    (535
                    )
                    
                    
                    (1,055
                    )Net
      income (loss)
                    
                    $
                    (18,252
                    )
                    
                    $
                    2,667
                    
                    
                    $
                    (22,563
                    )
                    
                    $
                    (732
                    )Denominator
      for weighted average common shares outstanding:Basic
      shares
                    
                    
                    54,551
                    
                    
                    
                    53,776
                    
                    
                    
                    54,456
                    
                    
                    
                    53,745Dilutive
      effect of equity awards
                    
                    
                    —
                    
                    
                    
                    440
                    
                    
                    
                    —
                    
                    
                    
                    474Diluted
      shares
                    
                    
                    54,551
                    
                    
                    
                    54,216
                    
                    
                    
                    54,456
                    
                    
                    
                    54,219




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):




Three
      Months Ended
                      
                      
                      Six
      Months EndedJune
      27,
                        2009
                      
                      
                      June
      28,
                        2008
                      
                      
                      June
      27,
                        2009
                      
                      
                      June
      28,
                        2008Net
      sales:Envelopes,
      forms and labels
                      
                      $
                      186,677
                      
                      
                      $
                      227,877
                      
                      
                      $
                      369,108
                      
                      
                      $
                      466,014Commercial
      printing
                      
                      
                      210,967
                      
                      
                      
                      296,624
                      
                      
                      
                      440,636
                      
                      
                      
                      592,815Total
                      
                      $
                      397,644
                      
                      
                      $
                      524,501
                      
                      
                      $
                      809,744
                      
                      
                      $
                      1,058,829Operating
      income (loss):Envelopes,
      forms and labels
                      
                      $
                      10,647
                      
                      
                      $
                      32,234
                      
                      
                      $
                      19,053
                      
                      
                      $
                      57,860Commercial
      printing
                      
                      
                      (7,408
                      )
                      
                      
                      13,264
                      
                      
                      
                      (5,978
                      )
                      
                      
                      24,542Corporate
                      
                      
                      (8,716
                      )
                      
                      
                      (9,347
                      )
                      
                      
                      (18,331
                      )
                      
                      
                      (23,271
                      )Total
                      
                      $
                      (5,477
                      )
                      
                      $
                      36,151
                      
                      
                      $
                      (5,256
                      )
                      
                      $
                      59,131Restructuring,
      impairment and other charges:Envelopes,
      forms and labels
                      
                      $
                      7,460
                      
                      
                      $
                      867
                      
                      
                      $
                      12,216
                      
                      
                      $
                      2,522Commercial
      printing
                      
                      
                      23,771
                      
                      
                      
                      4,333
                      
                      
                      
                      27,630
                      
                      
                      
                      5,687Corporate
                      
                      
                      800
                      
                      
                      
                      225
                      
                      
                      
                      917
                      
                      
                      
                      6,965Total
                      
                      $
                      32,031
                      
                      
                      $
                      5,425
                      
                      
                      $
                      40,763
                      
                      
                      $
                      15,174Net
      sales by product line:Envelopes
                      
                      $
                      129,340
                      
                      
                      $
                      154,976
                      
                      
                      $
                      256,015
                      
                      
                      $
                      320,644Commercial
      printing
                      
                      
                      135,271
                      
                      
                      
                      206,833
                      
                      
                      
                      291,046
                      
                      
                      
                      411,519Journals
      and periodicals
                      
                      
                      73,650
                      
                      
                      
                      90,073
                      
                      
                      
                      146,983
                      
                      
                      
                      180,637Labels
      and business forms
                      
                      
                      59,383
                      
                      
                      
                      72,619
                      
                      
                      
                      115,700
                      
                      
                      
                      146,029Total
                      
                      $
                      397,644
                      
                      
                      $
                      524,501
                      
                      
                      $
                      809,744
                      
                      
                      $
                      1,058,829Intercompany
      sales:Envelopes,
      forms and labels to commercial printing
                      
                      $
                      957
                      
                      
                      $
                      1,444
                      
                      
                      $
                      2,324
                      
                      
                      $
                      2,678Commercial
      printing to envelopes, forms and labels
                      
                      
                      386
                      
                      
                      
                      804
                      
                      
                      
                      926
                      
                      
                      
                      2,318Total
                      
                      $
                      1,343
                      
                      
                      $
                      2,248
                      
                      
                      $
                      3,250
                      
                      
                      $
                      4,996
   June
      27,
                                  2009
                                
                                
                                January
      3,
                                  2009Identifiable
      assets:Envelopes,
      forms and labels
                                
                                $
                                587,339
                                
                                
                                $
                                624,760Commercial
      printing
                                
                                
                                802,699
                                
                                
                                
                                863,224Corporate
                                
                                
                                69,871
                                
                                
                                
                                64,130Total
                                
                                $
                                1,459,909
                                
                                
                                $
                                1,552,114


17




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.  Financial
Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries




Cenveo is
a holding company (“Parent Company”), which is the ultimate parent of all Cenveo
subsidiaries. In January 2004, the Parent Company’s wholly owned subsidiary,
Cenveo Corporation (the “Subsidiary Issuer”), issued 77⁄8% Notes and, in
connection with the acquisition of Cadmus Communications Corporation (“Cadmus”),
assumed Cadmus’ 83⁄8% Notes (the “Subsidiary Issuer Notes”), which are fully and
unconditionally guaranteed, on a joint and several basis, by the Parent Company
and substantially all of its wholly-owned subsidiaries (the “Guarantor
Subsidiaries”).




Presented
below is condensed consolidating financial information for the Parent Company,
the Subsidiary Issuer, the Guarantor Subsidiaries and Non-Guarantor Subsidiaries
for the three and six months ended June 27, 2009 and June 28,
2008.  The condensed consolidating financial information has been
presented to show the nature of assets held, results of operations and cash
flows of the Parent Company, the Subsidiary Issuer, the Guarantor Subsidiaries
and Non-Guarantor Subsidiaries, assuming the guarantee structure of the
Subsidiary Issuer Notes was in effect at the beginning of the periods
presented.




The
supplemental condensed consolidating financial information reflects the
investments of the Parent Company in the Subsidiary Issuer, the Guarantor
Subsidiaries and Non-Guarantor Subsidiaries using the equity method of
accounting. The Company’s primary transactions with its subsidiaries other than
the investment account and related equity in net loss of unconsolidated
subsidiaries are the intercompany payables and receivables between its
subsidiaries.


18




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING BALANCE SHEET


June
27, 2009


(in
thousands)




Parent
              
              
              Subsidiary
              
              
              Guarantor
              
              
              Non-GuarantorCompany
              
              
              Issuer
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              Eliminations
              
              
              ConsolidatedAssetsCurrent
      assets:Cash
      and cash equivalents
              
              $
              —
              
              
              $
              5,616
              
              
              $
              547
              
              
              $
              2,202
              
              
              $
              —
              
              
              $
              8,365Accounts
      receivable, net
              
              
              —
              
              
              
              104,121
              
              
              
              124,396
              
              
              
              2,482
              
              
              
              —
              
              
              
              230,999Inventories
              
              
              —
              
              
              
              77,187
              
              
              
              61,760
              
              
              
              1,394
              
              
              
              —
              
              
              
              140,341Notes
      receivable from subsidiaries
              
              
              —
              
              
              
              36,938
              
              
              
              —
              
              
              
              —
              
              
              
              (36,938
              )
              
              
              —Prepaid
      and other current assets
              
              
              —
              
              
              
              63,632
              
              
              
              10,328
              
              
              
              2,391
              
              
              
              —
              
              
              
              76,351Total
      current assets
              
              
              —
              
              
              
              287,494
              
              
              
              197,031
              
              
              
              8,469
              
              
              
              (36,938
              )
              
              
              456,056Investment
      in subsidiaries
              
              
              (231,432
              )
              
              
              1,402,177
              
              
              
              2,330
              
              
              
              6,725
              
              
              
              (1,179,800
              )
              
              
              —Property,
      plant and equipment, net
              
              
              —
              
              
              
              149,298
              
              
              
              244,630
              
              
              
              388
              
              
              
              —
              
              
              
              394,316Goodwill
              
              
              —
              
              
              
              29,245
              
              
              
              281,938
              
              
              
              —
              
              
              
              —
              
              
              
              311,183Other
      intangible assets, net
              
              
              —
              
              
              
              8,160
              
              
              
              263,393
              
              
              
              —
              
              
              
              —
              
              
              
              271,553Other
      assets, net
              
              
              —
              
              
              
              21,758
              
              
              
              4,700
              
              
              
              343
              
              
              
              —
              
              
              
              26,801Total
      assets
              
              $
              (231,432
              )
              
              $
              1,898,132
              
              
              $
              994,022
              
              
              $
              15,925
              
              
              $
              (1,216,738
              )
              
              $
              1,459,909Liabilities
      and Shareholders’ Equity (Deficit)Current
      liabilities:Current
      maturities of long-term debt
              
              $
              —
              
              
              $
              8,485
              
              
              $
              8,323
              
              
              $
              —
              
              
              $
              —
              
              
              $
              16,808Accounts
      payable
              
              
              —
              
              
              
              84,520
              
              
              
              59,642
              
              
              
              2,166
              
              
              
              —
              
              
              
              146,328Accrued
      compensation and related liabilities
              
              
              —
              
              
              
              16,122
              
              
              
              9,267
              
              
              
              —
              
              
              
              —
              
              
              
              25,389Other
      current liabilities
              
              
              —
              
              
              
              64,150
              
              
              
              16,144
              
              
              
              1,070
              
              
              
              —
              
              
              
              81,364Intercompany
      payable (receivable)
              
              
              —
              
              
              
              710,245
              
              
              
              (714,682
              )
              
              
              4,437
              
              
              
              —
              
              
              
              —Notes
      payable to issuer
              
              
              —
              
              
              
              —
              
              
              
              36,938
              
              
              
              —
              
              
              
              (36,938
              )
              
              
              —Total
      current liabilities
              
              
              —
              
              
              
              883,522
              
              
              
              (584,368
              )
              
              
              7,673
              
              
              
              (36,938
              )
              
              
              269,889Long-term
      debt
              
              
              —
              
              
              
              1,232,891
              
              
              
              24,989
              
              
              
              —
              
              
              
              —
              
              
              
              1,257,880Deferred
      income tax liability (asset)
              
              
              —
              
              
              
              (65,110
              )
              
              
              84,902
              
              
              
              (803
              )
              
              
              —
              
              
              
              18,989Other
      liabilities
              
              
              —
              
              
              
              78,261
              
              
              
              66,322
              
              
              
              —
              
              
              
              —
              
              
              
              144,583Shareholders’
      equity (deficit)
              
              
              (231,432
              )
              
              
              (231,432
              )
              
              
              1,402,177
              
              
              
              9,055
              
              
              
              (1,179,800
              )
              
              
              (231,432
              )Total
      liabilities and shareholders’ equity (deficit)
              
              $
              (231,432
              )
              
