ACCO Brands Corporation (NYSE: ABD), a world leader in branded
office products, today reported its third quarter results for the
period ended September 30, 2011.
“Despite the challenging global macroeconomic environment, ACCO
Brands continued to execute exceptionally well in the third
quarter,” said Robert J. Keller, chairman and chief executive
officer. “We once again grew our revenue, operating income,
operating income margin and earnings per share. We also increased
market share in important categories and channels, and we see
opportunities for further share growth ahead of us. We are
reiterating our full-year sales, earnings-per-share and free cash
flow guidance.”
Third Quarter Results
Net sales increased 6% to $339.1 million, compared to $319.4
million in the prior-year quarter. Foreign currency favorably
impacted sales by 4% and pricing added 2%. Volume was down
modestly. Third quarter income from continuing operations was $11.9
million, or $0.21 per diluted share, compared to income of $4.4
million, or $0.08 per diluted share, in the prior-year quarter.
Using a normalized effective tax rate of 30% in both periods and
excluding $4.2 million of costs associated with the repurchase of
the company’s senior subordinated and senior secured notes in the
current period, adjusted income from continuing operations was
$13.7 million, compared to $8.7 million in the prior-year period,
and $0.24 per diluted share compared to $0.15 per diluted share in
the prior-year period, an increase of 60%.
Reported third quarter operating income increased to $35.4
million from $30.0 million in the prior-year quarter. EBITDA
increased to $48.1 million, from $41.6 million in the prior year,
and included a benefit from foreign exchange translation of $3.4
million. The company reduced its debt by $48.9 million in the
quarter through the redemption of bonds and ended the quarter with
$41.3 million of cash and no borrowings under its revolving credit
facility.
Business Segment Highlights
ACCO Brands Americas
ACCO Brands Americas third quarter net sales increased 3% to
$182.6 million, from $178.1 million in the prior-year quarter.
Pricing and foreign currency translation favorably impacted sales
by 2% and 1%, respectively. Volume decreased modestly. Operating
income was even with the prior-year quarter at $16.5 million, and
operating margin declined slightly to 9.0% from 9.3% primarily due
to increased fuel costs.
ACCO Brands International
ACCO Brands International net sales increased 14% to $110.3
million, compared to $97.0 million in the prior-year quarter.
Foreign currency translation and pricing favorably impacted sales
by 11% and 5%, respectively. Volume declined 2% as reduced demand
in Europe was partly offset by gains in shredder placements.
Operating income increased to $14.6 million, compared to $5.3
million in the prior-year quarter, and operating margin increased
to 13.2% from 5.5%. The increase was driven by strong improvements
in the profitability of the European business resulting from price
increases and operational improvements executed in the first half
of the year.
Computer Products Group
Computer Products net sales increased 4% to $46.2 million,
compared to $44.3 million in the prior-year quarter. Foreign
currency translation impacted sales favorably by 4% while pricing
was a reduction of 1%. Volume increased 1% driven by new products.
Operating income was $11.1 million, compared to $12.6 million in
the prior-year quarter, and operating margin decreased to 24.0%
from a record-level 28.4% in the prior-year quarter due to
unfavorable mix.
Nine Month Results
Net sales increased 5% to $967.7 million, compared to $925.1
million in the prior-year period. Foreign currency translation
contributed 4% to sales growth and pricing added 2%. Volume
declined 2%. Income from continuing operations was $9.2 million, or
$0.16 per diluted share, for the nine months ended September 30,
2011, compared to income of $3.5 million, or $0.06 per diluted
share, in the prior-year period. Using a normalized effective tax
rate of 30% in both periods, and excluding $4.2 million of costs
associated with the company’s repurchase of bonds in the current
period, adjusted income from continuing operations was $19.1
million, or $0.33 per share, which includes $4.5 million of costs
associated with the rationalization of the company’s European
operations, compared to $13.9 million, or $0.24 per share in the
prior-year period.
Operating income increased 5% to $79.3 million for the nine
months ended September 30, 2011, including the $4.5 million of
additional costs in Europe, compared to operating income of $75.5
million in the prior-year period. EBITDA increased 4% to $114.4
million, from $110.1 million in the prior-year period, and included
the benefit from foreign exchange translation of $8.7 million.
