Presentation to the Allianz SE High Yield Group May 31, 2016 - - PDF document

Presentation to the Allianz SE High Yield Group May 31, 2016

Michael McGillen David Hollander Kathy Mohanna Will Hasten

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 1

Table of Contents

Executive Summary ............................................................................................................................. 3 Company ................................................................................................................................................... 6 History & Business Description ............................................................................................... 6 Manufacturing Process & Value Chain ................................................................................. 9 Products ............................................................................................................................................... 9 Management .................................................................................................................................... 11 Shareholder Profile ..................................................................................................................... 13 Capital Structure ........................................................................................................................... 14 Recent Financial Performance .............................................................................................. 18 Segment Financial Analysis ..................................................................................................... 19 Industry .................................................................................................................................................. 22 Market Trends ............................................................................................................................... 22 Competitive Landscape ............................................................................................................. 26 SWOT Analysis ............................................................................................................................... 29 Valuation ................................................................................................................................................ 30 Discounted Cash Flow Analysis ............................................................................................. 30 Comparable Companies Analysis ......................................................................................... 31 Precedent Transactions Analysis ......................................................................................... 33 Historical Prices Analysis ........................................................................................................ 34 Sum-of-the-Parts Analysis ....................................................................................................... 35 Plan of Reorganization ................................................................................................................... 36 Key Challenges to Financial Restructuring ..................................................................... 36 Board Control ................................................................................................................................. 37 Operational Improvements .................................................................................................... 38 Acquisitions & Divestments .................................................................................................... 42 Capital Structure Reorganization ........................................................................................ 44 Recovery Analysis ........................................................................................................................ 47 Allianz Recovery Analysis ........................................................................................................ 49 Appendix ................................................................................................................................................ 50 Exhibit 1: Comparable Trading Multiples ..........................................................................

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 2 Exhibit 2: Historical Financials – Income Statement .................................................... 1 Exhibit 3: Historical Financials – Balance Sheet ............................................................. 2 Exhibit 4: Historical Financials – Cash Flow Statement .............................................. 3 Exhibit 5: Projected Financials + Proposed Capital Structure................................. 4 Exhibit 6: Projected Financials + Proposed Capital Structure................................. 5 Exhibit 7: Projected Financials + Proposed Capital Structure................................. 6 Exhibit 8: Sum-of-the-parts Valuation .................................................................................. 7 Exhibit 9: Asset Waterfall in Bankruptcy............................................................................ 7 Exhibit 10: Pro-forma Balance Sheet following recapitalization ........................... 8 Exhibit 11: Pre-Restructuring Debt Repayment Schedule ........................................ 8 Exhibit 12: DCF Sensitivity ......................................................................................................... 9

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 3

Executive Summary

Cenveo Corporation (‘Cenveo’ or ‘the Company’) is a market-leading manufacturer

• f envelopes, labels, and commercial print applications. Over the last ten years, it

has been beset by secular declines in nearly all of its businesses. As advertising spend continues its shift toward digital customer acquisition, direct-mail-dependent Cenveo has seen pricing and sales volumes worsen. It has attempted three re- financings in six years and our analysis indicates a likely bankruptcy within three. Negative revenue growth, untenable 8.7x EBITDA leverage, an ABL facility drawn dangerously close to its $190mm limit, and $540mm of first-lien notes coming due in 2019 all spell reorganization for the envelope giant. There has been a growing trend among private equity and hedge funds with appetites for equity-like risks/rewards to use debt as a way for acquiring control of financially distressed companies. The most common approach is to acquire discounted loans (e.g., second-lien loans, senior subordinated notes, etc.) in the secondary market or by lending more money to the company to avoid bankruptcy. Underlying the success of such strategies is growing evidence of creditors effectively influencing management and the overall direction of a company.1 An effective “loan-to-own” strategy should minimize the risk of litigation, liquidation (i.e., the target company fails) and valuation that exceeds the investor’s value

• proposition. As a result, any firm engaging in a loan-to-own strategy using the

junior debt must account for the interests of other creditors and management.

1 “Creditor Control and Conflict in Chapter 11”, Kenneth Ayotte and Edward Morrison, 2009

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 4 European insurance company Allianz SE (“Allianz”) began purchasing Cenveo second lien, unsecured debt, and equity when Cenveo refinanced its obligations in 2012, and increased the investment in 2013 and 2014. Currently, Allianz is the largest single holder of debt and equity in the company2. Allianz’s strategy has many of the trademarks of a loan-to-own strategy, including a pending exchange of existing junior debt for a combination of senior debt and equity. Following the exchange, Allianz’s total potential position in Cenveo will be $204mm, including warrants to purchase an additional 15% in equity.

Table 1 - Allianz's (nominal) position in Cenveo

Security % Outstanding Amount ($mm) Secured Senior Note (New from Allianz) 100.0% $50.0 2019 Senior Priority Secured Notes (1st Lien) 5.0% $27.0 2022 Junior Priority Secured Notes (2nd Lien) 13.0% $32.2 2024 Senior Unsecured Notes (New) 68.4% $71.8 Equity (assuming exercised warrants) 28.4% $23.2 Total Potential Investment $204.2

In order for the trade to be profitable, Allianz must successfully navigate potential conflicts with equity holders, management, and senior creditors; our analysis shows that Allianz is unlikely to recover full value should the first lien holders push Cenveo into bankruptcy. Therefore, given aforementioned loan-to-own trends and Allianz’s position, we chose to address our Plan of Reorganization recommendations to their High Yield

2 FactSet

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 5 Group:

• 1. Operational Improvements: Use equity/debt position to obtain board

control and put in place new management familiar with higher-margin labeling and modern mailing campaigns, cross-sell Kadena platform, and expand labeling operations in underpenetrated geographic areas

• 2. M&A: Divest negative-growth Commercial Print segment to synergy-capable

strategic buyer, using proceeds to pay off 1st lien debt and reduce leverage ratios

• 3. Capital Structure Reorganization: Coordinate with 1st and 2nd lien holders

to de-lever Cenveo through debt-to-equity conversion in pre-packaged bankruptcy, use market position to entice strategic buyer We estimate that execution of this plan will provide for complete recovery for the ABL, 1st Lien and 2nd Lien holders and leave a significant stake in equity for Allianz. Finally, it is important to remember that we believe Allianz has little long-term interest in managing an envelope company. The recommendations below are aimed at streamlining Cenveo and paving the way towards a profitable exit.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 6

Company

History & Business Description

Cenveo produces envelopes, labels, and commercial printing products, primarily in the United States and Canada. Its present structure originates from a Sterling Group roll-up of Georgia-Pacific’s envelope business as well as other commercial printers. Sterling took the combined enterprise public in 1995 under the name Mail-Well, changing its name to Cenveo in 2004.

Table 2 – Key Financials (excluding discontinued operations) 2013A 2014A 2015A Net Sales $1,589 $1,761 $1,742 Stock Price (as of 5/31/2016) $0.96 Operating Income 69 85 121 Market Capitalization 66 EBITDA 113 133 167 Net Debt 1029 UFCF 52 63 63 Enterprise Value $1,095

3

Under Sterling’s Gerland Mahoney in the ‘90s and early-‘00s, Cenveo tried to consolidate what was a highly-fragmented industry, acquiring American Envelope, Graphic Arts Center, and Supremex,4 transforming Mail-Well into the largest envelope manufacturer in North America. Mahoney’s successor Paul Reilly launched a major effort to restructure the business and divest underperforming business units, but resigned in 2005 with little success. In May 2005, Robert Burton became Chairman and CEO.5

3 Excludes revenue, operating income, and assets classified as “Corporate” 4 http://www.mikedunton.com/mail-well_history_2.htm 5 Burton Capital’s stake was later increased to 10.6% in less than a week after disclosing the 9.6% stake

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 7 By 2005, structural shifts currently affecting the direct mail and printing were beginning to take hold. Cenveo revenues dropped 13% from 2004-2006 despite US Print Media advertising revenues increasing a modest 3.7%6. Cenveo management’s strategy response was to focus on reducing costs and buy capacity/niche products, positioning the company for a market rebound. Key acquisitions are highlighted below.

6 https://www.statista.com/chart/709/googles-ad-revenue-since-2004/

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 8  Cadmus Communications (March 2007): Paid $241mm in cash (12.3x LTM EBITDA, representing an 18% premium to the prior-day’s closing price) to expand into scientific and technical journal printing  Commercial Envelope Manufacturing (August 2007): Paid $230mm in cash (11.3x LTM EBITDA) to expand its envelope manufacturing business  MeadWestVaco’s Envelope Products Group (February 2011): Paid $55mm in cash to expand direct mail and billing business.  National Envelope (August 2013): Purchased one of Cenveo’s chief envelope competitors out of bankruptcy for $133mm (including assumption

• f debt). This helped solidify Cenveo’s position as the largest North

American envelope manufacturer Cenveo had expanded its suite of niche products and services but borrowed heavily to do so. From 2006 to 2009, Cenveo’s net debt ballooned 83% ($676mm to $1,234mm) while revenue increased only 14% owing to the 2008 recession. As pricing pressure increased and demand slowed, Cenveo’s interest coverage went from 1.77x to 1.00x over the same period. Declining sales in 2012 and 2013 prompted management to change tactics once more by focusing on the commercial envelope business and reducing exposure to

• printing. From 2011-2016, it sold 5 print facilities ($14.6mm), 6 niche envelope

facilities ($9.4mm), its Custom Envelope business ($48mm), and its Packaging business ($105mm), using the proceeds to pay down debt. Cenveo has since become increasingly dependent on the high-yield market to refinance its existing debt obligations, engaging in three exchange offers/issuances

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 9 from 2011-2015. While these have helped reduce overall interest expense by $20mm per year, Cenveo has struggled to generate cash flow to grow its way out of debt.

Manufacturing Process & Value Chain

Cenveo operates 46 manufacturing facilities (15 owned, 31 leased) and leases its Stamford headquarters as well as its sales and support facilities. Its primary product inputs include paper, ink, film, offset plates and chemicals, with paper accounting for the majority of total material costs. Understandably, Cenveo’s business requires the use of heavy, capital-intensive machinery—roughly 83% of the Company’s $636mm in Gross PP&E is devoted to machines like digital presses, which can cost up to $900,000 and comprise much of one facility’s output. Many of these machines are highly productive, however (1 W+D 320 envelope converter processes 21,000 units an hour). Cenveo’s 6.26x 5-year fixed asset turnover compares favorably with RR Donnelly’s 6.71x and Quad/Graphics 2.34x. Only 23% of Cenveo’s 7,300 employees are unionized, which gives them a degree of operational flexibility.