              $
              1,898,132
              
              
              $
              994,022
              
              
              $
              15,925
              
              
              $
              (1,216,738
              )
              
              $
              1,459,909




19




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS


For
the three months ended June 27, 2009


(in
thousands)




Parent
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Subsidiary
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Guarantor
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Non-
                                                                                                                                                                    GuarantorCompany
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Issuer
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Subsidiaries
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Subsidiaries
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  Eliminations
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  ConsolidatedNet
      sales
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  179,734
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  213,260
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  4,650
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  397,644Cost
      of sales
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  150,489
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  166,507
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  3,369
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  320,365Selling,
      general and administrative expenses
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  28,308
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  19,975
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  87
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  48,370Amortization
      of intangible assets
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  108
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  2,247
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  2,355Restructuring,
      impairment and other charges
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  19,384
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  12,647
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  32,031Operating
      income (loss)
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (18,555
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  11,884
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  1,194
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (5,477
                                                                                                                                                                  )Interest
      expense (income), net
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  27,271
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  546
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (10
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  27,807Intercompany
      interest expense (income)
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (304
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  304
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —Loss
      on early extinguishment of debt
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  725
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  725Other
      (income) expense, net
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  204
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (3,271
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  446
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (2,621
                                                                                                                                                                  )Income
      (loss) from continuing operations before income taxes and equity in income
      of unconsolidated subsidiaries
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (46,451
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  14,305
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  758
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (31,388
                                                                                                                                                                  )Income
      tax expense (benefit)
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (13,768
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (925
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  1,146
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (13,547
                                                                                                                                                                  )Income
      (loss) from continuing operations before equity in income of
      unconsolidated subsidiaries
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (32,683
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  15,230
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (388
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (17,841
                                                                                                                                                                  )Equity
      in income of unconsolidated subsidiaries
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (18,252
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  14,842
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (388
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  3,798
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —Income
      (loss) from continuing operations
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (18,252
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (17,841
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  14,842
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (388
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  3,798
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (17,841
                                                                                                                                                                  )Loss
      from discontinued operations, net of taxes
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (411
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  —
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  (411
                                                                                                                                                                  )Net
      income (loss)
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  (18,252
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  (18,252
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  14,842
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  (388
                                                                                                                                                                  )
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  3,798
                                                                                                                                                                  
                                                                                                                                                                  
                                                                                                                                                                  $
                                                                                                                                                                  (18,252
                                                                                                                                                                  )


20




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS


For
the six months ended June 27, 2009


(in
thousands)




Parent
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Subsidiary
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Guarantor
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Non-
                                                                                                                                                                        GuarantorCompany
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Issuer
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Eliminations
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      ConsolidatedNet
      sales
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      374,600
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      425,702
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      9,442
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      809,744Cost
      of sales
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      317,132
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      345,338
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      6,211
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      668,681Selling,
      general and administrative expenses
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      59,692
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      41,003
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      190
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      100,885Amortization
      of intangible assets
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      209
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,462
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,671Restructuring,
      impairment and other charges
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      23,613
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      17,150
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      40,763Operating
      income (loss)
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (26,046
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      17,749
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      3,041
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (5,256
                                                                                                                                                                      )Interest
      expense (income), net
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      49,506
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      882
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (36
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      50,352Intercompany
      interest expense (income)
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (588
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      588
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —Gain
      on early extinguishment of debt
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (16,917
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (16,917
                                                                                                                                                                      )Other
      (income) expense, net
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      452
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (3,217
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      179
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (2,586
                                                                                                                                                                      )Income
      (loss) from continuing operations before income taxes and equity in income
      of unconsolidated subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (58,499
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      19,496
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      2,898
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (36,105
                                                                                                                                                                      )Income
      tax expense (benefit)
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (16,130
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      853
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      1,200
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (14,077
                                                                                                                                                                      )Income
      (loss) from continuing operations before equity in income of
      unconsolidated subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (42,369
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      18,643
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      1,698
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (22,028
                                                                                                                                                                      )Equity
      in income of unconsolidated subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (22,563
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      20,341
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      1,698
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      524
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —Income
      (loss) from continuing operations
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (22,563
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (22,028
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      20,341
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      1,698
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      524
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (22,028
                                                                                                                                                                      )Loss
      from discontinued operations, net of taxes
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (535
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (535
                                                                                                                                                                      )Net
      income (loss)
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (22,563
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (22,563
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      20,341
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      1,698
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      524
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (22,563
                                                                                                                                                                      )


21




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS


For
the six months ended June 27, 2009


(in
thousands)




Parent
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Subsidiary
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Guarantor
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Non-
                                                                                                                                                                                                                                                                                                                                              GuarantorCompany
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Issuer
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Subsidiaries
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Subsidiaries
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Eliminations
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            ConsolidatedCash
      flows from operating activities:Net
      cash provided by (used in) operating activities
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            6,856
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            (38,622
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            49,537
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            4,266
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            22,037Cash
      flows from investing activities:Capital
      expenditures
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,431
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (9,644
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (16,075
                                                                                                                                                                                                                                                                                                                                            )Intercompany
      note
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            2,257
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (2,257
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —Investment
      in guarantor subsidiary preferred shares
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,725
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            6,725
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —Proceeds from sale of property, plant and equipment
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,759
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            400
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            5,159Proceeds
      from sale of investment
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,032
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,032Net
      cash (used in) provided by investing activities
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            585
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (5,212
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,725
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,468
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,884
                                                                                                                                                                                                                                                                                                                                            )Cash
      flows from financing activities:Repayment
      of term loans
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (21,083
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (21,083
                                                                                                                                                                                                                                                                                                                                            )Repayment
      of 83⁄8% senior subordinated notes
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (23,024
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (23,024
                                                                                                                                                                                                                                                                                                                                            )Payment
      of amendment and debt issuance costs
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (7,296
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (7,296
                                                                                                                                                                                                                                                                                                                                            )Repayment
      of 101⁄2% senior notes
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (3,250
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (3,250
                                                                                                                                                                                                                                                                                                                                            )Repayment
      of 77⁄8% senior subordinated notes
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (4,295
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (4,295
                                                                                                                                                                                                                                                                                                                                            )Repayments
      of other long-term debt
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (343
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (4,527
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (4,870
                                                                                                                                                                                                                                                                                                                                            )Purchase
      and retirement of common stock upon vesting of RSUs
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (478
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (478
                                                                                                                                                                                                                                                                                                                                            )Payment
      of refinancing fees, redemption, premiums and expenses
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (94
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (94
                                                                                                                                                                                                                                                                                                                                            )Borrowings
      under revolving credit facility, net
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            47,200
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            47,200Proceeds
      from issuance of preferred shares
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            6,725
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,725
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —Intercompany
      note
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (2,257
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            2,257
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —Intercompany
      advances
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,378
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            51,123
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (44,730
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (15
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —Net
      cash (used in) provided by financing activities
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (6,856
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            38,938
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (44,789
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (15
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (4,468
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (17,190
                                                                                                                                                                                                                                                                                                                                            )Effect
      of exchange rate changes on cash and cash equivalents
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (42
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (42
                                                                                                                                                                                                                                                                                                                                            )Net
      (decrease) increase in cash and cash equivalents
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            901
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (506
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (2,474
                                                                                                                                                                                                                                                                                                                                            )
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            (2,079
                                                                                                                                                                                                                                                                                                                                            )Cash
      and cash equivalents at beginning of period
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,715
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            1,053
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            4,676
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            10,444Cash
      and cash equivalents at end of period
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            5,616
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            547
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            2,202
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            —
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            $
                                                                                                                                                                                                                                                                                                                                            8,365


22
  CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING BALANCE SHEET


January
3, 2009


(in
thousands)




Parent
              
              
              Subsidiary
              
              
              Guarantor
              
              
              Non-
                GuarantorCompany
              
              
              Issuer
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              Eliminations
              
              
              ConsolidatedAssetsCurrent
      assets:Cash
      and cash equivalents
              
              $
              —
              
              
              $
              4,715
              
              
              $
              1,053
              
              
              $
              4,676
              
              
              $
              —
              
              
              $
              10,444Accounts
      receivable, net
              
              
              —
              
              
              
              127,634
              
              
              
              137,746
              
              
              
              4,765
              
              
              
              —
              
              
              
              270,145Inventories
              
              
              —
              
              
              
              86,219
              
              
              
              72,149
              
              
              
              1,201
              
              
              
              —
              
              
              
              159,569Notes
      receivable from subsidiaries
              
              
              —
              
              
              
              39,195
              
              
              
              —
              
              
              
              —
              
              
              
              (39,195
              )
              
              
              —Prepaid
      and other current assets
              
              
              —
              
              
              
              62,961
              
              
              
              9,879
              
              
              
              2,050
              
              
              
              —
              
              
              
              74,890Total
      current assets
              
              
              —
              
              
              
              320,724
              
              
              
              220,827
              
              
              
              12,692
              
              
              
              (39,195
              )
              
              
              515,048Investment
      in subsidiaries
              
              
              (220,955
              )
              
              
              1,380,326
              
              
              
              7,063
              
              
              
              —
              
              
              
              (1,166,434
              )
              
              
              —Property,
      plant and equipment, net
              
              
              —
              
              
              
              165,140
              
              
              
              254,841
              
              
              
              476
              
              
              
              —
              
              
              
              420,457Goodwill
              
              
              —
              
              
              
              29,245
              
              
              
              281,938
              
              
              
              —
              
              
              
              —
              
              
              
              311,183Other
      intangible assets, net
              
              
              —
              
              
              
              9,089
              
              
              
              267,855
              
              
              
              —
              
              
              
              —
              
              
              
              276,944Other
      assets, net
              
              
              —
              
              
              
              21,936
              
              
              
              6,205
              
              
              
              341
              
              
              
              —
              
              
              
              28,482Total
      assets
              
              $
              (220,955
              )
              
              $
              1,926,460
              
              
              $
              1,038,729
              
              
              $
              13,509
              
              
              $
              (1,205,629
              )
              
              $
              1,552,114Liabilities
      and Shareholders’ (Deficit) EquityCurrent
      liabilities:Current
      maturities of long-term debt
              
              $
              —
              
              
              $
              15,956
              
              
              $
              8,358
              
              
              $
              —
              
              
              $
              —
              
              
              $
              24,314Accounts
      payable
              
              
              —
              
              
              
              99,150
              
              
              
              73,402
              
              
              
              1,883
              
              
              
              —
              
              
              
              174,435Accrued
      compensation and related liabilities
              
              
              —
              
              
              
              21,311
              
              
              
              16,008
              
              
              
              —
              
              
              
              —
              
              
              
              37,319Other
      current liabilities
              
              
              —
              
              
              
              74,653
              
              
              
              13,302
              
              
              
              915
              
              
              
              —
              
              
              
              88,870Intercompany
      payable (receivable)
              
              
              —
              
              
              
              658,885
              
              
              
              (663,337
              )
              