Business Outlook
The company is reiterating its full-year 2011 guidance, calling
for sales growth from continuing operations of 2-4% and
earnings–per-share growth from continuing operations at the high
end of its previously stated 20-30% range. Guidance is based on a
normalized 30% tax rate, excludes costs associated with the
repurchase of its bonds and adjusts for the impact of the GBC –
Fordigraph divestiture completed in the second quarter. The company
expects free cash flow (after interest, taxes and capital
expenditures) of $100-$110 million, including gross proceeds from
the sale of the GBC – Fordigraph business.
Webcast
At 8:30 a.m. Eastern Time today, ACCO Brands Corporation will
host a conference call to discuss the company’s results. The call
will be broadcast live via webcast. The webcast can be accessed
through the Investor Relations section of www.accobrands.com. The
webcast will be in listen-only mode and will be available for
replay for one month following the event.
Non-GAAP Financial Measures
“Adjusted” results exclude all unusual tax items. Adjusted
supplemental EBITDA from continuing operations excludes other
non-operating items, including other income/expense and stock-based
compensation expense. Adjusted results and supplemental EBITDA from
continuing operations are non-GAAP measures. There could be
limitations associated with the use of non-GAAP financial measures
as compared to the use of the most directly comparable GAAP
financial measure. Management uses the adjusted measures to
determine the returns generated by its operating segments and to
evaluate and identify cost-reduction initiatives. Management
believes these measures provide investors with helpful supplemental
information regarding the underlying performance of the company
from year to year. These measures may be inconsistent with measures
presented by other companies.
About ACCO Brands Corporation
ACCO Brands Corporation is a world leader in branded office
products. Its industry-leading brands include Day-Timer®,
Swingline®, Kensington®, Quartet®, GBC®, Rexel, NOBO, Derwent,
Marbig and Wilson Jones®, among others. Under the GBC brand, the
company is also a leader in the professional print finishing
market.
Forward-Looking Statements
This press release contains statements which may constitute
"forward-looking" statements as that term is defined in the Private
Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to certain risks
and uncertainties, are made as of the date hereof and the company
assumes no obligation to update them.
ACCO Brands' ability to predict results or the actual effect of
future plans or strategies is inherently uncertain. Because actual
results may differ from those predicted by such forward-looking
statements, you should not place undue reliance on them when
deciding to buy, sell or hold the company’s securities. Among the
factors that could cause our plans, actions and results to differ
materially from current expectations are: fluctuations in the cost
and availability of raw materials; competition within the markets
in which the company operates; the effects of both general and
extraordinary economic, political and social conditions, including
any volatility and disruption in the capital and credit markets;
the effect of consolidation in the office products industry; the
liquidity and solvency of our major customers; our continued
ability to access the capital and credit markets; the dependence of
the company on certain suppliers of manufactured products; the risk
that targeted cost savings and synergies from previous business
combinations may not be fully realized or take longer to realize
than expected; future goodwill and/or impairment charges; foreign
exchange rate fluctuations; the development, introduction and
acceptance of new products; the degree to which higher raw material
costs, and freight and distribution costs, can be passed on to
customers through selling price increases and the effect on sales
volumes as a result thereof; increases in health care, pension and
other employee welfare costs; as well as other risks and
uncertainties detailed in the company’s Annual Report on Form 10-K
for the year ended December 31, 2010, under Item 1A, “Risk
Factors,” and in the company's other SEC filings.