Products

Envelope: Cenveo operates 22 envelope manufacturing and sales facilities, all based in the US. This manufacturing process consists of “converting” rolls of paper into envelopes using die-cutting, folding, and gluing. Its Commercial Envelope Group handles specialized B2B envelope production, while its ‘Quality Park’ brand sells specialty and stock envelopes through wholesalers, independent dealers and office product superstores. These operations run hand-in-hand with Cenveo’s Mailing

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 10 Services division, which constructs direct-mail campaigns. These include standard promotional mailers as well as invoices and billing statements. Key consumers include the finance/insurance and retail industries. Print: This segment produces car brochures, journals/books/magazines, advertising displays, corporate identity/marketing materials and directories. With 16 manufacturing and sales facilities in the US, Cenveo’s commercial printing process includes electronic prepress, direct-to-plate technology, high-quality color printing (on web or sheet-fed presses, depending on the volume and quality you need), and digital printing. This segment caters primarily to the consumer product, automotive, travel and leisure and telecommunications industries. Label: The label segment produces custom labels for pharmacies, consumer product, and food/beverage companies. It specializes in end-to-end production of custom, overnight packaging, and pressure-sensitive prescription labels. Its ‘Rx Technology’ brand is the strongest in the pharmacy segment and its ‘Nashua’ brand is a popular manufacturer of entertainment tickets. The segment has 8 manufacturing and sales facilities and labels are sold directly via the Cenveo website/sales team or through extensive distributor channels. Auxiliary: Cenveo also offers services that complement the 3 segments: Fulfillment software and warehousing/distribution capacity (5 US facilities) offer clients the ability to input orders automatically and take delivery within days while avoiding inventory build-up. The Creative Services Group (4 facilities in the US, 4 in India, and 1 in the UK) designs direct-mail and commercial printing campaigns, services essential to Envelope and Print customers. Cenveo also recently rolled out a

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 11 platform called ‘Kadena’, which is software that allows clients to design and archive marketing content (both digital and print), manage its production and distribution, and review campaign analytics.

Management

CEO Robert Burton Sr. has been an officer and director since 2005. Previously the CEO of Moore Corporation ($2.0bn in sales) and World Color Press ($3.0bn in sales), Burton had extensive printing industry experience prior to Cenveo. In 2005, Burton became Cenveo's largest individual shareholder when he acquired a 9.6% stake through his company Burton Capital Management. His two sons Robert Jr. and Michael are President and COO, respectively, while CFO Scott Goodwin was an accountant at Deloitte prior to Cenveo and Ian Scheinmann was a real estate lawyer prior to becoming their de facto General Counsel.

Table 2 - Cenveo Key Executives Table 3 - Kadena platform framework

Robert Burton, Sr. 74 Chairman of the Board, CEO 09/12/2005 Robert Burton, Jr. 39 President 08/10/2011 Scott Goodwin 37 CFO 04/2012 Michael Burton 37 COO 07/01/2013 Ian Scheinmann 46 Senior Vice President - Legal Affairs 08/2010 Office Name Age Current Position Officer Since

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 12 The Cenveo Board is composed of three independent directors and Burtons Sr. and

• Jr. Gerald Armstrong is a former banker specializing in print finance, Dr. Mark

Griffin is an educator specializing in learning disabilities, and Dr. Susan Herbst is the president of the University of Connecticut, where Cenveo is based. While it requires a supermajority for mergers (2/3rds), Cenveo’s board is remarkably shareholder-friendly. There is no poison pill, classified board or super- voting requirements for the removal of board members; it has a 1.25/10 FactSet Bulletproof rating for takeover defenses, which is lax compared to the 3.19 rating for the Russell 3000.

Table 3 - Cenveo Directorship

There are 3 Cenveo governance-related issues that are cause for concern:  While management equity interests are aligned with the company, the small number of board members create an unusual amount of control for the Burton family. This would present some difficulty in a reorganization scenario.  Excessive Burton family compensation. Each of the Burtons averaged over $1mm in compensation over a period in which Cenveo’s share averaged a

Robert Burton, Sr. Chairman of the Board 09/12/2005 Gerald Armstrong Independent Director, Chair of Audit Committee and Nominating Committee 12/31/2007 Robert Burton Director 09/18/2013

• Dr. Mark Griffin

Independent Director, Chair of HR Committee 09/12/2005

• Dr. Susan Herbst, Ph.D

Independent Director 09/18/2013 Current Positions Director Since Board Member Name

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 13 negative 31% annual return. Cumulatively, they have been paid over $75mm since 2005 (when shares averaged ~$4.00).

Table 4 - Burton family compensation

2011 2012 2013 2014 2015 Robert Burton, Sr. $9,631,864 $3,040,124 $4,395,124 $3,791,124 $4,305,124 Robert Burton, Jr. 2,016,075 942,290 1,220,524 1,251,736 1,485,190 Michael Burton 1,802,973 922,290 1,201,212 1,218,261 1,514,986 Total $13,450,912 $4,904,704 $6,816,860 $6,261,121 $7,305,300

 Cenveo disagreed with and dismissed its auditor Grant Thornton over how to account for discontinued operations in 2015; it is possible a ‘discontinued’ designation for certain operations could understate future operating losses. Nevertheless, Cenveo was able to obtain a 2015 unqualified opinion from new auditor BDO Seidman.

Shareholder Profile

Robert Burton Sr. has been Cenveo’s largest individual shareholder since 2005, and the Burton Family & affiliates own 13.2%. Investment managers Allianz (13.4%) as well as Vanguard (3.1%) also own significant pieces, with Allianz purchasing all of its 9.1mm shares in mid-2014, presumably to help defend its debt position. Some special situation and credit-focused investment firms have relevant equity positions in the Company, but the most significant credit-focused shareholder is Rotation Capital Management, which holds 6% of the equity.

Shareholder % Ownership Position (‘000 shares) Market Value ($mm) Allianz Global Investors U.S. LLC 13.4% 9,068 $8,705

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 14

BURTON ROBERT G SR 11.1% 7,553 7,251 Rotation Capital Management LP 6.1% 4,138 3,973 Private Management Group, Inc. 5.4% 3,651 3,505 Zelman Capital LLC 4.6% 3,126 3,001 Wallace Capital Management, Inc. 4.6% 3,117 2,993 Boothbay Fund Management LLC 3.5% 2,348 2,254 The Vanguard Group, Inc. 3.1% 2,103 2,019 BlackRock Fund Advisors 2.9% 1,988 1,908 Ardsley Advisory Partners 2.2% 1,500 1,440

Capital Structure

All debt, excluding small equipment loans, is issued at Cenveo Corporation, the

• perating Company, with a guaranty from Cenveo, Inc., the Holding Company. The

Company’s capital structure includes a combination of secured and unsecured debt resulting in total debt / est. 2016 EBITDA of 8.7x. On May 11, 2016, Cenveo made the latest in a series of exchange offers, this time with Allianz and effective June 7, 2016. Without contingency on a debt re-issuance,

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 15 we assume (as do Cenveo analysts) this exchange will take effect and have modeled

• ur Plan of Reorganization following this assumption.

Table 5 - Cenveo Refinancings and Facility Amendments

Date Transaction Summary Details June 7, 2016 (pending)  Exchanged $150mm of the 11.5% Notes due 2017 for $105mm in 6% Notes due 2024, plus warrants totaling 16.6% of total equity Repurchase $38mm of the 7% Convertible Notes due 2017 for $23mm cash and 3.3% of total equity  Issues $50mm Senior Secured Note in exchange for reducing ABL facility from $240mm to $190mm  Allianz was involved in each part of proposal, composing 68% of the 11.5% Note exchange, 100% of the repurchase agreement and 100% of the Secured Note issuance  Exchange reduces total debt by

• nly $10mm, but extends major

maturities out to 2019 June 26, 2014  Issues $540mm of 1st Lien 6% Notes due 2019  Issues $250mm of 2nd Lien 8.5% Notes due 2022 Net proceeds were used to repurchase both the Term Loan facility due 2018 and the 8.875% 2nd Lien Notes due 2018  Both tranches of issued Notes were issued at par  The Burton family were one of the holders of the 8.875% Notes April 16, 2013  Refinances $360mm Term B Loan revolver, lowering interest rate from 7% to 6.25%  Establishes $200mm ABL revolver, lowering interest rate from 7% to Libor + 220  Issues $50mm Senior Secured Note in exchange for reduced ABL amount  Bank of America arranged Term B Loan  Macquarie, BofA, and Barclays arranged ABL facility December 17, 2012  Issues additional $15mm Term Loan due 2016  Issues new $50mm 7.875% Senior Sub Note due 2017  Calls remainder of 7.875% Senior Sub Notes due 2013 at par

While the latest agreement only reduces total debt by $32.5mm, it is key to moving maturities to 2019 in addition to lowering interest expense. Furthermore, it gives Allianz an additional 15% of potential corporate control (in shares and warrants), bringing its total to 28.4% of company equity. An overview of the post-exchange capital structure is provided below.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 16

Table 6 - Capital Structure Post-Exchange ($mm) Security Rate Maturity Principal Post-Exchange Trading Price Yield to Worst ABL Revolver L + 225 Renewed $103.0 100.0 1.4% Secured Senior Note (New from Allianz) 4.00% 2019 50.0 100.0 4.0% 2019 Senior Priority Secured Notes (1st Lien) 6.00% 2019 540.0 82.5 13.0% 2022 Junior Priority Secured Notes (2nd Lien) 8.50% 2022 248.0 69.5 16.5% 2017 Senior Unsecured Exchangeable Notes 7.00% 2017 11.2 91.8 15.5% 2017 Senior Unsecured Notes (Old) 11.50% 2017 39.7 91.5 21.9% Other Debt/Capital Leases 0.00% NA 13.7 100.0 0.0% Total $1,110.6 84.5 23.2%



ABL Facility: Originally a revolver of $240mm, it was reduced to $190mm plus a $50mm secured note following the recent debt exchange. It is secured on a

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 17 first priority on all Cenveo assets. The syndicate includes Bank of America, Macquarie, Barclays, GE Capital and Wells Fargo.



Senior Secured Note: Issued by Allianz as part of the agreement to reduce the ABL facility. Ranked junior to the 1st Lien Notes with respect to the Notes collateral but senior to the 1st Lien with respect to ABL collateral.



2019 Senior Priority Secured Notes (1st Lien): These are rated Caa1/B- and secured on a 1st Lien basis by both the parent and subsidiaries of Cenveo. Key covenants include a restriction on sale of assets (the lien transfers), limit on further indebtedness (unless it can meet a fixed-charge ratio of at least 2:1— Cenveo will be at 1.05:1 in 2016), and change of control. Holders include Allianz (5%), Aberdeen (5%), Fidelity (4%), Unicredit (3%), SEI, State Street, and Western and Southern (all with 2%).



2022 Junior Priority Secured Notes (2nd Lien): Rated Caa3/CCC-, largely the same covenants and collateral as the 1st Lien. Holders include Allianz (13%), Northeast Investors (10%), JPMorgan (5%), SEI (4.7%), Advent, Vertex and Goldman (all with 1%). Both the 1st and 2nd Lien groups have retained respective financial and legal counsel.