              
              4,452
              
              
              
              —
              
              
              
              —Notes
      payable to issuer
              
              
              —
              
              
              
              —
              
              
              
              39,195
              
              
              
              —
              
              
              
              (39,195
              )
              
              
              —Total
      current liabilities
              
              
              —
              
              
              
              869,955
              
              
              
              (513,072
              )
              
              
              7,250
              
              
              
              (39,195
              )
              
              
              324,938Long-term
      debt
              
              
              —
              
              
              
              1,259,175
              
              
              
              22,866
              
              
              
              —
              
              
              
              —
              
              
              
              1,282,041Deferred
      income tax liability (asset)
              
              
              —
              
              
              
              (56,500
              )
              
              
              84,076
              
              
              
              (804
              )
              
              
              —
              
              
              
              26,772Other
      liabilities
              
              
              —
              
              
              
              74,785
              
              
              
              64,533
              
              
              
              —
              
              
              
              —
              
              
              
              139,318Shareholders’
      (deficit) equity
              
              
              (220,955
              )
              
              
              (220,955
              )
              
              
              1,380,326
              
              
              
              7,063
              
              
              
              (1,166,434
              )
              
              
              (220,955
              )Total
      liabilities and shareholders’ (deficit) equity
              
              $
              (220,955
              )
              
              $
              1,926,460
              
              
              $
              1,038,729
              
              
              $
              13,509
              
              
              $
              (1,205,629
              )
              
              $
              1,552,114


23




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS


For
the three months ended June 28, 2008


(in
thousands)







Parent
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Subsidiary
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Guarantor
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Non-
                                                                                                                                                                      GuarantorCompany
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Issuer
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Subsidiaries
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Subsidiaries
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    Eliminations
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    ConsolidatedNet
      sales
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    242,903
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    276,447
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    5,151
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    524,501Cost
      of sales
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    197,640
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    216,012
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,754
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    417,406Selling,
      general and administrative expenses
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    36,228
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    26,817
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    195
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    63,240Amortization
      of intangible assets
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    112
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,167
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,279Restructuring
      and impairment charges
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,743
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    682
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    5,425Operating
      income
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,180
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    30,769
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,202
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    36,151Interest
      expense (income), net
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    25,690
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    491
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (6
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    26,175Intercompany
      interest (income) expense
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (153
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    153
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —Loss
      on early extinguishment of debt
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,242
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    4,242Other
      expense, net
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    396
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    267
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    663Income
      (loss) from continuing operations before income taxes and equity in income
      of unconsolidated subsidiaries
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (25,995
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    29,858
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,208
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    5,071Income
      tax expense (benefit)
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (387
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,392
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,005Income
      (loss) from continuing operations before equity in income of
      unconsolidated subsidiaries
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (25,608
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    27,466
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,208
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,066Equity
      in income of unconsolidated subsidiaries
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,667
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    28,674
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,208
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (32,549
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —Income
      (loss) from continuing operations
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    2,667
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,066
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    28,674
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    1,208
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (32,549
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    3,066Loss
      from discontinued operations, net of taxes
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (399
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    —
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    (399
                                                                                                                                                                    )Net
      income (loss)
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    2,667
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    2,667
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    28,674
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    1,208
                                                                                                                                                                    
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    (32,549
                                                                                                                                                                    )
                                                                                                                                                                    
                                                                                                                                                                    $
                                                                                                                                                                    2,667


24




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING STATEMENT OF OPERATIONS


For
the six months ended June 28, 2008


(in
thousands)







Parent
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Subsidiary
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Guarantor
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Non-
                                                                                                                                                                        GuarantorCompany
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Issuer
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      Eliminations
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      ConsolidatedNet
      sales
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      503,195
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      546,071
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      9,563
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      1,058,829Cost
      of sales
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      416,426
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      430,266
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      7,012
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      853,704Selling,
      general and administrative expenses
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      72,696
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      53,324
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      346
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      126,366Amortization
      of intangible assets
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      223
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,231
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,454Restructuring,
      impairment and other charges
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      14,451
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      723
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      15,174Operating
      (loss) income
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (601
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      57,527
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      2,205
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      59,131Interest
      expense (income), net
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      52,250
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      928
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (25
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      53,153Intercompany
      interest (income) expense
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (1,097
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      1,097
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —Loss
      on early extinguishment of debt
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,242
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,242Other
      expense, net
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      582
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      542
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      1,124Income
      (loss) from continuing operations before income taxes and equity in income
      of unconsolidated subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (56,578
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      54,960
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      2,230
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      612Income
      tax expense (benefit)
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (4,210
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      4,499
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      289Income
      (loss) from continuing operations before equity in income of
      unconsolidated subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (52,368
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      50,461
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      2,230
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      323Equity
      in income of unconsolidated subsidiaries
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (732
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      52,691
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      2,230
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (54,189
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —Income
      (loss) from continuing operations
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (732
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      323
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      52,691
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      2,230
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (54,189
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      323Loss
      from discontinued operations, net of taxes
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (1,055
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      —
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      (1,055
                                                                                                                                                                      )Net
      income (loss)
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (732
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (732
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      52,691
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      2,230
                                                                                                                                                                      
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (54,189
                                                                                                                                                                      )
                                                                                                                                                                      
                                                                                                                                                                      $
                                                                                                                                                                      (732
                                                                                                                                                                      )




25




CENVEO,
INC. AND SUBSIDIARIES


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




14.
Financial Information for Subsidiary Issuer, Guarantor and Non-Guarantor
Subsidiaries (Continued)





CENVEO,
INC. AND SUBSIDIARIES


CONDENSED
CONSOLIDATING STATEMENT OF CASH FLOWS


For
the six months ended June 28, 2008


(in
thousands)




Parent
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Subsidiary
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Guarantor
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Non-
                                                                                                                                                                                        GuarantorCompany
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Issuer
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Subsidiaries
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Subsidiaries
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      Eliminations
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      ConsolidatedCash
      flows from operating activities:Net
      cash provided by operating activities
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      6,961
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      25,105
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      93,743
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      574
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      126,383Cash
      flows from investing activities:Cost
      of business acquisitions, net of cash acquired
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (38,453
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (38,453
                                                                                                                                                                                      )Capital
      expenditures
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (11,395
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (13,992
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (25,387
                                                                                                                                                                                      )Acquisition
      payments
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,653
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,653
                                                                                                                                                                                      )Proceeds
      from sale of property, plant and equipment
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      11,829
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      185
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      12,014Intercompany
      note
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      3,170
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,170
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —Net
      cash used in investing activities
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (38,502
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (13,807
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,170
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (55,479
                                                                                                                                                                                      )Cash
      flows from financing activities:Repayment
      of senior unsecured loan
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (175,000
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (175,000
                                                                                                                                                                                      )Repayments
      under revolving credit facility, net
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (64,200
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (64,200
                                                                                                                                                                                      )Repayment
      of term loans
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,600
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,600
                                                                                                                                                                                      )Repayments
      of other long-term debt
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (194
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (11,430
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (11,624
                                                                                                                                                                                      )Payment
      of debt issuance costs
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (5,297
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (5,297
                                                                                                                                                                                      )Proceeds
      from issuance of 101⁄2%
      senior notes
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      175,000
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      175,000Proceeds
      from issuance of other long-term debt
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      3,311
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      6,000
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      9,311Proceeds
      from exercise of stock options
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      1,154
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      1,154Intercompany
      note
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,170
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      3,170
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —Intercompany
      advances
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (8,115
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      78,968
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (71,980
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      1,127
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —Net
      cash (used in) provided by financing activities
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (6,961
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      8,988
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (80,580
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      1,127
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      3,170
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (74,256
                                                                                                                                                                                      )Effect
      of exchange rate changes on cash and cash equivalents
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      9
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      9Net
      (decrease) increase in cash and cash equivalents
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (4,409
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (635
                                                                                                                                                                                      )
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      1,701
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      (3,343
                                                                                                                                                                                      )Cash
      and cash equivalents at beginning of period
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      13,091
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      882
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      1,909
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      15,882Cash
      and cash equivalents at end of period
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      8,682
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      247
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      3,610
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      —
                                                                                                                                                                                      
                                                                                                                                                                                      
                                                                                                                                                                                      $
                                                                                                                                                                                      12,539




26




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




This
Management’s Discussion and Analysis of Financial Condition and Results of
Operations, of Cenveo, Inc. and its subsidiaries, which we refer to as Cenveo,
should be read in conjunction with the accompanying unaudited
condensed consolidated financial statements and “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in our
Annual Report on Form 10-K, filed with the Securities and Exchange Commission,
which we refer to as the SEC, on March 19, 2009, for the fiscal year ended
January 3, 2009, which we refer to as our 2008 Form 10-K. Item 7 of our 2008
Form 10-K describes the application of our critical accounting policies, for
which there have been no significant changes as of June 27, 2009.




Forward-Looking
Statements




Certain
statements in this report may constitute “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements generally can be identified by the use of terminology such as “may,”
“expect,” “intend,” “estimate,” “anticipate,” “plan,” “foresee,” “believe” or
“continue” and similar expressions, or as other statements that do not relate
solely to historical facts. These statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that could cause
actual results to differ materially from what is expressed or forecasted in
these forward-looking statements. In view of such uncertainties, investors
should not place undue reliance on our forward-looking statements. Such
statements speak only as of the date they were made, and we undertake no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise.




Factors
that could cause actual results to differ materially from management’s
expectations include, without limitation: (i) a decline of our consolidated or
individual reporting units operating performance as a result of the current
economic environment could affect the results of our operations and financial
position, including the impairment of our goodwill and other long-lived assets;
(ii) our substantial indebtedness could impair our financial condition and
prevent us from fulfilling our business obligations; (iii) our ability to
service or refinance our debt; (iv) the terms of our indebtedness imposing
significant restrictions on our operating and financial flexibility; (v)
additional borrowings are available to us that could further exacerbate our risk
exposure from debt;  (vi) our ability to successfully integrate
acquisitions; (vii) intense competition in our industry; (viii) the general
absence of long-term customer agreements in our industry, subjecting our
business to quarterly and cyclical fluctuations; (ix) factors affecting the U.S.
postal services impacting demand for our products; (x) the availability of the
Internet and other electronic media affecting demand for our products; (xi)
increases in paper costs and decreases in its availability; (xii) our labor
relations; (xiii) compliance with environmental rules and regulations; and (xiv)
dependence on key management personnel. This list of factors is not exhaustive,
and new factors may emerge or changes to the foregoing factors may occur that
would impact our business. Additional information regarding these and other
factors can be found elsewhere in this report and in our other filings with the
SEC.




Business
Overview




We are
the third largest diversified printing company in North America. Our broad
portfolio of products includes envelope, form, and label manufacturing,
commercial printing and packaging and publisher offerings. We operate from a
global network of 69 printing and manufacturing, content management and
distribution facilities, which we refer to as manufacturing facilities, serving
a diverse base of over 100,000 customers. Since current management took over in
late 2005, we have consolidated and closed plants, centralized and leveraged our
purchasing spend, sought operational efficiencies and reduced corporate and
field staff. In addition, we have made investments in our businesses through
acquisition of highly complementary companies and capital expenditures, while
also divesting non-strategic businesses.