ACCO Brands Corporation
Consolidated Statements of Operations and Reconciliation
of Adjusted Results (Unaudited) (In millions of dollars,
except per share data) Three Months Ended September
30, 2011 2010 %
Change Net sales
$ 339.1 $ 319.4
6 % Cost of products sold
232.0
221.6 5 % Gross profit
107.1 97.8 10 % Operating costs
and expenses: Advertising, selling, general and administrative
expenses
70.6 66.1 7 % Amortization of
intangibles
1.5 1.7 (12 )%
Restructuring charges (income)
(0.4 )
- NM Total operating costs and expenses
71.7 67.8 6 %
Operating income
35.4 30.0 18 %
Non-operating expense (income): Interest expense, net
20.6 19.7 5 % Equity in earnings of
joint ventures
(3.8 ) (2.3 ) 65
% Other expense, net
3.2
0.1 NM Income from continuing
operations before income tax
15.4 12.5 23
% Income tax expense
3.5
8.1 (57 )% Income from continuing
operations
11.9 4.4 170 % Income (loss)
from discontinued operations, net of income taxes
(0.2 ) 1.0 NM Net income
$ 11.7 $ 5.4 117
% Per share: Basic earnings per share: Income from
continuing operations
$ 0.22 $ 0.08
175 % Income (loss) from discontinued operations
- 0.02 (100 )% Basic earnings per share
$ 0.21 $ 0.10 110 %
Diluted earnings per share: Income from continuing
operations
$ 0.21 $ 0.08 163
% Income (loss) from discontinued operations
-
0.02 (100 )% Diluted earnings per share
$ 0.20 $ 0.09 122 %
Weighted average number of shares outstanding: Basic
55.2 54.9 Diluted
57.5 57.1
Reconciliation of Reported Consolidated Results to
Adjusted Results Three Months Ended
Three Months Ended September 30, 2011 September
30, 2010 Bond Tax
Tax Repurchases Adjustment
Adjustment (in millions, except per share data)
Reported (C) (B) Adjusted
Reported (A) Adjusted Income from continuing
operations before income tax
$ 15.4 $ 4.2 $ - $ 19.6
$ 12.5 $ - $ 12.5 Income tax expense (benefit)
3.5 1.3 1.1 5.9
8.1 (4.3 ) 3.8 Income from continuing
operations
$ 11.9 $ 2.9 $ (1.1 ) $ 13.7
$
4.4 $ 4.3 $ 8.7 Diluted earnings per share:
Income from continuing operations
$ 0.21 $ 0.24
$ 0.08 $ 0.15 Weighted average number of
diluted shares outstanding
57.5 57.5
57.1 57.1
Note – “Adjusted” results are non-GAAP
measures. There could be limitations associated with the use of
non-GAAP financial measures as compared to the most directly
comparable GAAP financial measure. Management believes these
measures provide investors with helpful supplemental information
regarding the underlying performance of the Company from year to
year. These measures may be inconsistent with measures presented by
other companies.
Statistics (as a % of Net sales, except Income tax rate)
Three Months Ended September 30, 2011
2010 Reported Adjusted
Reported Adjusted Gross profit (Net
sales, less Cost of products sold) 31.6% 30.6%
Advertising, selling, general and administrative 20.8% 20.7%
Operating income 10.4% 9.4% Income from continuing operations
before income tax 4.5% 3.9% Net income 3.5% 4.0% 1.7% 3.0% Income
tax rate 22.7% 30.0% 64.8%
30.0%
(A)
The Company has incurred significant
operating losses in several jurisdictions in prior periods. In
accordance with GAAP, tax valuation allowances have been recorded
on certain of the Company’s deferred tax assets. As a result, the
operating results in these locations have recorded no tax benefit
or expense, which results in a high effective tax rate for the
prior-year period. Assuming all the locations become profitable in
the future and valuation allowances were reversed, the Company’s
ongoing effective tax rate would approximate 30%. This estimated
long-term rate will be subject to variations from the mix of
earnings in the Company’s operating jurisdictions.
(B)
During the third quarter of 2011 the U.K.
reversed a valuation allowance of $2.8 million which had the effect
of reducing the effective tax rate to less than 30%.
(C)
During the third quarter of 2011, the
Company recorded a loss associated with bond repurchases of $4.2
million, or $0.05 per diluted share.
Reconciliation of Net Income to Adjusted Supplemental
EBITDA from Continuing Operations (Unaudited) (In
millions of dollars)
Three Months Ended September 30, 2011
2010 % Change Net income $ 11.7 $ 5.4
117 % Discontinued operations 0.2 (1.0 ) 120 % Loss on bond
repurchases (D) 4.2 - NM Income taxes, impact of adjustments
(2.4 ) 4.3 NM
Adjusted income from continuing
operations 13.7 8.7 57 % Adjusted interest expense, net (D)
19.4 19.7 (2 )% Adjusted income tax expense 5.9 3.8 55 %
Depreciation (E) 6.4 7.5 (15 )% Amortization of intangibles 1.5 1.7
(12 )% Adjusted other expense, net (D) 0.2 0.1 100 % Stock-based
compensation expense 1.0 0.1 900 %
Adjusted supplemental EBITDA from continuing operations $
48.1 $ 41.6 16 % Adjusted supplemental EBITDA
from continuing operations as a % of Net Sales 14.2 % 13.0 %
(D)
During the third quarter of 2011, the
company recorded a $4.2 million loss associated with bond
repurchases. $3.0 million of the premium paid was recorded in Other
expense, net and $1.2 million of accelerated debt origination costs
were recorded in Interest expense, net.