2017 Senior Unsecured Notes: Allianz formerly held 54% of these, and together with 2 other holders, a total of 79% were exchanged for the 2024 Notes, leaving the rest with light covenants except for a restriction on asset sales (unless it’s for at least 75% cash). Ranked pari passu with other unsecured debt.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 18



2017 Senior Unsecured Exchangeable Notes: Convertible at $4.41 per share, these are covenant light. 77% of these (Allianz’s stake) were repurchased by Cenveo at a 40% discount. Also pari passu with unsecured debt.



2024 Senior Unsecured Notes: With the same covenants as the 2017 Unsecureds, Allianz and two holders have 97% outstanding. Leverage & Solvency: The Company’s 2016E ABL, secured, and total leverage will be an uncomfortable 0.8x, 7.2x, and 8.4x. Based on a fully-diluted market capitalization

• f $66mm as of May 31, 2016, Cenveo’s enterprise value is 8.7x EBITDA, which

suggests a debt-to-value at a bankruptcy-level 98%. An Altman Z-Score of 0.8 supports the bankruptcy prediction as well.

Recent Financial Performance

Cenveo reported weaker sales in 2015 (-10.6%) due to the divestiture of its packaging business and sales slowdowns in its envelope and label segments. That said, operating margin widened 2.6%; COGS narrowed by 1.3% and SG&A by 0.5%, demonstrating management’s focus on cost minimization. Interest expense also declined by $6mm as a result of debt retirement and exchanges. On a same-segment basis, revenue was down only 1.1%, with EBITDA up 25.6% due to cost-cutting particularly in the Envelope segment. Management maintained this margin improvement was due to faster-than-expected integration of the National Envelope acquisition (they closed redundant facilities in Jacksonville and Ohio) as well as investments in more efficient labeling machinery.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 19

Cenveo 2012A 2013A 2014A 2015A Sales $1,798 $1,778 $1,949 $1,742 Sales Growth (5.8%) (1.1%) 9.6% (10.6%) COGS excluding D&A as % of Sales 78.4% 80.7% 82.2% 80.9% SG&A Margin 10.4% 11.6% 11.2% 10.7% EBIT (Operating Income) 112 29 44 84 Net Income (Loss) (80) (69) (84) (31) Adjusted EBITDA 187 115 130 142 % Growth (12.3%) (38.3%) 13.0% 9.3% D&A 62 60 64 50 CapEx 21 29 37 26

Segment Financial Analysis

While the Envelope, Print, and Label segments usually operate out of separate manufacturing facilities, the company benefits from cross-selling synergies, as evident by the 130% rise in intercompany sales to $28.3mm from 2013-2015. This was particularly evident in Print (from $4.9mm to $17.6mm), which provides the direct-mail inserts to Envelope clients. Additionally, Cenveo benefits from cost synergies on raw materials supply as well as final product distribution—it frequently ships multiple products across segments to the same customers. Envelope: The segment typically accounts for 40% of the company’s assets and 33% of its capital expenditure. Historically, Envelope experiences seasonality with a higher percentage of products sold during Q3 and Q4, primarily related to back-to- school campaigns and holiday purchases.

Envelope 2013A 2014A 2015A Net Sales 750 930 909 Net Operating Income 40 30 66 Net Operating Margin 5.3% 3.2% 7.3%

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 20

Restructuring & Other Charges 5 14 4 Depreciation & Amortization 16 20 20 Capital Expenditures 7 17 7 Total Assets 450 445 % of Total Sales 42.2% 47.7% 52.2% % of Total Assets 38.8% 41.2% EBITDA 56 49 87

Print: Cenveo’s weakest-performing segment, Print struggles with both top-line growth (0.1% in 2015) and bottom-line efficiency (3.0% operating margin). Print seasonality is associated with consumer publications, such as holiday catalogs and automobile brochures, and tend to be concentrated from July through October. Scholastic and promotional materials (unsurprisingly) tend to decline in the

• summer. As a result, print operations operate at or near capacity at certain times

throughout the year, presenting operational challenges for management.

Print 2013A 2014A 2015A Net Sales 502 508 511 Net Operating Income (9) 17 15 Net Operating Margin (1.8%) 3.3% 3.0% Restructuring & Other Charges 4 3 7 Depreciation & Amortization 20 21 17 Capital Expenditures 6 6 9 Total Assets 321 278 266 % of Total Sales 28.2% 26.1% 29.3% % of Total Assets 26.4% 24.0% 24.6% EBITDA 11 38 33

Label: This segment is the current bright spot among the three, projected at positive 5-year revenue growth in addition to operating margins a full 5% better than

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 21 Envelope (12.3%). It also produces 2/3rds of Envelope’s cash flow on only 40% of its

• revenues. The segment also accounts for only 21% of the company’s assets and 14%
• f its capital expenditures. Historically, the segment experiences an increase in sales

during Q1 and Q2, resulting from the release of product catalogs to trade channel customers and spring advertising campaigns. The prescription label business—a significant portion of segment revenue—has seasonality during the cold and flu seasons (Q1 and Q4).

Label 2013A 2014A 2015A Net Sales 337 324 322 Net Operating Income 38 38 40 Net Operating Margin 11.3% 11.8% 12.3% Restructuring & Other Charges 1 Depreciation & Amortization 8 7 9 Capital Expenditures 5 3 4 Total Assets 356 231 224 % of Total Sales 19.0% 16.6% 18.5% % of Total Assets 29.3% 19.9% 20.7% EBITDA 46 46 48

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 22

Industry

Market Trends

Cenveo’s three segments traditionally fall within the following industries: Office Stationery Manufacturing (or OSM, encompassing Envelopes), Print, and Packaging & Labelling (PL). OSM: In the United States (where Cenveo generates 80% of its revenue), OSM accounts for $6.9bn in sales with a 5-year CAGR of -0.3% (2011-2016) and -2.0% (2016-2021). Demand for office stationary products is closely correlated with economic activity and level of unemployment and began to recover following the most recent crisis supported by favorable levels of business activity and consumer spending.

Table 7 - Recovery in Demand for OSM

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 23 Advertising mail accounts for half of all mail received by US households and its decline is the most significant threat to the industry7. In 2017, digital is projected to surpass television as the single largest segment ($77bn) of total advertising; by contrast, direct mail totals a mere 17%8. E-commerce as a share of total retail spend increased from 4.8% in 2011 to 8.0% in 2016. As a result, the share of US advertising spend devoted to print has fallen 3.5% during that time.

Table 8 - Revenue of Direct Mail Advertising

Source: Statista, US Census Bureau

7 32223 Office Stationery Manufacturing in the US, IBISWorld 8 http://www.ccfi.asso.fr/blog/2015/12/third-most-important-ad-medium-in-uk-and-usa-direct-mail/

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 24

Table 10 - US Advertising Expenditures

Source: Wintberry

Envelope demand from office supply stores, a key industry client, is also projected to decrease from 2016-2019. Compounding this negative growth are the prices of raw materials, namely wood pulp. While correlated with finished products, these are not as easily passed on by manufacturers; prices are expected to increase an annualized 5.1% to 20199, further diminishing margins. As a result, industry leaders such as International Paper, RR Donnelly & Sons and Cenveo have been closing unprofitable plants and consolidating; industry employment is expected to decrease 5% annually over 5 years. Print: In the US, the industry is also squarely in decline, projected at $83bn in 2016 revenue, reflecting a 5-year CAGR of -0.6% (past) and -1.6% (future). Paper printing, like OSM, has been hard hit by digital customer acquisition methods. Furthermore, catalogues and print media have seen noticeable declines as people choose

9 http://media.ibisworld.com/2016/02/11/wood-pulp-paper-prices-continue-to-rise/

Table 9 - Sources of Addressed Direct Mail

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 25 paperless options in a nod to conservation. The sudden demand vacuum has left excess capacity among the top printers (although their 76% utilization remains above the 71% manufacturing average10) and resulted in prices averaging an anemic 0.5% CAGR over the last 5 years.11 To counter these headwinds, printers are attempting to move down the supply chain to creative and inventory services. Cenveo’s aforementioned Kadena is an example of this trend, recently signing a 5-year deal to manage National Register Publishing’s data products (contact lists and museum/financial directories)12; Cenveo doesn’t release the product’s profitability information, however. One lone tailwind that may see Cenveo pick up additional clients is the increasing margin strain affecting newspaper and book publishers. Many of these may be persuaded to forego the additional investment and outsource their printing needs to commercial printers such as Cenveo. PL: PL, unlike OSM and Print, follows consumer purchasing trends, especially in North America. These have been favorable as of late as North American consumption recovers from the 2008 recession. The pharmaceutical, food, and military markets remain strong and annual growth in the $7.4bn US industry has been 3.1% (2011-2016) and projected at 1.4% (2016-2021)13. Operations have benefited from the technology boom as processes, especially in labeling, have

10 ISM Q4 2015 Report, U.S. Census Bureau 11 IBISWorld, Printing in the US Industry report, 2016. Bureau of Labor Statistics 12 http://www.prnewswire.com/news-releases/cenveo-announces-five-year-partnership-with-national-register-publishing-

300228964.html

13 56191 Packaging & Labeling services in the US, IBISWorld

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 26 become more automated. Such processes often require outsourcing to PL firms in an arrangement called contract packaging, which is used by cosmetic and pharmaceutical companies. The high level of automation leads to lower labor costs. Larger producers do have scale advantages, however label capital intensity remains below the overall economy and barriers to entry are low. Population trends and increased pharmaceutical regulation have also worked in the industry’s favor.