We
operate our business in two complementary segments: envelopes, forms and labels
and commercial printing.




Envelopes,
Forms and Labels




We are a
leading North American envelope manufacturer, a leading forms and labels
provider, and the largest North American prescription labels manufacturer for
the retail pharmacy chains. Our envelopes, forms and labels segment represented
approximately 47% and 46% of our net sales for the three and six months ended
June 27, 2009. The segment operates 32 manufacturing facilities in North America
and primarily specializes in the design, manufacturing and printing
of:





·
            direct
      mail and customized envelopes for advertising, billing and
      remittance;


·
            custom
      labels and specialty forms; and


·
            stock
      envelopes, labels and business
forms.





27




Our
envelopes, forms and labels segment serves customers ranging from Fortune 50
companies to middle market and small companies serving niche markets. We offer
direct mail products used for customer solicitations and custom envelopes used
for billing and remittance by end users including banks, brokerage firms and
credit card companies in addition to a broad group of other customers in varying
industries. We print a diverse line of custom labels and specialty forms for a
broad range of industries including manufacturing, warehousing, packaging, food
and beverage, and health and beauty, which we sell through an extensive network
of resale distributors.  We produce a diverse line of custom products
for our small and mid-size business forms and labels customers, including both
traditional and specialty forms and labels for use with desktop PCs and laser
printers.  Our printed office products include business documents,
specialty documents and short-run secondary labels, which are made of paper or
film affixed with pressure sensitive adhesive and are used for mailing,
messaging, bar coding and other applications, by large through smaller-sized
customers across a wide spectrum of industries.  We produce
pressure-sensitive prescription labels for the retail pharmacy chain
market.  We also produce a broad line of stock envelopes, labels and
traditional business forms that are sold through independent distributors,
contract stationers, national catalogs for the office products market and office
products superstores.


Commercial
Printing




We are
one of the leading commercial printing companies in North America and one of the
largest providers of editorial, content processing and production assistance to
scientific, technical and medical publishers, which we refer to as STM
publishers.  On March 31, 2008, we added to our commercial printing
business with the acquisition of Rex Corporation and its manufacturing facility,
which we refer to as Rex. Prior to our acquisition, Rex had annual revenues of
approximately $40.0 million. Our commercial printing segment represented
approximately 53% and 54% of our net sales for the three and six months ended
June 27, 2009.  The segment operates 37 manufacturing facilities in
the United States, Canada, Latin America and Asia and provides one-stop print,
design and content management offerings, including:





·
              high-end
      color printing of a wide range of premium products for national and
      regional customers;·
              general
      commercial printing for regional and local
  customers;





·
            STM
      publishers and special interest and trade magazines for not-for-profit
      organizations, educational institutions and specialty publishers;
      and


·
            specialty
      packaging and high quality promotional materials for multinational
      consumer products companies.




Our
commercial printing segment primarily serves the consumer products,
pharmaceutical, financial services, publishing and telecommunications
industries, with customers ranging from Fortune 50 companies to middle market
and small companies operating in niche markets.  We provide a wide
array of commercial print offerings to our customers including electronic
prepress, digital asset archiving, direct-to-plate technology, high-quality
color printing on web and sheet-fed presses and digital printing. The broad
array of commercial printing products we produce also includes annual reports,
car brochures, direct mail products, specialty packaging, journals and
specialized periodicals, advertising literature, corporate identity materials,
financial printing, books, directories, calendars, brand marketing materials,
catalogs, and maps.  In our journal and specialty magazine business,
we offer complete solutions, including editing, content processing, content
management, electronic peer review, production and reprint
marketing.  Our primary customers for our specialty packaging and
promotional products are pharmaceutical, apparel, food and confection and other
large multi-national consumer product companies.




Consolidated
Operating Results




Management’s
Discussion and Analysis of Financial Condition and Results of Operations
includes an overview of our condensed consolidated operating results for the
three and six month periods ended June 27, 2009 and June 28, 2008 followed by a
discussion of the operating results of each of our reportable segments for the
same period. Our results for the three and six month periods ended June 28, 2008
include the operating results of Rex from March 31, 2008.




During
the first six months of 2009, the economic downturn that accelerated in the
second half of 2008 continued to significantly impact the results of our
operations. Our commercial printing segment experienced volume declines as
compared to the prior year in substantially all of the markets we serve
primarily due to the economic downturn, excess capacity and intense pricing
pressures.  Our envelopes, forms and labels segment experienced volume
declines as compared to the prior year primarily due to the economic downturn
and our financial services customers who historically reached targeted customers
via our direct mail capabilities suspending this practice.  In order
to compete effectively in this current environment, we continue to focus on
improving productivity and creating operating
efficiencies by reducing our costs. For example, in the first six months of
2009, we reduced our employee headcount by approximately 1,300, primarily
resulting from the closure of three envelope plants, two commercial
printing plants and a forms plant and consolidated them into existing
operations.





28




The
current U.S. and global economic conditions have affected and, most likely, will
continue to affect our results of operations and financial position. These
uncertainties about future economic conditions in a very challenging environment
make it more difficult for us to forecast our future operating results. We are
pursuing additional cost savings opportunities in an effort to mitigate the
impacts of the current economic conditions and to ensure our cost structure is
aligned with our estimated net sales.




A summary
of our condensed consolidated statements of operations is presented below. The
summary presents reported net sales and operating income (loss). See Segment
Operations below for a summary of net sales and operating income (loss) of our
reportable segments that we use internally to assess our operating performance.
Our fiscal quarters end on the Saturday closest to the last day of the calendar
month. Our 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.




Three
      Months Ended
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              Six
      Months EndedJune
      27, 2009
                                                                                                              
                                                                                                              
                                                                                                              June
      28, 2008
                                                                                                              
                                                                                                              
                                                                                                              June
      27, 2009
                                                                                                              
                                                                                                              
                                                                                                              June
      28, 2008(in
      thousands, except
                                                                                                                per
      share amounts)
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (in
      thousands, except
                                                                                                                per
      share amounts)Net
      sales
                                                                                                              
                                                                                                              $
                                                                                                              397,644
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              524,501
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              809,744
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              1,058,829Operating
      income (loss):Envelopes,
      forms and labels
                                                                                                              
                                                                                                              
                                                                                                              10,647
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              32,234
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              19,053
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              57,860Commercial
      printing
                                                                                                              
                                                                                                              
                                                                                                              (7,408
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              13,264
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (5,978
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              24,542Corporate
                                                                                                              
                                                                                                              
                                                                                                              (8,716
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (9,347
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (18,331
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (23,271
                                                                                                              )Total
      operating income (loss)
                                                                                                              
                                                                                                              
                                                                                                              (5,477
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              36,151
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (5,256
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              59,131Interest
      expense, net
                                                                                                              
                                                                                                              
                                                                                                              27,807
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              26,175
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              50,352
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              53,153(Gain)
      loss on early extinguishment of debt
                                                                                                              
                                                                                                              
                                                                                                              725
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              4,242
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (16,917
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              4,242Other
      (income) expense, net
                                                                                                              
                                                                                                              
                                                                                                              (2,621
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              663
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (2,586
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              1,124Income
      (loss) from continuing operations before
                                                                                                                income
      taxes
                                                                                                              
                                                                                                              
                                                                                                              (31,388
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              5,071
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (36,105
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              612Income
      tax (benefit) expense
                                                                                                              
                                                                                                              
                                                                                                              (13,547
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              2,005
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (14,077
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              289Income
      (loss) from continuing operations
                                                                                                              
                                                                                                              
                                                                                                              (17,841
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              3,066
                                                                                                              
                                                                                                              
                                                                                                              
                                                                                                              (22,028
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              323Income
      (loss) from discontinued operations, net of taxes
                                                                                                              
                                                                                                              
                                                                                                              (411
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (399
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (535
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (1,055
                                                                                                              )Net
      income (loss)
                                                                                                              
                                                                                                              $
                                                                                                              (18,252
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              2,667
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              (22,563
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              (732
                                                                                                              )Income
      (loss) per share—basic and
      diluted:Continuing
      operations
                                                                                                              
                                                                                                              $
                                                                                                              (0.33
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              0.06
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              (0.40
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              0.01Discontinued
      operations
                                                                                                              
                                                                                                              
                                                                                                              (0.01
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (0.01
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (0.01
                                                                                                              )
                                                                                                              
                                                                                                              
                                                                                                              (0.02
                                                                                                              )Net
      income (loss)
                                                                                                              
                                                                                                              $
                                                                                                              (0.34
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              0.05
                                                                                                              
                                                                                                              
                                                                                                              $
                                                                                                              (0.41
                                                                                                              )
                                                                                                              
                                                                                                              $
                                                                                                              (0.01
                                                                                                              )




Net
Sales




Net sales
decreased $126.9 million in the second quarter of 2009, as compared to the
second quarter of 2008, due to lower sales from our commercial printing segment
of $85.7 million and from our envelopes, forms and labels segment of $41.2
million. These decreases were primarily due to volume declines, pricing
pressures and changes in product mix, primarily due to the current general
economic conditions and lost sales resulting from plant closures as part of our
restructuring plans.




Net sales
for the six months ended June 27, 2009 decreased $249.1 million, as compared to
the six months ended June 28, 2008, due to lower sales from our commercial
printing segment of $152.2 million and from our envelopes, forms and labels
segment of $96.9 million. These decreases were primarily due to having one less
week in the first quarter of 2009, as compared to the first quarter of 2008,
volume declines, pricing pressures and changes in product mix, primarily due to
the current general economic conditions and the lost sales resulting from plant
closures as part of our restructuring plans. See Segment Operations below for a
detailed discussion of the primary factors affecting the change in our net sales
by reportable segment.





29




Operating
Income (Loss)





Operating
income decreased $41.6 million in the second quarter of 2009, as compared to the
second quarter of 2008. This decrease was primarily due to lower operating
income for our envelopes, forms and labels segment of $21.6 million and our
commercial printing segment of $20.7 million.  These declines were
primarily due to increased restructuring and impairment charges and the current
general economic conditions.




Operating
income for the six months ended June 27, 2009 decreased $64.4 million, as
compared to the six months ended June 28, 2008. This decrease was primarily due
to lower operating income for our envelopes, forms and labels segment of $38.8
million and our commercial printing segment of $30.5 million.  These
declines were primarily due to increased restructuring and impairment charges,
the current general economic conditions and the first quarter of 2009 having one
less week than the first quarter of 2008. See Segment Operations below for a
more detailed discussion of the primary factors for the changes in operating
income (loss) by reportable segment.





Interest
Expense





Interest
expense increased approximately $1.6 million to $27.8 million in the second
quarter of 2009, as compared to $26.2 million in the second quarter of 2008.
This increase was primarily due to higher interest rates resulting from the
amendment, which we refer to as the Amendment, of our revolving credit facility
due 2012, which we refer to as the Revolving Credit Facility, and our term loan
and delayed-draw term loan due 2013, which we refer to as the Term Loans, and
collectively with our Revolving Credit Facility, the Amended Credit Facilities,
which became effective on April 24, 2009, partially offset by lower interest
expense due to: (i) the repurchase and retirement of a portion of our 83⁄8% senior
subordinated notes due 2014, which we refer to as the 83⁄8% Notes, 101⁄2% senior
notes due 2016, which we refer to as the 101⁄2% Notes, and 77⁄8% senior subordinated
notes due 2013, which we refer to as the 77⁄8% Notes, collectively the Notes, and
(ii) the repayment of our Term Loans (primarily a mandatory excess cash flow
payment) and other debt. Interest expense in the second quarter of 2009
reflected an average outstanding debt of approximately $1.3 billion and a
weighted average interest rate of 8.0%, as compared to an average outstanding
debt of $1.4 billion and a weighted average interest rate of 7.0% in the second
quarter of 2008.





Interest
expense decreased approximately $2.8 million to $50.4 million during the first
six months of 2009, as compared to $53.2 million in the first six months of
2008. This decrease was primarily due to our (i) lower outstanding average debt
balance, primarily due to the repurchases of the Notes and a
mandatory excess cash flow payment on our Term Loans, and (ii) having one
less week of interest expense in the first quarter of 2009 as compared to the
first quarter of 2008. These decreases were partially offset by the increase in
interest expense in the second quarter of 2009 as a result of the
Amendment.  Interest expense in the first six months of 2009 reflected
average outstanding debt of approximately $1.3 billion and a weighted average
interest rate of 7.5%, as compared to an average outstanding debt of $1.4
billion and a weighted average interest rate of 7.2% during the first six months
in 2008.





As a
result of the Amendment, we expect to have higher interest expense for the
remainder of 2009 as compared to 2008.





(Gain)
Loss on Early Extinguishment of Debt




In the
second quarter of 2009, we incurred a loss on early extinguishment of debt of
$5.0 million related to the Amendment, of which approximately $3.9 million
relates to fees paid to consenting lenders and approximately $1.1 million
related to the write-off of previously unamortized debt issuance costs, which
was largely offset by gains on early extinguishment of debt of approximately
$4.3 million related to the repurchase and retirement of principal amounts of
approximately $7.4 million of the 83⁄8% Notes and $2.1 million of the 77⁄8% Notes.
For the first six months of 2009, we recognized gains on early extinguishment of
debt of $21.9 million related to the repurchase and retirement of principal
amounts of approximately $40.1 million of the 83⁄8% Notes; $7.1 million of the 77⁄8%
Notes; and $5.0 million of the 101⁄2% Notes, which were partially offset by the
loss on early extinguishment of debt of $5.0 million related to the
Amendment.





In the
second quarter of 2008, upon the conversion of the $175.0 million senior
unsecured loan due 2015 and the issuance of the 101⁄2% Notes, we incurred a loss
on the early extinguishment of debt of $4.2 million.




30





Income
Taxes




Three
      Months Ended
              
              
              
              Six
      Months EndedJune
      27, 2009
              
              
              June
      28, 2008
              
              
              June
      27, 2009
              
              
              June
      28, 2008(in
      thousands)
              
              
              
              (in
      thousands)Income
      tax (benefit) expense for U.S. operations
              
              $
              (14,587
              )
              
              $
              1,749
              
              
              $
              (15,231
              )
              
              $
              4Income
      tax expense for foreign operations
              
              
              1,040
              
              
              
              256
              
              
              
              1,154
              
              
              
              285Income
      tax (benefit) expense
              
              $
              (13,547
              )
              
              $
              2,005
              
              
              $
              (14,077
              )
              
              $
              289Effective
      income tax rate
              
              
              43.2
              %
              
              
              39.5
              %
              
              
              39.0
              %
              
              
              47.2
              %





In the
second quarter of 2009, we had an income tax benefit of $13.5 million, compared
to an income tax expense of $2.0 million in the second quarter of 2008, which
primarily relates to income tax benefits from taxes on our domestic operations,
partially offset by discrete items. In the first six months of 2009, we had an
income tax benefit of $14.1 million, compared to an income tax expense of $0.3
million in the first six months of 2008, which primarily relates to income tax
benefits from taxes on our domestic operations, partially offset by discrete
items. Our effective tax rate in the three and six months ended June 27, 2009
and June 28, 2008 was higher than the statutory federal rate, primarily due to
non-deductible expenses and state income taxes. There is a reasonable
possibility that within the next twelve months we may decrease our liability for
uncertain tax positions by approximately $12.1 million due to the expiration of
certain statute of limitations.




We assess
the recoverability of our deferred tax assets and, based upon this assessment,
record a valuation allowance against deferred tax assets to the extent
recoverability does not satisfy the “more likely than not” recognition criteria
in Statement of Financial Accounting Standards No. 109, “Accounting for Income
Taxes”. We consider our recent operating results and anticipated future taxable
income in assessing the need for a valuation allowance. As of June 27, 2009, the
total valuation allowance on our net U.S. deferred tax assets was approximately
$28.1 million.




Segment
Operations




Our Chief
Executive Officer monitors the performance of the ongoing operations of our two
reportable segments. We assess performance based on net sales and operating
income (loss). The summaries of net sales and operating income (loss) of our two
reportable segments are presented below.




Envelopes,
Forms and Labels




Three
      Months Ended
              
              
              
              Six
      Months EndedJune
      27, 2009
              
              
              June
      28, 2008
              
              
              June
      27, 2009
              
              
              June
      28, 2008(in
      thousands)
              
              
              
              (in
      thousands)Segment
      net sales
              
              $
              186,677
              
              
              $
              227,877
              
              
              $
              369,108
              
              
              $
              466,014Segment
      operating income
              
              $
              10,647
              
              
              $
              32,234
              
              
              $
              19,053
              
              
              $
              57,860Operating
      income margin
              
              
              5.7
              %
              
              
              14.1
              %
              
              
              5.2
              %
              
              
              12.4
              %Restructuring
      and impairment charges
              
              $
              7,460
              
              
              $
              867
              
              
              $
              12,216
              
              
              $
              2,522




Segment
Net Sales




Segment
net sales for our envelopes, forms and labels segment decreased $41.2 million,
or 18.1%, in the second quarter of 2009, as compared to the second quarter of
2008.  This decrease was primarily due to the current general economic
conditions, which has resulted in: (i) lower sales volume of approximately $33.9
million, primarily from our envelope business, for which we have seen a shift
from direct mail and customized envelopes to generic transactional envelopes,
and lost sales in connection with the closure of three envelope plants that were
integrated into our existing envelope operations, and (ii) lower pricing and
product mix of approximately $7.3 million, primarily due to pricing pressures in
the current envelope marketplace.





Segment
net sales for our envelopes, forms and labels segment decreased $96.9 million,
or 20.8%, in the first six months of 2009, as compared to the first six months
of 2008.  This decrease was primarily due to: (i) lower sales volume
of approximately $94.8 million, primarily due to having one less week in the
first quarter of 2009, as compared to the first quarter of 2008, and the current
general economic conditions which have had a significant impact on our envelope
business, for which we have seen a shift from direct mail and customized
envelopes to generic transactional envelopes and lost sales in connection with
the closure of three envelope





31





plants
that were integrated into our existing envelope operations, and (ii) lower
pricing and product mix of $2.1 million, primarily due to pricing pressures in
the current envelope marketplace.




Segment
Operating Income




Segment
operating income for our envelopes, forms and labels segment decreased $21.6
million, or 67.0%, in the second quarter of 2009, as compared to the second
quarter of 2008. This decrease was primarily due to lower gross margins of $17.1
million resulting from the current general economic conditions, which has
resulted in increased pricing pressures and product mix changes from high color
direct mail envelopes to transactional envelope products and increased
restructuring and impairment charges of $6.6 million, primarily due to the
closure of three envelope plants and one forms plant. These decreases were
partially offset by lower selling, general and administrative expenses of $2.1
million, primarily due to our cost reduction programs and lower commission
expenses resulting from lower sales.




Segment
operating income for our envelopes, forms and labels segment decreased $38.8
million, or 67.1%, in the first six months of 2009, as compared to the first six
months of 2008. This decrease was primarily due to (i) lower gross margins of
$36.0 million, primarily due to the current general economic conditions, which
has resulted in increased pricing pressures and product mix changes from high
color direct mail envelopes to transactional envelope products, and having one
less week in the first quarter of 2009, as compared to the first quarter of
2008, and (ii) increased restructuring and impairment charges of $9.7 million,
primarily due to the closure of three envelope plants and one forms plant. These
decreases were partially offset by lower selling, general and administrative
expenses of $6.9 million, primarily due to our cost reduction programs, lower
commission expenses resulting from lower sales, and having one less week in the
first quarter of 2009, as compared to the first quarter of 2008.




Commercial
Printing




Three
      Months Ended
              
              
              
              Six
      Months EndedJune
      27, 2009
              
              
              June
      28, 2008
              
              
              June
      27, 2009
              
              
              June
      28, 2008(in
      thousands)
              
              
              
              (in
      thousands)Segment
      net sales
              
              $
              210,967
              
              
              $
              296,624
              
              
              $
              440,636
              
              
              $
              592,815Segment
      operating income (loss)
              
              $
              (7,408
              )
              
              $
              13,264
              
              
              $
              (5,978
              )
              
              $
              24,542Operating
      income (loss) margin
              
              
              (3.5
              )%
              
              
              4.5
              %
              
              
              (1.4
              )%
              
              
              4.1
              %Restructuring
      and impairment charges
              
              $
              23,771
              
              
              $
              4,333
              
              
              $
              27,630
              
              
              $
              5,687







Segment
Net Sales




Segment
net sales for our commercial printing segment decreased $85.7 million, or 28.9%,
in the second quarter of 2009, as compared to the second quarter of 2008. This
decrease was primarily due to the current general economic conditions, which
resulted in lower sales: (i) of $73.8 million related to volume declines and
lost sales from the closure of two commercial printing plants and (ii) of $11.9
million resulting from increased pricing pressures and changes in product
mix.




Segment
net sales for our commercial printing segment decreased $152.2 million, or
25.7%, in the first six months of 2009, as compared to the first six months of
2008. This decrease was primarily due to lower sales of approximately $162.2
million from having one less week in the first quarter of 2009, as compared to
the first quarter of 2008 and volume declines, lost sales from the closure of
two commercial printing plants, pricing pressures and changes in product mix,
primarily due to the current general economic conditions. This decrease was
partially offset by $10.0 million of sales generated from the integration of Rex
into our operations, as Rex was not included in our results in the first quarter
of 2008.