Competitive Landscape

OSM: Cenveo generates the bulk of its revenue from its Envelope segment, the largest operation in North America. Its Commercial Envelope Group produces 25%

• f envelopes worldwide14 and controls more than 40% of the North American

envelope market15. Competition is fierce, yet capital intensity limits the number of firms to ~500, with the top 4 controlling 50.7% of the market. Due to the industry’s maturity, more and more production is occurring overseas, as companies such as

14 http://www.cenveo.com/Products-Services/Envelopes 15 2015 Annual Report, page 5

Figure 3 - OSM has undergone consolidation International Paper, 27.2% Cenveo, 12.6% RR Donnelly & Sons, 5.5% ACCO, 5.4% Other, 49.3%

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 27 International Paper look for growth and lower costs in Brazil and China. The appreciation of the dollar has hurt exports, however. Cenveo’s biggest Envelope competitors are RR Donnelly, ACCO, Supremex, and International Paper. RR Donnelly in particular is structured quite similarly to Cenveo, with both OSM and Commercial Print operations. However, RR Donnelly is splitting into 3 separate businesses to free up higher-growth divisions; a restrictive capital structure and debt covenants limit Cenveo’s annual capital expenditure to $45mm. Its competitors haven’t pulled back, though: ACCO acquired MeadWestvaco’s Office Products division (2012, $860mm) and RR Donnelly acquired Esselte’s North American operations (2014, $97mm). Commercial Printing: Since print client service generally occurs within a 100- to 300-mile radius, U.S. competition is fragmented and intense. In 2016, there were an estimated 49,000 printers (mostly private) generating $3.5mm in average revenue. Cenveo is the third-largest16 US-based provider of print and related services, trailing the aforementioned R.R. Donnelly & Sons and Quad-Graphics, which specializes in catalogue and magazine printing. Other competitors include Ennis, which

16 IBISWorld, Printing Impressions trade magazine

R.R. Donnelly & Sons, 7.7% Quad/Graphics, 4.3% Deluxe, 1.3% Cenveo, 0.6% Other, 86.1% Table 11 - Commercial Printing Market Share

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 28 specializes in advertising and business forms, and Deluxe, which controls over 50%

• f the U.S. check-printing market.17

Fragmentation has led to an uptick in M&A: RR Donnelly acquired Consolidated Graphics (2014, $620mm)18 to bolster print market share and Quad/Graphics acquired Brown Printing (2014, $100mm)19 to expand its magazine capabilities. PL: Cenveo’s decision to sell its packaging business to WestRock (2016, $105mm) was a conscious pivot out of the packaging component of PL. The Company remains, however, the largest North American pharmacy prescription label manufacturer. PL’s main player is packaging giant Sonoco, which controls 21.1% of the market. Other competitors include Berkeley (cosmetic packaging) and Aldelano (display. While industry experts expect consolidation in the label space, there hasn’t been much significant activity other than CCL’s acquisitions of Worldmark (2015, $191mm) and Avery Dennison OCP (2013, $500mm) and Sonoco’s acquisition of Tegrant (2011, $550mm).

Table 12 - Cenveo is in more dire straits than its competitors

Revenues ($mm) Sales Growth Free Cash Flow ($mm) EBITDA Margin Debt as %

• f Assets

Debt / EBITDA Cenveo $1,742 (10.6%) $6.3 8.4% 111.9% 8.7x RR Donnelly & Sons $11,257 (3.0%) $444.4 10.3% 47.0% 2.9x Quad/Graphics $4,731 (2.7%) $215.1 11.1% 47.6% 2.6x International Paper $22,365 (5.3%) $1,093.0 10.9% 30.5% 2.5x ACCO $1,510 (10.6%) $143.6 1.4% 36.9% 3.5x Deluxe $1,773 5.9% $264.7 25.6% 34.2% 1.4x Ennis $569 (1.9%) $32.6 11.4% 10.2% 2.9x

17 https://archive.org/stream/deluxessolventfr00mass/deluxessolventfr00mass_djvu.txt, Commonwealth of Massachusetts 18 http://www.piworld.com/article/rr-donnelley-acquire-consolidated-graphics-620-million-plus-debt/ 19 http://investors.qg.com/phoenix.zhtml?c=231687&p=irol-newsArticle&ID=1916134

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 29

SWOT Analysis

Cenveo has achieved established market positions in each of its three segments, but faces industry headwinds and an over-levered capital structure that prevents management from investing in the business. In our view, the threats and weaknesses to Cenveo’s business outweigh its strengths and opportunities.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 30

Valuation

To value Cenveo, we used the following methods: discounted cash flow analysis (Gordon Growth and Terminal Value Methods), publicly traded comparables, precedent transaction analysis, a sum-of-the-parts analysis, and historical prices. As exhibited below, these four methods result in a mean and median enterprise value / 2015 EBITDA multiple of 7.1x and 6.9x, respectively, and a mean and median enterprise value / est. 2016 EBITDA multiple of 7.4x and 6.9x, respectively. These various valuation methods lead us to conclude that Cenveo’s enterprise value is approximately $910mm, or 7.0x est. 2016 EBITDA of $130mm, on a run-rate basis.

Discounted Cash Flow Analysis

We used two discounted cash flow methods, the Gordon Growth Model and the Terminal Multiple Method, to estimate Cenveo’s current value based on discounting

6.0x 5.4x 7.0x 6.7x 8.3x 9.1x 6.6x 5.9x 7.0x 6.7x 9.1x 9.1x 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x DCF - Terminal Multiple DCF - Gordon Growth Publicly Traded Comps Precedent Transactions Sum-of-the-parts Historical Prices

Enterprise Value / EBITDA

EV / 2015 EBITDA EV / 2016 est. EBITDA

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 31 the Company’s future stream of cash flows. To calculate the cash flows, we used projected Earnings Before Interest and Taxes (“EBIT”), less taxes, plus depreciation & amortization, less capital expenditures. To discount these cash flows, we calculated a WACC of 7.83%. As exhibited below, the Gordon Growth Method implies an enterprise value of $705mm and the Terminal Multiple Method implies an enterprise value of $823mm.

Gordon Growth Method Terminal Multiple Method Terminal Growth Rate (0.99%) EBITDA Multiple 6.51x TV 513 TV 693 Discounted TV 337 Discounted TV 455 Enterprise Value 705 Enterprise Value 823 Less: Debt (1,006) Less: Debt (1,006) Less: Preferred and Minority Interest Less: Preferred and Minority Interest Less: Pension Deficits (99) Less: Pension Deficits (99) Plus: Cash 8 Plus: Cash 8 Equity Value (392) Equity Value (274) Implied TV EBITDA Multiple 4.8x Implied Growth Rate 1.2% Share Count 69.269254 Share Count 69.269254 Implied Share Price $0.00 Implied Share Price $0.00 (Discount) / Premium to Current Price (100.0%) (Discount) / Premium to Current Price (100.0%)

Comparable Companies Analysis

As of 5/31/2016, Cenveo’s stock price was $0.96. The market values Cenveo at 0.6x Enterprise Value / Sales, which is in line with its core competitors, but a discount to

• ther paper companies. Cenveo’s enterprise value / LTM EBITDA of 7.9x is a premium

to its core competitors and a discount to other paper companies. Cenveo’s EBITDA margins of 8.3% are well below its core competitors, which average 14.6%, and other paper companies, which average 16.4%.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 32 Cenveo’s enterprise value of $1.0bn is comprised of just $66mm in equity value and $1.1bn of net debt. The analysis below values Cenveo’s debt at par. If we use the market value of debt, then enterprise value reduces to $906mm, which is 6.2x LTM EBITDA, in line with core competitors but a significant discount to other paper companies.

Comparable Companies Enterprise Value Market Cap P/E EV/Sales (LTM) EV/EBITDA (LTM) Total Debt/ EBITDA Cenveo, Inc. 1,029 66 2.8x 0.60x 7.94x 8.7x Tier 1: Core Competitors International Paper Company 24,158 15,538 16.9x 1.08x 6.14x 2.51x R.R. Donnelley & Sons Company 6,091 3,074 20.2x 0.54x 5.06x 2.94x Quad/Graphics, Inc. Class A 1,778 461 #N/A 0.38x 3.85x 2.59x Deluxe Corporation 3,231 2,673 12.5x 1.82x 7.30x 1.39x Transcontinental Inc. Class A 1,923 1,575 6.7x 0.96x 5.08x 0.95x Ennis, Inc. 530 498 14.0x 0.93x 6.67x 0.51x Supremex Inc. 167 142 8.9x 1.17x 5.95x 0.86x Multi-Color Corporation 1,419 #N/A 18.9x 1.63x 9.58x #N/A ACCO Brands Corporation 1,454 753 9.2x 0.96x 6.08x 3.53x Tension Envelope Corporation #N/A #N/A #N/A #N/A #N/A #N/A Sonoco Products Company 5,157 4,126 16.8x 1.03x 8.24x 1.77x Median 1,778 1,164 13.3x 0.96x 6.08x 1.95x Tier 2: Other Paper & Print Companies Kimberly-Clark Corporation 54,064 45,937 46.0x 2.91x 13.59x 1.89x Avery Dennison Corporation 6,704 5,637 21.2x 1.12x 9.25x 1.48x InnerWorkings, Inc. 464 398 #N/A 0.45x 8.95x 2.26x Dai Nippon Printing Co., Ltd. 6,188 5,592 18.8x 0.00x 0.05x 1.67x Graphic Packaging Holding Company 6,063 4,166 18.3x 1.46x 8.07x 2.55x WestRock Co. 14,458 13,220 17.6x 1.27x 7.78x 3.20x Cimpress N.V. 3,446 2,794 29.8x 2.31x 14.11x 3.31x Median 6,188 5,592 20.0x 1.27x 8.95x 2.26x Median 3,248 2,640 15.5x 1.07x 7.04x 2.05x

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 33 Publicly traded comparables suggest that Cenveo, as a going concern, should be valued at 7.0x enterprise value / est. 2016 EBITDA, or $910mm.

Precedent Transactions Analysis

There has been an uptick in M&A in the envelope, commercial print, and label industries during the past few years. Based on a mean enterprise value / est. 2016 EBITDA of 6.7x, these transactions imply that Cenveo’s enterprise value is approximately $871mm.

Precedent Transactions Year Deal Value x Sales (LTM) x EBITDA (LTM) Envelope ACCO acq. MeadWestvaco 2012 1,028 1.3x 6.3x Cenveo acq. National Envelope 2013 133 0.3x 4.4x Harland Clarke acq. Valassis 2013 1,840 0.9x 6.0x RRD acq. Esselte 2014 96 1.0x Ennis acq. Cenveo Custom Envelope 2012 48 0.6x 3.4x Median 133 0.9x 5.2x Commercial Print Quad/Graphics acq. Brown Printing 2014 100 0.3x 4.0x Quad/Graphics acq. Vertis 2013 170 0.2x 2.8x RRD acq. Courier 2013 298 1.1x 7.3x RRD acq. Consolidated Graphics 2014 684 0.7x 6.0x Quad/Graphics acq. World Color Press 2010 1,209 0.4x 3.9x Median 298 0.4x 4.0x Label Sonoco acq. Tegrant 2011 550 1.3x CCL acq. WorldMark 2015 252 1.2x 7.2x CLL acq. Avery Dennison OCP 2011 500 0.5x 4.5x WestRock acq. Cenveo Packaging 2016 105 0.6x 10.8x Median 376 0.9x 7.2x Median 269 0.7x 5.5x

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 34

Historical Prices Analysis

From June 2015 through May 2016, Cenveo’s share price has ranged from $0.36 - $2.58 with a mean and median of $1.28 and $1.49, respectively. The Company’s enterprise value / LTM EBITDA during the last twelve months has ranged from 8.0x – 10.2x, based on the face value of debt. The chart below plots the decline in Cenveo’s share price and enterprise value multiples over the past twelve months. Cenveo’s current equity valuation suggests that the Company will need to restructure its debt to avoid bankruptcy.