Segment
Operating Income (Loss)




Segment
operating income for our commercial printing segment decreased $20.7 million, or
155.9%, in the second quarter of 2009, as compared to the second quarter of
2008. This decrease was primarily due to increased restructuring and impairment
charges of $19.4 million primarily due to the closure of two commercial printing
plants and lower gross margins of approximately $12.3 million primarily due to
the current general economic conditions, which has resulted in increased pricing
pressures and product mix changes from high color to more generic commercial
print products. These decreases were partially offset by lower selling, general
and administrative expenses of $11.0 million, primarily due to our cost
reduction programs and lower commission expenses resulting from lower
sales.





32




Segment
operating income for our commercial printing segment decreased $30.5 million, or
124.4%, in the first six months of 2009, as compared to the first six months of
2008. This decrease was primarily due to lower gross margins of approximately
$26.9 million and increased restructuring and impairment charges of $21.9
million primarily due to the closure of two commercial printing plants. 
The lower gross margins are primarily due to the current general economic
conditions, which has resulted in increased pricing pressures and product mix
changes from high color to more generic commercial print products and having one
less week in the first quarter of 2009, as compared to the first quarter of
2008, partially offset by gross margins from Rex, as Rex was not included in our
results in the first quarter of 2008. These decreases were partially offset by
lower selling, general and administrative expenses of $18.3 million primarily
due to our cost reduction programs, lower commission expenses resulting from
lower sales and having one less week in the first quarter of 2009, as compared
to the first quarter of 2008, partially offset by selling, general and
administrative expenses of Rex, as Rex was not included in our results in the
first quarter of 2008.




Corporate
Expenses




Corporate
expenses include the cost of running our corporate headquarters.Corporate expenses were
lower in the second quarter of 2009, as compared to the second quarter of 2008,
primarily due to lower stock-based compensation expense. Corporate expenses were
lower in the first six months of 2009, as compared to the first six months of
2008, primarily due to the $6.7 million non-recurring charge incurred in 2008
for professional fees in connection with an internal review conducted by our
audit committee.




Restructuring,
Impairment and Other Charges




In the
first quarter of 2009, we developed and implemented a cost savings and
restructuring plan, which we refer to as the 2009 Plan, to reduce our operating
costs and realign our manufacturing platform in order to compete effectively
during the current economic downturn.  As a result, in the first six
months of 2009, we implemented cost saving initiatives throughout our business,
including the closure of six manufacturing facilities and integrated them into
existing operations and reductions in headcount of approximately 1,300. We
are pursuing additional cost savings opportunities in an effort to mitigate the
impacts of the current economic conditions and to ensure our cost structure is
aligned with our estimated net sales. We anticipate being substantially complete
with the implementation of these cost savings initiatives in the fourth quarter
of 2009. As of June 27, 2009, our total restructuring liability was $31.0
million, of which $11.3 million is included in other current liabilities and
$19.7 million, which is expected to be paid through 2018, is included in other
liabilities in our condensed consolidated balance sheet.




During
the second quarter of 2009, we incurred $32.0 million of restructuring and
impairment charges, which included $7.0 million of employee separation costs,
asset impairments, net of $3.8 million, equipment moving expenses of $1.1
million, lease termination expenses of $4.3 million, multi-employer pension
withdrawal expenses of $13.4 million and building clean-up and other expenses of
$2.4 million. During the first six months of 2009, we incurred $40.8 million of
restructuring and impairment charges, which included $12.4 million of employee
separation costs, asset impairments, net of $6.5 million, equipment moving
expenses of $1.3 million, lease termination expenses of $4.6 million,
multi-employer pension withdrawal expenses of $13.4 million and building
clean-up and other expenses of $2.6 million.




In the
second quarter of 2008, we incurred $5.4 million of restructuring and impairment
charges, which included $2.3 million of employee separation costs, asset
impairment charges, net of $1.0 million, equipment moving expenses of $0.1
million, lease termination expenses of $1.0 million, and building clean-up and
other expenses of $1.0 million. During the six months ended June 28, 2008, we
incurred $15.2 million of restructuring, impairment and other charges, which
included a $6.7 million non-recurring charge for professional fees related to
the internal review initiated by our audit committee, $4.0 million of employee
separation costs, asset impairment charges, net of $0.7 million, equipment
moving expenses of $0.7 million, lease termination expenses of $1.3 and building
clean-up and other expenses of $1.9 million.




Liquidity
and Capital Resources




Net Cash Provided by Operating
Activities. Net cash provided by operating activities was $22.0 million
in the first six months of 2009, which was primarily due to a decrease in our
working capital of $11.5 million and net income (loss) adjusted for non-cash
items of $10.4 million. The decrease in our working capital primarily resulted
from a decrease in receivables due to the timing of collections from and sales
to our customers and a decrease in inventories due to the timing of work
performed for our customers, partially offset by a decrease in accounts payable
and accrued compensation liabilities primarily due to the timing of payments to
our vendors.




Cash
provided by operating activities is generally sufficient to meet daily
disbursement needs. On days when our cash receipts exceed disbursements, we
reduce our revolving credit balance or place excess funds in conservative,
short-term investments until there is an opportunity to pay down debt. On days
when our cash disbursements exceed cash receipts, we use our invested cash
balance and/or our revolving credit balance to fund the difference. As a
result,





33




our daily
revolving credit balance fluctuates depending on working capital needs.
Regardless, at all times we believe we have sufficient liquidity available to us
to fund our cash needs.




Net cash
provided by operating activities was $126.4 million in the first six months of
2008, which was primarily due to a decrease in our working capital of $78.1
million and net income adjusted for non-cash items of $53.9 million. The
decrease in our working capital primarily resulted from a decrease in
receivables due to the timing of collections from and sales to our customers,
and an increase in accounts payable and accrued compensation liabilities
primarily due to the timing of payments to our vendors.




Net Cash Used in Investing
Activities. Net cash used in investing activities was $6.9 million in the
first six months of 2009, primarily for capital expenditures of $16.1 million,
offset in part by $5.2 million of proceeds from the sale of property, plant and
equipment and $4.0 million of proceeds from the sale of an
investment.




We
estimate that we will spend an aggregate of approximately $25 million on capital
expenditures in 2009, before considering proceeds from the sale of property,
plant and equipment. Our primary sources for our capital expenditures are cash
generated from operations, proceeds from the sale of property, plant and
equipment, and financing capacity within our current debt arrangements. These
sources of funding are consistent with prior years’ funding of our capital
expenditures.




Net cash
used in investing activities was $55.5 million in the first six months of 2008,
primarily resulting from the cost of business acquisitions of $38.5 million,
primarily for Rex, and capital expenditures of $25.4 million, offset in part by
$12.0 million of cash proceeds from the sale of property, plant and
equipment.





Net Cash Used in Financing
Activities. Net cash used in financing activities was $17.2 million in
the first six months of 2009, primarily due to: (i) payments of $23.0 million,
$4.3 million and $3.3 million of our 83⁄8% Notes, 77⁄8% Notes, and 101⁄2% Notes,
respectively, (see Long-Term Debt below), (ii) the payment of $7.3 million for
the Amendment, (iii) the repayment of $21.1 million of Term Loans, primarily
related to our mandatory excess cash flow sweep requirement under our Amended
Credit Facilities, and (iv) the repayment of other long-term debt of $4.9
million, offset in part by the proceeds on borrowings under our Revolving Credit
Facility of $47.2 million.




Net cash
used in financing activities was $74.3 million in the first six months of 2008,
primarily resulting from the conversion of our $175.0 million Senior Unsecured
Loan, net repayments of our Revolving Credit Facility of $64.2 million, payments
of our other long-term debt of $11.6 million, primarily debt assumed in the Rex
acquisition, and payments of $5.3 million for debt issuance costs on the
issuance of our 101⁄2% Notes, which was offset in part by the proceeds from the
issuance of our $175.0 million 101⁄2% Notes and $9.3 million of borrowings of
other long-term debt.





Long-Term Debt. Our total
outstanding long-term debt, including current maturities, was approximately
$1.275 billion as of June 27, 2009, a decrease of $31.7 million from January 3,
2009. This decrease was primarily due to: (i) the open market repurchase and
retirement of principal amounts of approximately $40.1 million,  $7.1
million and $5.0 million of our 83⁄8% Notes, 77⁄8% Notes and 101⁄2% Notes,
respectively, during the first six months of 2009 and (ii) paying down our debt
with cash flows provided by operating activities. These above open market
purchases were made within permitted restricted payment limits under our debt
agreements at the time of purchase; however, potential future open market
purchases will be restricted for some time as a result of the Amendment. As of
June 27, 2009, approximately 80% of our outstanding debt was subject to fixed
interest rates. See the remainder of this Long-Term Debt section that follows.
As of August 4, 2009, we had approximately $51.2 million borrowing availability
under our Revolving Credit Facility.




Debt
Compliance and Amendment




Our
Amended Credit Facilities contain two financial covenants, a maximum
consolidated leverage ratio covenant that we must be in pro forma compliance
with at all times, which we refer to as our Leverage Covenant, and a minimum
consolidated interest coverage ratio that we must be in pro forma compliance
with on a quarterly basis, which we refer to as our Interest Coverage Covenant.
As a result of the Amendment, as of June 27, 2009 our Leverage Covenant must not
exceed 6.25:1.00 and our Interest Coverage Covenant must not be less than
1.85:1.00. At the end of the second quarter of 2010, the Leverage Covenant
threshold steps down to 5.60:1.00 and, at the end of the first quarter of 2010,
the Interest Coverage Covenant threshold steps up to 2.00:1.00. Additionally,
the calculations of these two financial covenants have been modified to permit
the adding back of certain amounts. We were in compliance with all debt
agreement covenants as of June 27, 2009.





As conditions to the Amendment, we
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




34




Covenant
then in effect. Previously, our Revolving Credit Facility 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 our ability to request a $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 our
Amended Credit Facilities remain in full force and effect, including our failure
to operate within the revised Leverage Covenant and Interest Coverage Covenant
ratio thresholds, in certain circumstances, or have effective internal controls
would prevent us from borrowing additional amounts and could result in a default
under our Amended Credit Facilities. Such default could cause the indebtedness
outstanding under our Amended Credit Facilities and, by reason of
cross-acceleration or cross-default provisions, our 77⁄8% Notes, 83⁄8% Notes, 101⁄2%
Notes and any other indebtedness we may then have, to become immediately due and
payable.




As the
Amended Credit Facilities have senior secured position in our capital structure
and the most restrictive covenants, then provided we are in compliance with our
Amended Credit Facilities, we also would be in compliance with the senior
secured debt to consolidated cash flow covenant within our 101⁄2% Notes indenture
and the debt incurrence tests within the three subordinated notes
indentures.




Letters
of Credit




On June
27, 2009, we had outstanding letters of credit of approximately $17.5 million
and a de minimis amount of surety bonds related to performance and payment
guarantees. Based on our experience with these arrangements, we do not believe
that any obligations that may arise will be significant.




Credit
Ratings




Our
current credit ratings are as follows:


Rating
      Agency
                  
                  Corporate
                    Rating
                  
                  Amended
                    Credit
                    Facilities
                  
                  101⁄2%
                    Notes
                  
                  77⁄8%
                    Notes
                  
                  83⁄8%
                    Notes
                  
                  Outlook
                  
                  
                  Last
      UpdateStandard
      & Poor’s
                  
                  B+
                  
                  BB-
                  
                  B-
                  
                  B-
                  
                  B-
                  
                  Negative
                  
                  
                  March
      2009Moody’s
                  
                  B2
                  
                  Ba3
                  
                  B3
                  
                  Caa1
                  
                  Caa1
                  
                  Negative
                  
                  
                  May
      2009




In March
2009, Standard & Poor's Ratings Services, which we refer to as Standard
& Poor’s, lowered our Corporate Rating from BB- to B+ and all of our debt
credit ratings citing the negative impact of the current general economic
environment and its anticipated impact on our results of
operations.  In May 2009, Moody’s Investors Services, which we refer
to as Moody’s, lowered our Corporate Rating to B2 from B1 along with all of our
debt credit ratings citing a combination of poor industry fundamentals, the
expectation that an economic recovery will be quite slow and our leverage
level.




The terms
of our existing debt do not have any rating triggers that impact our funding
availability or unduly influence our daily operations, including planned capital
expenditures. We do not believe that our current ratings will unduly influence
our ability to raise additional capital. Some of our constituents closely track
rating agency actions and would note any raising or lowering of our credit
ratings; however, we believe that along with reviewing our credit ratings,
additional quantitative and qualitative analyses must be performed to accurately
judge our financial condition.




The
current credit markets downturn that began in 2007 and continues through the
date hereof makes raising additional capital expensive for any issuer. We do not
have plans to enter the current credit market for new financing given that we
have no significant debt maturities until 2013. Further, we expect that our
internally generated cash flows and financing available under our Revolving
Credit Facility will be sufficient to fund our working capital needs and
short-term growth for the next 12 months; however, this cannot be
assured.




Interest
Rate Swaps




We enter
into interest rate swap agreements to hedge interest rate exposure of our
notional floating rate debt.  As of June 27, 2009, we had $500.0
million of such interest rate swaps. In June of 2009, we had $220.0 million notional
amounts of interest rate swap agreements mature, of which we 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.
We continue to monitor interest rate related developments and may execute
additional interest rate swaps should conditions suggest there may be a
benefit.




35




Off-Balance Sheet
Arrangements. It is not our business practice to enter into off-balance
sheet arrangements. Accordingly, as of June 27, 2009, we do not have any
off-balance sheet arrangements.




Guarantees. In connection with the
disposition of certain operations, we have indemnified the purchasers for
certain contingencies as of the date of disposition. We have accrued the
estimated probable cost of these contingencies.




Seasonality




Our
commercial printing plants experience seasonal variations. Revenues from annual
reports are generally concentrated from February through April. Revenues
associated with consumer publications, such as holiday catalogs and automobile
brochures, tend to be concentrated from July through October. Revenues
associated with the educational and scholarly market and promotional materials
tend to decline in the summer. In addition, several envelope market segments and
certain segments of the direct mail market have historically experienced
seasonality with a higher percentage of 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 related to holiday purchases. As a
result of these seasonal variations, some of our operations operate at or near
capacity at certain times throughout the year.




New
Accounting Pronouncements





We are
required to adopt certain new accounting pronouncements. See Note 1 to our
condensed consolidated financial statements included herein.




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
SEC. In addition, our earnings conference calls are archived for replay on our
website and presentations to securities analysts are also included on our
website.





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 operations and financial
position. Risks from interest rate fluctuations and changes in foreign currency
exchange rates are managed through normal operating and financing activities. We
do not utilize derivatives for speculative purposes.




Exposure
to market risk from changes in interest rates relates primarily to our variable
rate debt obligations. The interest on this debt is LIBOR plus a margin. At June
27, 2009, we had variable rate debt outstanding of approximately $250.2 million,
after considering our interest rate swaps. A 1% increase in LIBOR on debt
outstanding subject to variable interest rates would increase our annual
interest expense by approximately $2.5 million.




We have
foreign operations, primarily in Canada, and thus are exposed to market risk for
changes in foreign currency exchange rates. For the three months ended June 27,
2009, a uniform 10% strengthening of the U.S. dollar relative to the local
currency of our foreign operations would have resulted in a decrease in sales
and operating income of approximately $2.0 million and $0.3 million,
respectively. For the six months ended June 27, 2009, a uniform 10%
strengthening of the U.S. dollar relative to the local currency of our foreign
operations would have resulted in a decrease in sales and operating income of
approximately $3.8 million and $0.5 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.




36




Item
4.  Controls and Procedures




Evaluation
of Disclosure Controls and Procedures




Our
management, with the participation of our Chief Executive Officer and our Chief
Financial Officer, carried out an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rules
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 quarterly
report. Based on that evaluation, our Chief Executive Officer and our Chief
Financial Officer concluded that our disclosure controls and procedures were
effective as of June 27, 2009 in order to provide reasonable assurance that
information required to be disclosed by the Company in its filings under the
Exchange Act was recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission.




Changes
in Internal Control over Financial Reporting




There
were no changes in our internal control over financial reporting during the
quarter ended June 27, 2009 that have materially affected or are reasonably
likely to materially affect, our internal control over financial
reporting.




Inherent
Limitations on Effectiveness of Controls




Our
management, including our Chief Executive Officer and our Chief Financial
Officer, does not expect that our disclosure controls or our internal control
over financial reporting will prevent or detect all errors and all fraud. A
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system’s objectives will be
met. Our disclosure controls and procedures are designed to provide reasonable
assurance of achieving their objectives. The design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Further, because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not
occur or that all control issues and instances of fraud, if any, within the
Company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns can occur
because of simple errors or mistakes. Controls can also be circumvented by the
individual acts of some persons, by collusion of two or more people, or by
management override of the controls. The design of any system of controls is
based in part on certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Projections of any evaluation of
controls effectiveness to future periods are subject to risks. Over time,
controls may become inadequate because of changes in conditions or deterioration
in the degree of compliance with policies or procedures.




37




PART
II. OTHER INFORMATION






Item
1.  Legal Proceedings




From time
to time, we are involved in litigation that we consider to be ordinary and
incidental to our business. While the outcome of pending legal actions cannot be
predicted with certainty, we believe the outcome of these proceedings will not
have a material adverse effect on our condensed consolidated financial position,
results of operations or liquidity.





Item
1A.  Risk Factors




In
addition to the other information set forth in this report, you should carefully
consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual
Report on Form 10-K for the year ended January 3, 2009, which could materially
affect our business, financial condition or future results. The risks described
in our Annual Report on Form 10-K are not the only risks facing our Company.
Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operating results.




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




On April
30, 2009, 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 for a one year term by the following vote:




Name
                    For
                    WithheldRobert
      G. Burton,
      Sr.
                    47,788,053
                    1,417,607Gerald
      S. Armstrong
                    45,410,919
                    3,794,741Leonard
      C.
      Green
                    48,033,150
                    1,172,510Mark
      J.
      Griffin
                    48,031,800
                    1,173,860Robert
      B.
      Obernier
                    48,031,689
                    1,173,971





Selection
of Auditors - The selection by the Company’s Audit Committee of Grant Thornton,
LLP as independent auditors of the Company for the fiscal year ending January 2,
2010 was ratified by the following vote: 48,600,803 For; 591,156 Against; 13,701
Abstentions.




Amendment
to the Cenveo, Inc. 2007 Long-Term Equity Incentive Plan, as amended, (the
“Plan”) – The Plan amendment proposed by management was to increase the number
of shares allocated to the Plan from 2,000,000 shares to 4,500,000
shares.  The Plan amendment was approved by the Company’s shareholders
by the following vote: 31,338,811 For; 12,394,334 Against; 22,535
Abstentions.




38


Item
      6.
                                          ExhibitsExhibit
                                            Number
                                          
                                          Description2.1
                                          Agreement
      of Merger dated as of December 26, 2006 among Cenveo, Inc., Mouse
      Acquisition Corp. and Cadmus Communications Corporation—incorporated by
      reference to Exhibit 2.1 to registrant’s current report on Form 8-K filed
      December 27, 2006.2.2
                                          Stock
      Purchase Agreement dated as of July 17, 2007 among Cenveo Corporation,
      Commercial Envelope Manufacturing Co., Inc. and its
      shareholders—incorporated by reference to Exhibit 2.1 to registrant’s
      current report on Form 8-K filed July 20, 2007.3.1
                                          Articles
      of Incorporation—incorporated by reference to Exhibit 3(i) of the
      registrant’s quarterly report on Form 10-Q for the quarter ended June 30,
      1997, filed August 14, 1997.3.2
                                          Articles
      of Amendment to the Articles of Incorporation dated May 17,
      2004—incorporated by reference to Exhibit 3.2 to registrant’s quarterly
      report on Form 10-Q for the quarter ended June 30, 2004, filed August 2,
      2004.3.3
                                          Amendment
      to Articles of Incorporation and Certificate of Designations of Series A
      Junior Participating Preferred Stock of the Registrant dated April 20,
      2005—incorporated by reference to Exhibit 3.1 to registrant’s current
      report on Form 8-K filed April 21, 2005.3.4
                                          Bylaws
      as amended and restated effective February 22, 2007—incorporated by
      reference to Exhibit 3.2 to registrant’s current report on Form 8-K filed
      August 30, 2007.3.5
                                          Registration
      Statement on Form S-8 dated September 11, 2008 registering shares under
      the Cenveo, Inc. 2007 Long-Term Equity Incentive Plan, and filed with the
      Securities & Exchange Commission on September 11, 2008—incorporated by
      reference to Exhibit 3.5 to registrant’s quarterly report on Form 10-Q for
      the quarter ended September 27, 2008.3.6
                                          Registration
      Statement on Form S-8 dated September 11, 2008 de-registering shares under
      the Cenveo, Inc. 2001 Long-Term Equity Incentive Plan, and filed with the
      Securities & Exchange Commission on September 11, 2008—incorporated by
      reference to Exhibit 3.6 to registrant’s quarterly report on Form 10-Q for
      the quarter ended September 27, 2008.4.1
                                          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 77⁄8% Senior Subordinated
      Notes due 2013—incorporated by reference to Exhibit 4.5 to registrant’s
      annual report on Form 10-K for the year ended December 31,
      2003.4.2
                                          Registration
      Rights Agreement dated February 4, 2004, between Mail-Well I Corporation
      and Credit Suisse First Boston LLC, as Initial Purchaser, relating to
      Mail-Well I Corporation’s 77⁄8% Senior Subordinated Notes due
      2013—incorporated by reference to Exhibit 4.6 to registrant’s annual
      report on Form 10-K for the year ended December 31, 2003.4.3
                                          Supplemental
      Indenture, dated as of June 21, 2006 among Cenveo Corporation (f/k/a
      Mail-Well I Corporation), the Guarantors named therein and U.S. Bank
      National Association, as Trustee, to the Indenture dated as of February 4,
      2004 relating to the 77⁄8% Senior Subordinated Notes due 2013—incorporated
      by reference to Exhibit 4.2 to registrant’s current report on Form 8-K
      filed June 27, 2006.