0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x $- $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Enterprise Value / LTM EBITDA Share Price

Historical Share Price and EV / EBITDA

Share Price Enterprise Value / LTM EBITDA

Enterprise Value Share Price Mean 9.1x $1.28 Median 9.0x $1.49 Maximum 10.2x $2.58 Minimum 8.0x $0.36

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 35

Sum-of-the-Parts Analysis

Cenveo operates three distinct segments: envelope, commercial print, and label, each with their own intrinsic value. Therefore, we thought it useful to conduct a sum-of- the-parts analysis on each segment. We valued the envelope segment at 6.1x enterprise value / EBITDA and the label segment at 8.9x enterprise value / EBITDA. We recommend divesting the commercial print segment, which we believe would yield a sale price of $146mm, or 4.9x estimated 2016 commercial print segment EBITDA of $30mm. Adding up the value of each segment yields an implied enterprise value of $1.2bn, or 9.1x enterprise value / est. 2016 EBITDA.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 36

Plan of Reorganization

Key Challenges to Financial Restructuring

While Allianz is invested throughout the capital structure,20 some its largest positions are in second lien and unsecured debt. We believe that liquidation under Chapter 11 would significantly jeopardize Allianz’s more-junior positions. Allianz would be better able to negotiate more equity for its junior debt by leveraging its current investment in Cenveo rather than negotiating with senior creditors during bankruptcy.  First Lien Creditors - Allianz’s loan-to-own strategy must address the conflict that often arises between senior creditors, who may be more inclined to impose liquidation, and junior creditors, who hope to receive equity in the restructured company. In Cenveo’s case, first lien creditors have significant bargaining power because they are covered in a liquidation scenario based

• n our valuation in addition to holding the nearest maturity. With significant

concentrations of second lien and unsecured notes, Allianz would likely cede any influence it had over the reorganization process to the first lien holders in a Chapter 11 scenario.21  Second Lien Creditors – Allianz must convince the remaining second lien creditors who may believe that they will receive a better package in Chapter

20 Its $50mm Secured Note is classified as an ABL 21 Academic research shows that, for companies reorganizing in bankruptcy, senior creditors exhibit “pervasive” control

through the reorganization process with equity-holders and managers exerting little to no leverage. However, the “zone of insolvency” theory has been recently by Delaware Chancery courts. Cenveo is incorporated in Colorado. “Creditor Control and Conflict in Chapter 11”, Kenneth Ayotte and Edward Morrison, 2009

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 37 11, especially if they become the fulcrum security. In bankruptcy, second lien holders will not be inclined to distribute a significant amount of equity to creditors holding unsecured debt, of which Allianz owns ~$72mm.  Cenveo Management/Board - The Burton family still has significant control

• ver Cenveo operations, including whether to sell existing business lines or

how best to pay back its creditors. They also present legal risks to Allianz. Holders of distressed debt acquired in the open market are increasingly becoming the target of litigation for fraudulent transfer/preference claims, recharacterization of debt to equity, equitable subordination and breach of fiduciary duty22.

Board Control

Key to any reorganization will be Allianz’s ability to influence the process, potentially contrary to the wishes of the current Burton-controlled board. It is thus essential that Allianz seek control in 2 ways: 1.

• a. Ally with creditors that have significant equity stakes. Hedge fund

Rotation Capital Management is an example of such a holder, with 6.1% equity. These creditors likely wish to see a swift and sustainable resolution to debt issues, which is one of the reasons they may have purchased an equity stake in the first place. They are also likely to

22 The pending bankruptcy of The Dolan Company in Delaware demonstrates how an equity committee can hold up the

process by claiming the “excessive fees,” “reduced availability,” “management control” and “lender coercion” on the part of

• creditors. http://www.natlawreview.com/article/attacks-loan-to-own-strategies-continue

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 38 have purchased their position below par, which would make them more likely to agree to a quick, painless restructuring to ensure profitable exit.

• b. Exercise its warrants and purchase equity on the open market. With

warrants struck at approximately $0.50 above market price, it would cost Allianz an additional $4.3mm to achieve its 28.4% stake. That plus Rotation’s portion leaves ~14% equity to achieve a majority equity position, which can be had at a minimal cost given recent stock declines.

• 2. Given Allianz’s past cordial relationship with the Burtons (as demonstrated

by its most recent debt exchange), we believe a more likely scenario is a Burton family more amenable to Allianz recommendations as they recognize the inevitable restructuring. In return, Allianz can offer a minimal post- restructuring portion of the equity (less than it would cost them in option #1). Furthermore, our recommendation would likely pass the “business judgment” test required by a board’s fiduciary standard.

Operational Improvements

Once Allianz board control is secure, there are 3 operational improvements to achieve:

• 1. Management led by Robert Burton has focused on low-growth segments

(envelope, print) in an ‘empire-building’ strategy to achieve rational pricing and economies of scale. This strategy has been haphazard at best: From

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 39 2005-2011, Cenveo acquired 13 companies with a variety of brands and niche products to “enhance our existing global packaging network” and “expand our reach.23” The Company then turned around and sold those businesses to “focus on core operations.” Burton also divested segments like Custom Envelope to a competitor (Ennis) in 2012 only to rebuild virtually the same group in-house from 2014-2016. In the meantime, Cenveo has experienced no improved pricing power or margins and the stock has fallen 87%. We therefore believe this team is not suitable to lead a nimbler Cenveo focused on higher-growth initiatives. We see a path for sustained growth through expansion of modern labeling capabilities as well as a transition from traditional to integrated online-and-mail campaigns. Therefore, we recommend the Company recruit a new management team familiar with these ideas. They should also be incentivized with equity post- recapitalization rather than significant cash payments.

Table 13 - Potential senior executive candidates

Dan Knotts COO, RR Donnelley

• Leads all of RR Donnelley’s

business worldwide

• 30 years of experience in

the industry

• Responsible for global

sales, operations, logistics, and strategic outsourcing David McRae President, Infogroup

• Leads direct marketing business

and tech solutions

• 20 years of experience in the

industry

• Responsible for building customer

relationships by leveraging marketing, data, and technology

23 http://www.cenveo.com/getattachment/d9f71559-fa17-44fd-a37f-4c11542fee9d/News

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 40

• 2. Kadena, Cenveo’s fledgling online content-management platform, is currently

used by printing clients such as National Register Publishing to manage their product design and manufacture. We believe Kadena can be used more effectively to control entire marketing campaigns. We recommend Cenveo cross-sell clients on using the platform to combine their existing social media efforts with direct-mail to create multiple points of contact with customers. For example, a client like American Airlines would find Kadena particularly well-suited to monitor credit card customer leads through social media mileage incentives and then follow up with a direct-mail application individually tailored to the customer’s travel profile. We estimated the end-to-end functionality Kadena provides a client at a conservative 5% of the cost of a direct-mail campaign—this is what Cenveo might charge. We also believe 80% of this revenue would drop to EBIT given Kadena’s software margins and built-in customer base necessitating minimal SG&A. Based on a conversion rate of 20% of existing customers, we estimate Kadena could add $5.3mm to Envelope segment EBIT, an 8.5% increase. This does not include existing Kadena sales to Label clients.

Table 14 - Impact of cross-selling Kadena to direct-mail clients

Average Direct-Mail campaign cost1 $44,750

• Avg. # names reached by campaign

50,000 Cost of Mailing List ($/name) $0.17 Cost of design (fixed) $5,000 Cost of printing & lettershop ($/name) $0.43 Cost of postage ($/name) $0.21 5% Value provided by Kadena $2,238 Cost of software dev. and cust. serv. (20%) $448

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 41

Cenveo Direct-Mail contract jobs (2016E) 14,933 # Kadena jobs (20% conversion) 2,987 Kadena Contribution $5,346,000

1: David R. Yale, Direct Marketer: "ControlBeaters" estimates)

• 3. Cenveo’s Label segment benefits from a national geographical reach. We

recommend it leverage that more efficiently by servicing more national customers with facilities within 10 miles of Cenveo’s. Below are examples of customers that should be using Cenveo labels but aren’t currently:  Molson Coors Brewing Company – Denver, CO  Pinnacle Foods - Parsippany-Troy Hills, NJ  Maple Leaf Foods – Toronto, Canada  Constellation Brands – Toronto, Canada  Campbell Soup Company - Camden, NJ These clients represent recurring, stable revenue for Cenveo given their location and established brand. At an average annual customer contract of $1mm, just the addition of these 5 increase Label segment revenue 1.5% with few additional customer acquisition costs.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 42

Acquisitions & Divestments

The Commercial Print division has deteriorated to a greater extent than Envelope/Label for reasons outlined above. It also has the weakest operating

• margins. We therefore believe that, given Cenveo’s lax debt covenants, it is no longer

necessary to keep Print’s EBITDA (with little accompanying cash flow) on the books purely for leverage ratios. It is important that Cenveo de-lever as soon as possible, and preferably with the sale of a division in decline and with few areas for growth. Indeed, throwing good money after bad is one of the reasons for Cenveo’s current capital structure. That said, it is important to recognize the synergistic nature of the Print division, especially through direct-mail inserts that are critical to Envelope clients. Therefore,

Table 15 - Cenveo's national reach should leverage nearby national brands

Molson Pinnacle Maple Leaf Constellation Campbell

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 43 we recommend merging those direct-mail capabilities into Envelope prior to a sale.24 We propose a buyer such as Quad/Graphics who can benefit from both revenue and cost synergies generated by the Print division; this purchase would make Quad one

• f the largest catalogue/magazine printers in the United States. CEO Joel Quadracci

has also been quite M&A-active, purchasing Brown Printing in 2014 and Vertis in

• 2013. Given comparable transactions, we anticipate a worst-case sale to be done at a

loss of $120mm to book value, which would add to Cenveo’s NOL balance25 and be useful in a reorganization. Proceeds would pay down First Lien debt (Exhibit 11).

Commercial Printing 2015A 2016E Sales 511 503 Operating Income/EBIT 15 15 Net Income (16) (2) EBITDA 33 29 UFCF 7 14 Assets (estimated) 266 266 Precedent Transactions x Sales (LTM) x EBITDA (LTM) Implied Segment Value $158 0.39x 4.00x Comparable Companies x Sales (LTM) x EBITDA (LTM) Implied Segment Value $199 0.96x 6.79x DCF Gordon Growth Method DCF Terminal Multiple Method Enterprise Value 87 Enterprise Value 76

24 We account for the merging of direct-mail inserts out of Print and into Envelope in the sale price. The price also accounts for

control premium/synergies related to the Print division.