39




Exhibit

                              Number
                          
                          Description4.4
                          Third
      Supplemental Indenture, dated as of March 7, 2007 among Cenveo Corporation
      (f/k/a Mail-Well I Corporation), the Guarantors named therein and U.S.
      Bank National Association, as Trustee, to the Indenture dated as of
      February 4, 2004 relating to the 77⁄8% Senior Subordinated Notes due
      2013—incorporated by reference to Exhibit 4.7 to registrant’s quarterly
      report on Form 10-Q for the quarter ended March 31,
  2007.4.5
                          Fourth
      Supplemental Indenture, dated as of July 9, 2007 among Cenveo Corporation
      (f/k/a Mail-Well I Corporation), the Guarantors named therein and U.S.
      Bank National Association, as Trustee, to the Indenture dated as of
      February 4, 2004 relating to the 77⁄8% Senior Subordinated Notes due
      2013—incorporated by reference to Exhibit 4.8 to registrant’s quarterly
      report on Form 10-Q for the quarter ended June 30,
2007.4.6
                          Fifth
      Supplemental Indenture, dated as of August 30, 2007 among Cenveo
      Corporation (f/k/a Mail-Well I Corporation), the Guarantors named therein
      and U.S. Bank National Association, as Trustee, to the Indenture dated as
      of February 4, 2004 relating to the 77⁄8% Senior Subordinated Notes due
      2013—incorporated by reference to Exhibit 4.6 to registrant’s quarterly
      report on Form 10-Q for the quarter ended September 29,
    2007.4.7
                          Sixth
      Supplemental Indenture, dated as of April 16, 2008 among Cenveo
      Corporation (f/k/a Mail-Well I Corporation), the Guarantors named therein
      and U.S. Bank National Association, as Trustee, to the Indenture dated as
      of February 4, 2004 relating to the 77⁄8% Senior Subordinated Notes due
      2013—incorporated by reference to Exhibit 4.7 to registrant’s quarterly
      report on Form 10-Q for the quarter ended June 28,
2008.4.8
                          Seventh
      Supplemental Indenture, dated as of August 20, 2008 among Cenveo
      Corporation (f/k/a Mail-Well I Corporation), the Guarantors named therein
      and U.S. Bank National Association, as Trustee, to the Indenture dated as
      of February 4, 2004 relating to the 77⁄8% Senior Subordinated Notes due
      2013—incorporated by reference to Exhibit 4.8 to registrant’s quarterly
      report on Form 10-Q for the quarter ended September 27,
    2008.4.9
                          Indenture,
      dated as of June 15, 2004, among Cadmus Communications Corporation, the
      Guarantors named therein and Wachovia Bank, National Association, as
      Trustee, relating to the 83⁄8% Senior Subordinated Notes due
      2014—incorporated by reference to Exhibit 4.9 to Cadmus Communications
      Corporation’s registration statement on Form S-4 filed August 24,
      2004.4.10
                          Registration
      Rights Agreement, dated June 15, 2004, among Cadmus Communications
      Corporation, the Guarantors named therein and Wachovia Capital Markets,
      LLC and Banc of America Securities LLC on behalf of the Initial
      Purchasers, relating to the 83⁄8% Senior Subordinated Notes due
      2014—incorporated by reference to Exhibit 4.10 to Cadmus Communications
      Corporation’s registration statement on Form S-4 filed August 24,
      2004.4.11
                          First
      Supplemental Indenture, dated as of March 1, 2005, to the Indenture dated
      as of June 15, 2004, among Cadmus Communications Corporation, the
      Guarantors named therein and Wachovia Bank, National Association, as
      Trustee, relating to the 83⁄8% Senior Subordinated Notes due
      2014—incorporated by reference to Exhibit 4.9.1 to Cadmus Communications
      Corporation’s quarterly report on Form 10-Q for the quarter ended March
      31, 2005, filed May 13, 2005.





40




Exhibit

                                Number
                            
                            Description


4.12
                  Second
      Supplemental Indenture, dated as of May 19, 2006, to the Indenture dated
      as of June 15, 2004, among Cadmus Communications Corporation, the
      Guarantors named therein and U.S. Bank National Association (successor to
      Wachovia Bank, National Association), as Trustee, relating to the 83⁄8%
      Senior Subordinated Notes due 2014—incorporated by reference to Exhibit
      4.9.2 to Cadmus Communications Corporation’s annual report on Form 10-K
      for the year ended June 30, 2006, filed September 13,
  2006.4.13
                  Third
      Supplemental Indenture, dated as of March 7, 2007, to the Indenture dated
      as of June 15, 2004, among Cenveo Corporation (as successor to Cadmus
      Communications Corporation), the Guarantors named therein and U.S. Bank
      National Association (successor to Wachovia Bank, National Association),
      as Trustee, relating to the 83⁄8% Senior Subordinated Notes due
      2014—incorporated by reference to Exhibit 4.11 to registrant’s quarterly
      report on Form 10-Q for the quarter ended March 31,
  2007.4.14
                  Fourth
      Supplemental Indenture, dated as of July 9, 2007, to the Indenture dated
      as of June 15, 2004, among Cenveo Corporation (as successor to Cadmus
      Communications Corporation), the Guarantors named therein and U.S. Bank
      National Association (successor to Wachovia Bank, National Association),
      as Trustee, relating to the 83⁄8% Senior Subordinated Notes due
      2014—incorporated by reference to Exhibit 4.13 to registrant’s quarterly
      report on Form 10-Q for the quarter ended June 30,
2007.4.15
                  Fifth
      Supplemental Indenture, dated as of August 30, 2007, to the Indenture
      dated as of June 15, 2004, among Cenveo Corporation (as successor to
      Cadmus Communications Corporation), the Guarantors named therein and U.S.
      Bank National Association (successor to Wachovia Bank, National
      Association), as Trustee, relating to the 83⁄8% Senior Subordinated Notes
      due 2014—incorporated by reference to Exhibit 4.13 to registrant’s
      quarterly report on Form 10-Q for the quarter ended September 29,
      2007.4.16
                  Sixth
      Supplemental Indenture, dated as of November 7, 2007, to the Indenture
      dated as of June 15, 2004, among Cenveo Corporation (as successor to
      Cadmus Communications Corporation), the Guarantors named therein and U.S.
      Bank National Association (successor to Wachovia Bank, National
      Association), as Trustee, relating to the 83⁄8% Senior Subordinated Notes
      due 2014—incorporated by reference to Exhibit 4.12 to registrant’s annual
      report on Form 10-K for the year ended December 29,
  2007.4.17
                  Seventh
      Supplemental Indenture, dated as of April 16, 2008, to the Indenture dated
      as of June 15, 2004, among Cenveo Corporation (as successor to Cadmus
      Communications Corporation), the Guarantors named therein and U.S. Bank
      National Association (successor to Wachovia Bank, National Association),
      as Trustee, relating to the 83⁄8% Senior Subordinated Notes due
      2014—incorporated by reference to Exhibit 4.16 to registrant’s quarterly
      report on Form 10-Q for the quarter ended June 28,
2008.4.18
                  Eighth
      Supplemental Indenture, dated as of August 20, 2008, to the Indenture
      dated as of June 15, 2004, among Cenveo Corporation (as successor to
      Cadmus Communications Corporation), the Guarantors named therein and U.S.
      Bank National Association (successor to Wachovia Bank, National
      Association), as Trustee, relating to the 83⁄8% Senior Subordinated Notes
      due 2014—incorporated by reference to Exhibit 4.18 to registrant’s
      quarterly report on Form 10-Q for the quarter ended September 27,
      2008.





41


Exhibit

                                Number
                            
                            Description


4.19
                  Indenture,
      dated as of June 13, 2008, between Cenveo Corporation, the other
      guarantors named therein and U.S. Bank National Association, as Trustee,
      relating to the 101⁄2% Notes of Cenveo Corporation—incorporated by reference
      to Exhibit 4.1 to registrant’s current report on Form 8-K dated (date of
      earliest event reported) June 9, 2008, filed June 13,
  2008.4.20
                  Guarantee
      by Cenveo, Inc. and the other guarantors named therein relating to the
      101⁄2% Notes of Cenveo Corporation—incorporated by reference to Exhibit 4.2
      to registrant’s current report on Form 8-K dated (date of earliest event
      reported) June 9, 2008, filed June 13, 2008.4.21
                  First
      Supplemental Indenture, dated as of August 20, 2008, to the Indenture of
      June 13, 2008 between Cenveo Corporation, the other guarantors named
      therein and U.S. Bank National Association, as Trustee, relating to the
      101⁄2% Notes of Cenveo Corporation—incorporated by reference to Exhibit 4.21
      to registrant’s quarterly report on Form 10-Q for the quarter ended
      September 27,
2008.





4.22
                  Registration
      Rights Agreement dated as June 13, 2008, among Cenveo Corporation, Cenveo
      Inc., the other guarantors named therein and Lehman Brothers
      Inc.—incorporated by reference to Exhibit 10.1 to registrant’s current
      report on Form 8-K dated (date of earliest event reported) June 9, 2008,
      filed June 13, 2008.10.1
                  Third
      Amendment, dated as of April 24, 2009, to Credit Agreement, dated as of
      June 21, 2006, as amended, among Cenveo Corporation, Cenveo, Inc., Bank of
      America, N.A., as Administrative Agent, and the other lenders party
      thereto—incorporated by reference to the registrant’s current report on
      Form 8-K filed April 27, 2009.10.2
                  Cenveo,
      Inc. 2007 Long-Term Equity Incentive Plan, as amended —incorporated by
      reference to Exhibit A to registrant’s Schedule14A filed April 6,
      2009.31.1*
                  Certification
      by Robert G. Burton, Sr., Chief Executive Officer, pursuant to Section 302
      of the Sarbanes-Oxley Act of 2002.31.2*
                  Certification
      by Kenneth P. Viret, Chief Financial Officer, pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002.32.1*
                  Certification
      of the Chief Executive Officer and of the Chief Financial Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002, furnished as an exhibit
      to this report on Form
10-Q.




________________________


*Filed
herewith.




42







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 Stamford, State of
Connecticut, on August 5, 2009.







CENVEO,
      INC.By:
            /s/Robert
      G. Burton, Sr.Robert
      G. Burton, Sr.Chairman
      and Chief Executive Officer(Principal
      Executive Officer)By:
            /s/
      Kenneth
      P. ViretKenneth
      P. ViretSenior
      Vice President and Chief Financial Officer(Principal
      Financial Officer andPrincipal
      Accounting Officer)