25 Allianz is an ‘old-and-cold’ creditor, which would exempt them from Sec. 382 limitations and provide access to Cenveo’s

existing ~$128mm in NOL carryforwards that have been carried at zero due to valuation allowances

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 44

Implied Segment Value $81 Triangulated Valuation $146 Premium/(Discount) to Book (45.1%)

Capital Structure Reorganization

As Exhibit 5 and Exhibit 6 (Appendix) indicate, Cenveo will not have sufficient liquidity to meet its $590mm in maturing first lien in 2019. We advise that Allianz use the restructuring process outside of bankruptcy to recoup the full value of its secured debt and exchange its existing unsecured debt for equity in the restructured

• business. Reorganization under Chapter 11 would not be optimal for Allianz, since

$100mm of its unsecured debt would out-of-the-money based on our valuation.

Restructuring Valuation and Capital Structure

($mm) Valuation

x 2016E EBITDA x 2018E EBITDA 2018E EBITDA Base Case 129.6 108.5 Enterprise Valuation 973.6 7.51x 8.97x First Lien Notes 310.9 2.40x 2.87x Second Lien Notes 229.4 1.77x 2.11x Total Debt 540.4 4.17x 4.98x Common Stock Value 433.2 3.34x 3.99x Distribution of Common Stock First Lien Notes 5% Second Lien Notes 50% New Unsecured Notes 45%

Our proposed restructuring plan creates a new, sustainable capital structure that allows the Company to avoid Chapter 11 bankruptcy while maximizing the value of Allianz’s positions. The proposed capital structure will not only reduce the cost of debt but also provide the flexibility and liquidity that Cenveo management needs to implement the above-mentioned operational improvements and turnaround the

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 45

• company. Under the proposed capital structure, the credit rating of the Company

would increase to B1/B+26 based on the debt/equity and EBITDA coverage averages

• f companies rated similarly, and it is estimated to increase to BB- in the following

years once the Company proves that it has started its operating restructuring. The expected credit statistics are shown in the following chart.

Post-Restructuring Credit Statistics

(Based on Projected 2018 EBITDA of $109mm) Cenveo Peer Pre- Restructuring Post- Restructuring YE 2015

1st Lien/EBITDA (Cumulative) 4.66x 2.87x NA 2nd Lien/EBITDA (Cumulative) 6.94x 4.98x NA Total Debt/EBITDA27 8.04x 4.98x

1.77x

Net Debt/EBITDA 7.94x 4.98x

1.49x

Fixed-charge Coverage Ratio 1.19x 6.38x

5.67x

FCF/Fixed Charges (Int+Principal+CapEx) 0.94x 3.31x

2.60x

Total Debt/FCF (Years) 10.20x 7.48x

0.16x

The proposed capital structure for the Company consists of (1) secured first lien debt refinanced at $311mm, equivalent to 2.9x est. 2018 EBITDA, and (2) $229mm

• f second lien debt, equivalent to 2.1x est. 2018 EBITDA.28 Total debt would be

$540mm which represents a leverage of 5.0x est. 2018 EBITDA (4.2x est. 2016 EBITDA). In addition, Cenveo will maintain a revolving credit facility of $200 million, undrawn immediately after the restructuring, but which will provide the main source of liquidity (as the existing excess cash will be distributed in the restructuring). Under our restructuring scenario, the equity of the Company

26 Based on Moody’s rating methodology 27 Total debt is calculated using par value 28 Our restructuring plan includes second lien notes over senior unsecured notes in order to reduce interest rate levels. Senior

unsecured notes would have a 2 to 3% interest rate differential.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 46 following the capital structure restructuring would be $433mm, which represents 45% of the estimated enterprise value. We estimated a restructuring enterprise valuation of $974mm (Exhibit 8) using an

• est. 2018 sum-of-the-parts valuation. Our valuation indicates that first lien

creditors would be fully covered in Chapter 11. As a result, a restructuring scenario that avoids Chapter 11 has to include at least a 100% recovery rate for first lien

• creditors. Allianz would use its control to require Cenveo to pay down as much debt

as possible using excess free cash flow and the sale of the print business. Restructuring would likely occur at the end of 2018 or early 2019, giving Cenveo

• ver 2 years to implement operational improvements and reduce its debt burden.

Over this period, we estimate that Cenveo can generate between $108mm and $337mm in cash flow from 2016 to year-end 2018 that can be used to reduce first lien principal. These steps would lower overall leverage and be sufficient for first lien creditors to extend their 2019 maturities. In a base case scenario, the remaining $311mm in first lien debt would be rolled

• ver to a later maturity date. The refinanced notes would include stronger

covenants intended to strengthen the claim of first lien lenders, including a cash sweep clause guarantying the distribution of any excess cash as a prepayment of the

• debt. The restructured balance sheet would also include $229mm in new second

lien notes with an estimated interest rate in the area of 6.0%. Overall, the blended interest rate would be close to 5.8%, in line with peers and B1/B+ rated companies. The above credit statistic table shows that the Company is able to cover its debt cost and that the proposed capital structure is sustainable. Free cash flow to fixed

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 47 charges (interest payments, principal payments and capital expenditures) would increase from 0.97x to 3.31x.

Recovery Analysis

2018 Restructuring Recovery Analysis ($mm )

Class Claim Cash Debt Equity Total $ Total % Administrative Claims 31 31 31 100% DIP(1) NA ABL Revolver 144 144 144 100% Secured Senior Note (New to Allianz) 50 50 50 100% 2017 Senior Unsecured Notes (Old)

• Capital Leases + Other

14 14 14 100% Long-Term Secured Debt 208 208 208 100% Total Administrative & Priority Claims 239 239 239 100% 2019 Senior Priority Secured Notes (1st Lien) 311 311 22 333 107% Second Lien Notes 248 229 217 446 180% New Unsecured Notes 105 195 195 186% Liabilities Subject To Compromise 664 540 433 974 147% Total Claims 903 239 540 433 1,213 134%

Our base case assumes a 100% recovery of the face value of their debt for the ABL and the $50mm Senior Secured Note to Allianz. We believe the $311mm first lien creditors would be willing to refinance at par following $229mm in principal reductions from 2016 to 2018. Further, lower leverage levels and stronger covenants on the restructured business would significantly enhance the credit quality of the refinanced first lien notes. To further entice first lien creditors, our plan also includes 5% of the new equity to first lien holders, resulting in a recovery rate of 107%. The $248mm in second lien holders would be offered the opportunity to refinance $229mm of their debt and receive 50% equity in the new business. Based on our

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 48 valuation this amounts a 180% recovery rate, which is a significant improvement from the exchange offer Cenveo’s unsecured lenders agreed to in May 2017. Allocating a portion of the equity is designed to sweeten the proposal and encourage them to vote in favor of the plan. Our analysis shows that second lien creditors would be significantly impaired in a liquidation scenario.29 Also, recent bankruptcies also show that junior creditors are unlikely to recover all of their debt through Chapter 11 reorganization.30 With these examples in mind, we believe second lien creditors will vote in favor of the plan. Allianz holds 68% of the unsecured credit and would agree to receive equity in the

• plan. Unsecured creditors receive $195mm of equity value, nearly double the face

value of their debt, which represents 45% of the equity of the new company. Given that unsecured debt traded below 50% prior to the 2016 exchange, we believe these creditors would accept an offer of all equity that achieves full recovery of their debt. Further, the unsecured creditors would be the first to be hit in a bankruptcy

• scenario. We believe that the unsecured creditors would vote favorable to the plan.

The company that emerges from this restructuring would carry a much healthier leverage level. At year-end 2016, Cenveo’s net debt to EBITDA is 8.7x. After this restructuring plan, the leverage level falls to 4.9x est. 2018 EBITDA. While this post- restructuring leverage level is on the high-side, many of Cenveo’s peers are highly levered, including RR Donnelly (3.8x) and International Paper (4.1x).

29 Using National Envelope’s bankruptcy as a proxy, we calculated a liquidation value between $500mm and $680mm.

Assuming there is $550mm in senior claims at bankruptcy, second lien lenders could at most hope to receive $130mm, representing a recovery rate of 53%.

30 In Verso Paper’s 2016 bankruptcy reorganization plan, creditors below the first lien notes received a combined 2.85% of the

equity, well below the face value of their debt.

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 49

Allianz Recovery Analysis

As exhibited below, Allianz has significant holdings in various securities with an aggregate principal exposure of $204mm, which we believe has a market value of approximately $121mm. Based on the recovery analysis above, Allianz should pursue a pre-petition debt exchange in order to maximize recovery. In this scenario, Allianz would recover 100% of their $50mm senior secured note and 107% of their $27mm hold in the 2017 first lien secured notes. Allianz’s $32.2mm second lien position would result in $30mm of refinanced second lien debt and $28mm converted into equity. Allianz’s senior unsecured notes would be fully converted into equity of the restructured company. Cenveo will now be positioned for more sustainable growth and profitable exit for both Allianz and the second lien holders via strategic sale or IPO.

Security % Outstanding Principal Amount ($mm) Trading Price Market Value ($mm) Estimated Recovery in Proposed Pre-Pack Deal Estimated Recovery in Proposed Pre-Pack Deal Secured Senior Note (New from Allianz) 100.0% $50.0 82.51 $41.3 100% $50.0 2019 Senior Priority Secured Notes (1st Lien) 5.0% $27.0 82.5 $22.2 107% $28.9 2022 Junior Priority Secured Notes (2nd Lien) 13.0% $32.2 69.5 $22.5 180% $58.0 2024 Senior Unsecured Notes (New) 68.4% $71.8 55.02 $34.5 186% $133.5 Equity (assuming exercised warrants) 28.4% $23.2 N/A $0.0 0% $0.0 Total Potential Investment $204.2 $120.5 $270.4

1 We have assumed a market value consistent with other first lien senior secured debt 2 We have assumed a market value at a 21% discount to the senior secured second lien notes

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 50

Appendix

Exhibit 1: Comparable Trading Multiples

Comparable Companies EV Mkt. Cap P/E EV/Sales (LTM) EV/EBITDA (LTM) Total Debt/ EBITDA Cenveo, Inc. 1,029 2.8x 0.60x 7.94x Tier 1: Core Competitors International Paper Company 24,158 15,538 16.9x 1.08x 6.14x 2.51x R.R. Donnelley & Sons Company 6,091 3,074 20.2x 0.54x 5.06x 2.94x Quad/Graphics, Inc. Class A 1,778 461 #N/A 0.38x 3.85x 2.59x Deluxe Corporation 3,231 2,673 12.5x 1.82x 7.30x 1.39x Transcontinental Inc. Class A 1,923 1,575 6.7x 0.96x 5.08x 0.95x Ennis, Inc. 530 498 14.0x 0.93x 6.67x 0.51x Supremex Inc. 167 142 8.9x 1.17x 5.95x 0.86x Multi-Color Corporation 1,419 #N/A 18.9x 1.63x 9.58x #N/A ACCO Brands Corporation 1,454 753 9.2x 0.96x 6.08x 3.53x Tension Envelope Corporation #N/A #N/A #N/A #N/A #N/A #N/A Sonoco Products Company 5,157 4,126 16.8x 1.03x 8.24x 1.77x Median 1,778 1,164 13.3x 0.96x 6.08x 1.95x Tier 2: Other Paper & Print Companies Kimberly-Clark Corporation 54,064 45,937 46.0x 2.91x 13.59x 1.89x Avery Dennison Corporation 6,704 5,637 21.2x 1.12x 9.25x 1.48x InnerWorkings, Inc. 464 398 #N/A 0.45x 8.95x 2.26x Dai Nippon Printing Co., Ltd. 6,188 5,592 18.8x 0.00x 0.05x 1.67x Graphic Packaging Holding Company 6,063 4,166 18.3x 1.46x 8.07x 2.55x WestRock Co. 14,458 13,220 17.6x 1.27x 7.78x 3.20x Cimpress N.V. 3,446 2,794 29.8x 2.31x 14.11x 3.31x Median 6,188 5,592 20.0x 1.27x 8.95x 2.26x Median 3,248 2,640 15.5x 1.07x 7.04x 2.05x Implied Enterprise Value $1,510

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 1

Exhibit 2: Historical Financials – Income Statement

2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A Sales $2,047 $2,099 $1,715 $1,815 $1,909 $1,798 $1,778 $1,949 $1,742 Cost of Goods Sold (COGS) incl. D&A 1,639 1,680 1,405 1,480 1,556 1,471 1,496 1,665 1,459 Gross Income 408 419 310 335 353 326 282 284 283 SG&A Expense 230 243 210 212 217 187 206 218 187 Reorganization and Restructure Expense 40 399 68 226 18 27 13 22 13 Impairment of Intangible Assets 33 EBIT (Operating Income) 138 (224) 32 (104) 118 112 29 44 84 Nonoperating Income - Net (3) 1 1 (2) 3 1 23 7 3 Interest Expense 91 107 106 121 116 115 113 107 101 Unusual Expense - Net 9 (15) (17) 10 (4) 12 11 27 1 Pretax Income 34 (316) (56) (237) 8 (14) (72) (83) (15) Income Taxes 10 (19) (16) (48) 9 60 14 3 4 Gain (Loss) from Continuing Operations 24 (297) (40) (189) (1) (74) (86) (86) (19) Gain (Loss) from Discontinued Operations, net o 17 (1) 9 3 (8) (6) 17 2 (11) Net Income (Loss) 41 (298) (31) (186) (9) (80) (69) (84) (31) Adjusted EBITDA 213 (131) 113 (26) 213 187 115 130 142 % Growth 67.5% (161.6%) (185.9%) (123.1%) (915.3%) (12.3%) (38.3%) 13.0% 9.3% EBIT 138 (224) 32 (104) 118 112 29 44 84 Depreciation & Amortization Expense 66 74 66 67 64 62 60 64 50 Supplemental Rental Expense 43.4 40.2 33.4 27.6 27.0 26.3 26.6 31.1 25.3 Stock-Based Compensation 10.3 18.1 14.3 10.9 8.7 5.3 3.7 2.4 1.6 Stock Option Expense 6.2 10.9 12.1 8.8 7.2 4.1 0.4 1.8 1.2 Tax Rate 29.2% 5.9% 28.3% 20.1% 112.2% (435.4%) (19.2%) (3.4%) (29.2%)

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 2

Exhibit 3: Historical Financials – Balance Sheet

2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A Assets Cash & Short-Term Investments 16 10 11 50 18 8 11 15 8 Cash Only 16 10 11 50 18 8 11 15 8 Short-Term Receivables 345 270 269 265 290 263 282 283 254 Inventories 163 160 145 149 134 131 162 137 122 Other Current Assets 73 75 65 65 94 67 55 50 93 Total Current Assets 597 515 489 528 536 469 510 484 477 Net Property, Plant & Equipment 428 420 388 348 329 283 305 282 211 Intangible Assets 940 588 615 456 414 404 355 344 306 Deferred Tax Assets 22 41 Other Assets 37 28 33 44 66 45 44 48 87 Total Assets 2,003 1,552 1,526 1,398 1,386 1,201 1,214 1,158 1,080 Liabilities & Shareholders' Equity ST Debt & Curr. Portion LT Debt 19 24 15 10 9 12 9 4 5 Accounts Payable 165 174 184 166 187 185 244 232 200 Other Current Liabilities 127 126 128 129 140 103 115 124 141 Total Current Liabilities 311 325 327 306 336 300 369 361 346 Long-Term Debt 1,426 1,282 1,219 1,284 1,238 1,172 1,176 1,230 1,203 Provision for Risks & Charges 4 2 2 2 19 Deferred Tax Liabilities 55 27 5 --

• 5

43 41 42 Other Liabilities 111 139 152 146 192 185 120 159 139 Total Liabilities 1,903 1,773 1,702 1,739 1,767 1,665 1,711 1,791 1,750 Common Equity 99 (221) (177) (341) (382) (464) (497) (633) (670) Common Stock Par/Carry Value 1 1 1 1 1 1 1 1 1 Additional Paid-In Capital/Capital Surplus 254 272 331 343 350 355 364 370 372 Retained Earnings (149) (447) (478) (664) (673) (753) (822) (905) (936) Cumulative Translation Adjustment/Unrealize (2) (19) (8) 5 2 3 (2) (3) (7) Other Appropriated Reserves (4) (27) (22) (25) (62) (70) (39) (95) (99) Total Shareholders' Equity 99 (221) (177) (341) (382) (464) (497) (633) (670) Total Equity 99 (221) (177) (341) (382) (464) (497) (633) (670) Total Liabilities & Shareholders' Equity 2,003 1,552 1,526 1,398 1,386 1,201 1,214 1,158 1,080

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 3

Exhibit 4: Historical Financials – Cash Flow Statement

2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A Operating Activities Net Income / Starting Line 41 (298) (31) (186) (9) (80) (69) (84) (31) Depreciation, Depletion & Amortization 66 74 66 67 64 62 60 64 50 Depreciation and Depletion 55 65 56 55 54 52 51 52 42 Amortization of Intangible Assets 10 9 10 12 10 10 10 12 8 Deferred Taxes & Investment Tax Credit 9 (24) (18) (50) 12 2 (29) 1 3 Other Funds 34 390 27 230 26 98 82 53 41 Extraordinaries

• 5

Changes in Working Capital (60) 69 27 (2) (13) (30) (17) (11) (35) Net Operating Cash Flow 88 210 72 59 80 52 28 24 32 Investing Activities 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A Capital Expenditures (32) (49) (25) (19) (16) (21) (29) (37) (26) Cost of Acquisitions (631) (51) (3) (41) (60) (1) (33) (2) Sale of Fixed Assets & Businesses 9 18 15 4 11 8 8 4 11 Purchase/Sale of Investments 4 (0) (2) (2) Other Funds 74 (1) 46 48 2 (2) Net Investing Cash Flow (579) (82) (10) (56) (65) 32 (7) (33) (19) Financing Activities 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A Change in Capital Stock (1) 1 (2) (1) (1) (1) (1) (1) (0) Issuance/Reduction of Debt, Net 505 (132) (60) 37 (47) (91) (17) 13 (15) Other Funds (8) (2) (0) (2) (0) Net Financing Cash Flow 496 (133) (62) 36 (48) (93) (18) 12 (16) Net Change in Cash 5 (5) 39 (32) (10) 3 3 (4) Unlevered Free Cash Flow 57 161 47 40 65 31 (1) (13) 6

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 4

Exhibit 5: Projected Financials + Proposed Capital Structure

Income Statement Projected ($mm except per share amounts) Cover

2015A 2016E 2017E 2018E 2019E 2020E 2021E Sales $1,742 $1,720 $1,699 $1,191 $1,179 $1,167 $1,155 Cost of Goods Sold (COGS) incl. D&A 1,459 1,413 1,394 977 963 951 940 Gross Income 283 307 304 214 215 216 215 SG&A Expense 187 204 203 138 136 135 134 Envelope 94 93 91 89 87 86 Print 54 54 Label 33 33 33 34 34 35 Corporate 23 23 14 14 14 14 Reorganization and Restructure Expense 13 20 20 9 9 9 9 Envelope 4 6 6 6 6 6 6 Print 7 11 11 Label 1 1 1 1 1 1 Corporate 2 3 3 3 3 3 3 Impairment of Intangible Assets EBIT (Operating Income) 84 82 82 67 70 72 72 Envelope 66 62 61 60 59 57 56 Print 15 15 13 Label 40 39 41 44 46 48 49 Corporate (37) (34) (34) (24) (24) (23) (23) Nonoperating Income - Net 3 (120) Interest Expense 101 78 60 55 61 47 44 Unusual Expense (Income) - Net 1 (19) (4) 4 (52) 4 4 Pretax Income (15) 24 (94) 9 61 21 25 Income Taxes 4 Income (Loss) from Continuing Operations (19) 24 (94) 9 61 21 25 Loss from Discontinued Operations, net of tax (11) Net Income (Loss) (31) 24 (94) 9 61 21 25 Comprehensive Loss (39) 24 (94) 9 61 21 25 Earnings Per Share (Basic) $0.35 ($1.39) $0.13 $0.89 $0.31 $0.36 Earnings Per Share (Diluted) $0.34 ($1.36) $0.12 $0.88 $0.31 $0.36 Adjusted EBITDA 142 130 126 109 108 108 106 % Growth (8.9%) (2.8%) (13.8%) (0.4%) (0.1%) (1.5%) EBIT 84 82 82 67 70 72 72 Depreciation & Amortization Expense 50 46 43 40 37 35 33 Supplemental Minimum Annual Operating Lease Expense 25.3 19.4 15.6 12.5 8.9 6.7 12.3 Non-cash Restructuring Expense 5.9 9.4 9.4 4.3 4.3 4.3 4.3 Stock-based Compensation Expense 1.6 1.1 1.1 1.1 1.1 1.1 1.1 NOL Carryforwards 128.2 118.7 156.4 152.9 128.6 120.2 110.3 Tax Rate (29%) 40.0% 40.0% 40.0% 40.0% 40.0% 40.0%

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 5

Exhibit 6: Projected Financials + Proposed Capital Structure

Balance Sheet Projected ($mm except per share amounts) Cover

2015A 2016E 2017E 2018E 2019E 2020E 2021E Assets Cash & Short-Term Investments 8 10 10 10 10 10 10 Short-Term Receivables 254 250 247 173 171 169 168 Inventories 122 118 117 81 80 79 78 Other Current Assets 93 92 91 64 63 62 62 Total Current Assets 477 470 464 327 324 321 318 Net Property, Plant & Equipment 211 195 181 168 156 145 134 Property, Plant & Equipment - Gross 636 662 685 707 727 746 763 Accumulated Depreciation 426 466 504 539 571 601 629 Intangible Assets 306 300 295 290 285 280 275 Net Goodwill 175 175 175 175 175 175 175 Net Other Intangibles 130 125 120 115 110 105 100 Deferred Tax Assets Other LT Assets 87 87 (179) (179) (179) (179) (179) Total Assets 1,080 1,052 761 606 586 566 548 Liabilities & Shareholders' Equity 2015A 2016E 2017E 2018E 2019E 2020E 2021E ST Debt & Curr. Portion LT Debt 5 51 361 Accounts Payable 200 195 193 133 132 130 129 Other Current Liabilities 141 137 135 94 93 92 91 Total Current Liabilities 346 382 328 588 225 222 220 Long-Term Debt 1,203 1,101 944 511 784 737 686 Provision for Risks & Charges 19 19 19 19 19 19 19 Deferred Tax Liabilities 42 42 42 42 42 42 42 Other LT Liabilities 139 139 139 139 139 139 139 Total Liabilities 1,750 1,684 1,472 1,299 1,209 1,159 1,106 Common Equity (670) (632) (711) (693) (623) (592) (558) Common Stock Par/Carry Value 1 1 1 1 1 1 1 Additional Paid-In Capital/Capital Surplus 372 386 401 410 419 429 438 Retained Earnings (936) (913) (1,007) (998) (937) (916) (891) Cumulative Translation Adjustment/Unreali (7) (7) (7) (7) (7) (7) (7) Pension Deficit (99) (99) (99) (99) (99) (99) (99) Total Shareholders' Equity (670) (632) (711) (693) (623) (592) (558) Accumulated Minority Interest Total Equity (670) (632) (711) (693) (623) (592) (558) Total Liabilities & Shareholders' Equity 1,080 1,052 761 606 586 566 548

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 6

Exhibit 7: Projected Financials + Proposed Capital Structure

Statement of Cash Flows Projected ($mm except per share amounts) Cover

2015A 2016E 2017E 2018E 2019E 2020E 2021E Operating Activities Net Income / Starting Line (31) 24 (94) 9 61 21 25 Depreciation, Depletion & Amortization 50 46 43 40 37 35 33 Deferred Taxes & Investment Tax Credit 3 Other Funds 41 15 135 9 9 9 9 Extraordinaries 5 Changes in Working Capital (35) (0) 2 36 1 1 1 Net Operating Cash Flow 32 84 85 94 108 66 68 Investing Activities 2015A 2016E 2017E 2018E 2019E 2020E 2021E Capital Expenditures (26) (25) (24) (22) (20) (19) (17) Cost of Acquisitions (2) Sale of Fixed Assets & Businesses 11 146 Purchase/Sale of Investments Other Funds (2) Net Investing Cash Flow (19) (25) 122 (22) (20) (19) (17) Financing Activities 2015A 2016E 2017E 2018E 2019E 2020E 2021E Change in Capital Stock (0) Issuance/Reduction of Debt, Net (15) (57) (208) (72) (88) (47) (50) Dividend Payments Other Funds (0) Net Financing Cash Flow (16) (57) (208) (72) (88) (47) (50) Beginning Cash Balance 8 10 10 10 10 10 Net Change in Cash 2 (0) Ending Cash Balance 10 10 10 10 10 10 Unlevered Free Cash Flow 6 59 62 72 88 47 50 Free Cash Flow per Share $0.09 $0.85 $0.89 $1.04 $1.27 $0.69 $0.73

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 7

Exhibit 8: Sum-of-the-parts Valuation

2018E Sum-of-the-parts Analysis Projected ($mm except per share amounts) Cover

EV/Sales EV/EBITDA Triangulated Value Envelope 0.97x 6.13x 642 Commercial Print (Sold in Restructuring Scenario) Label 0.92x 7.12x 331 Total SOTP 974 Less: Debt (1,006) Less: Preferred and Minority Interest Less: Pension Deficits (99) Plus: Cash 8 Total Equity (123)

Exhibit 9: Asset Waterfall in Bankruptcy

Bankruptcy Analysis Projected ($mm except per share amounts) Cover

Asset Waterfall Security (by Seniority) Principal (2016E) SOTP DCF Trading Comparables Precedent Transactions Other Debt/Capital Leases 13.7 13.7 13.7 13.7 13.7 ABL Revolver 144.5 144.5 144.5 144.5 144.5 Secured Senior Note (New to Allianz) 50.0 50.0 50.0 50.0 50.0 2019 Senior Priority Secured Notes (1st Lien) 540.0 540.0 540.0 540.0 540.0 2022 Junior Priority Secured Notes (2nd Lien) 248.0 225.4 15.7 248.0 221.6 2017 Senior Unsecured Notes (Old) 39.7 0.0 0.0 39.7 0.0 2024 Senior Unsecured Notes (New) 105.0 0.0 0.0 105.0 0.0 2017 Senior Unsecured Exchangeable Notes 11.2 0.0 0.0 11.2 0.0 Equity 0.0 0.0 357.8 0.0

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 8

Exhibit 10: Pro-forma Balance Sheet following recapitalization31 Exhibit 11: Pre-Restructuring Debt Repayment Schedule

Principal Schedule 2016E 2017E 2018E 2019E 2020E 2021E ABL Revolver 144.5 144.5 144.5 417.5 370.0 319.8 Secured Senior Note (New to Allianz) 50.0 50.0 50.0 0.0 0.0 0.0 2017 Senior Unsecured Notes (Old) 39.7 0.0 0.0 0.0 0.0 0.0 2019 Senior Priority Secured Notes (1st Lien) 540.0 383.2 310.9 0.0 0.0 0.0 2022 Junior Priority Secured Notes (2nd Lien) 248.0 248.0 248.0 248.0 248.0 248.0 2024 Senior Unsecured Notes (New) 105.0 105.0 105.0 105.0 105.0 105.0 2017 Senior Unsecured Exchangeable Notes 11.2 0.0 0.0 0.0 0.0 0.0

31 For the purposes of this analysis, we did not adjust assets to fair value following recapitalization. As a result, the amount of

goodwill shown in exhibit 10 is overstated.

Pro-forma Balance Sheet - Recapitalization ($mm )

2018E Adjustments Predecessor Recap Fresh Start Successor Assets: Cash and Cash Equivalents 10.0 ($10.0) $0.0 Accounts Receivable 173.0 173.0 Inventory 80.8 80.8 Prepaid Expenses & Other Current Assets 63.6 63.6 Total Current Assets $327.4 (10.0) $317.4 PP&E, net 168.1 168.1 Goodwill 289.8 381.5 671.3 Other Assets (179.2) 195.4 16.2 Deferred Tax Asset

• 27.6

27.6 Total Assets $606.3 $213.0 $381.5 $1,200.7 Liabilities: Accounts Payable 133.5 133.5 Accrued Expenses 0.0

• Other Current Liabilities

93.7 93.7 Current Portion of Long-Term Debt 0.0

• Total Current Liabilities

$227.1 $0.0 $0.0 $227.1 Liabilities Subject to Compromise 663.9 (123.58) 540.4 ABL Revolver 144.5 (144.5)

• Secured Senior Note (New to Allianz)

50.0 (50.0)

• 2017 Senior Unsecured Notes (Old)

0.0

• Capital Leases + Other

13.7 (13.7)

• Total Long-Term Secured Debt

208.2 (208.2)

• Pension & Post-Retirement Benefits

19.3 19.3 Deferred Tax Liability 42.0

• 42.0

Other Long-Term Liabilities 138.7 138.7 Total Liabilities $1,299.4 ($331.8) $0.0 $967.6 Common Stock & Additional Paid in Capital 304.8 128.4 433.2 Retained Earnings (997.9) 416.4 381.5 (200.1) Total Liabilities & Shareholders Equity $606.3 213.0 $381.5 $1,200.7 0.000 0.0000 0.0000 0.000 Note: Liabilities Subject to Compromise 2019 Senior Priority Secured Notes (1st Lien) 310.9

• 310.9

Second Lien Notes 248.0 (18.6) 229.4 New Unsecured Notes 105.0 (105.0)

• Total Liabilities Subject to Compromise

$663.9 540.4

PRESENTATION TO THE ALLIANZ SE HIGH YIELD GROUP 9

Other Debt/Capital Leases 13.7 13.7 13.7 13.7 13.7 13.7 Total $1,152.1 $944.4 $872.2 $784.2 $736.8 $686.5 Interest Schedule 2016E 2017E 2018E 2019E 2020E 2021E ABL Revolver 5.7 5.9 6.0 21.6 18.9 16.0 Accrued interest from 11.5% (Post-exchange) 3.7 0.0 0.0 0.0 0.0 0.0 Secured Senior Note (New to Allianz) 2.0 2.0 2.0 0.7 0.0 0.0 2017 Senior Unsecured Notes (Old) 4.7 0.4 0.0 0.0 0.0 0.0 2019 Senior Priority Secured Notes (1st Lien) 32.9 23.3 18.9 11.0 0.0 0.0 2022 Junior Priority Secured Notes (2nd Lien) 21.5 21.5 21.5 21.5 21.5 21.5 2024 Senior Unsecured Notes (New) 6.4 6.4 6.4 6.4 6.4 6.4 2017 Senior Unsecured Exchangeable Notes 0.8 0.3 0.0 0.0 0.0 0.0 Other Debt/Capital Leases 0.0 0.0 0.0 0.0 0.0 0.0 Total $77.8 $59.8 $54.9 $61.3 $46.8 $43.9 Cash on hand available for Debt Repayment 0.0 0.0 0.0 0.0 0.0 0.0 Cash flow available for Debt Repayment 56.6 207.7 72.2 87.9 47.5 50.3 Non-ABL Debt Issuance / (Repayment) (52.8) (50.9) 0.0 (360.9) 0.0 0.0 ABL Drawdown / (Repayment) (3.7) (156.8) (72.2) 273.0 (47.5) (50.3) Cash available for further Repayment/Borrowing $0.00 $0.0 $0.0 $0.0 $0.0 $0.0 ST Debt & Current Portion of LT Debt 50.9 0.0 360.9 0.0 0.0 0.0 LT Debt 1,101.2 944.4 511.2 784.2 736.8 686.5 Total Debt 1,152.1 944.4 872.2 784.2 736.8 686.5

Exhibit 12: DCF Sensitivity

Sensitivity Analysis: Enterprise Value (Terminal Multiple Method) Multiple at Exit 823 4.5x 5.0x 5.5x 6.0x 6.5x 7.0x 7.5x

Discount Rate

6.33% $ 721 $ 759 $ 796 $ 834 $ 873 $ 910 $ 948 6.83% 708 745 781 818 856 892 928 7.33% 695 731 767 802 839 874 910 7.83% 682 717 752 787 823 857 892 8.33% 670 704 738 772 807 840 874 8.83% 658 692 725 758 792 824 857 9.33% 647 679 712 744 777 809 841 9.83% 636 667 699 730 762 793 825