(E) Depreciation expense for the three months ended September 30,
2010, excludes $0.1 million that has been included in discontinued
operations, which is excluded from adjusted income from continuing
operations.
ACCO Brands
Corporation Consolidated Statements of Operations and
Reconciliation of Adjusted Results (Unaudited) (In
millions of dollars, except per share data) Nine
Months Ended September 30, 2011 2010
% Change Net sales
$
967.7 $ 925.1 5 % Cost of
products sold
665.9 641.8
4 % Gross profit
301.8 283.3 7
% Operating costs and expenses: Advertising, selling,
general and administrative expenses
218.5 203.5
7 % Amortization of intangibles
4.8 5.1
(6 )% Restructuring income
(0.8
) (0.8 ) 0 % Total
operating costs and expenses
222.5
207.8 7 % Operating income
79.3 75.5 5 % Non-operating
expense (income): Interest expense, net
59.3 58.9
1 % Equity in earnings of joint ventures
(6.2
) (4.6 ) 35 % Other expense, net
3.0 1.2 150
% Income from continuing operations before income tax
23.2 20.0 16 % Income tax expense
14.0 16.5 (15
)% Income from continuing operations
9.2 3.5
163 % Income from discontinued operations, net of
income taxes
38.1 2.1
NM Net income
$ 47.3 $
5.6 745 % Per share: Basic
earnings per share: Income from continuing operations
$
0.17 $ 0.06 183 % Income from
discontinued operations
0.69 0.04 NM Basic
earnings per share
$ 0.86 $ 0.10
760 % Diluted earnings per share: Income from
continuing operations
$ 0.16 $ 0.06
167 % Income from discontinued operations
0.66
0.04 NM Diluted earnings per share
$
0.82 $ 0.10 720 %
Weighted average number of shares outstanding: Basic
55.1
54.8 Diluted
57.6 57.2
Reconciliation of Reported Consolidated Results to Adjusted
Results Nine Months Ended Nine Months
Ended September 30, 2011 September 30, 2010
Bond Tax Tax
Repurchases Adjustment Adjustment (in
millions, except per share data)
Reported (B)
(A) Adjusted Reported (A)
Adjusted Income from continuing operations before income tax
$ 23.2 $ 4.2 $ - $ 27.4
$ 20.0 $ - $
20.0 Income tax expense (benefit)
14.0 1.3
(7.0 ) 8.3
16.5 (10.4 )
6.1 Income (loss) from continuing operations
$ 9.2 $
2.9 $ 7.0 $ 19.1
$ 3.5 $ 10.4 $ 13.9
Diluted earnings per share: Income (loss) from continuing
operations
$ 0.16 $ 0.33
$ 0.06 $ 0.24
Weighted average number of diluted shares outstanding
57.6 57.6
57.2 57.2
Note – “Adjusted” results are non-GAAP
measures. There could be limitations associated with the use of
non-GAAP financial measures as compared to the most directly
comparable GAAP financial measure. Management believes these
measures provide investors with helpful supplemental information
regarding the underlying performance of the Company from year to
year. These measures may be inconsistent with measures presented by
other companies.
Statistics (as a % of Net sales, except Income tax rate)
Nine Months Ended September 30, 2011
2010 Reported Adjusted
Reported Adjusted Gross profit (Net
sales, less Cost of products sold) 31.2% 30.6%
Advertising, selling, general and administrative 22.6% 22.0%
Operating income 8.2% 8.2% Income from continuing operations before
income tax 2.4% 2.2% Net income 4.9% 5.9% 0.6% 1.7% Income tax rate
60.3% 30.0% 82.5%
30.0%
(A)
The Company has incurred significant
operating losses in several jurisdictions in prior periods. In
accordance with GAAP, tax valuation allowances have been recorded
on certain of the Company’s deferred tax assets. As a result, the
operating results in these locations have recorded no tax benefit
or expense, which results in a high effective tax rate for the
current and prior periods. Assuming all the locations become
profitable in the future and valuation allowances were reversed,
the Company’s ongoing effective tax rate would approximate 30%.
This estimated long-term rate will be subject to variations from
the mix of earnings in the Company’s operating jurisdictions.
(B)
During the third quarter of 2011, the
Company recorded a loss associated with bond repurchases of $4.2
million, or $0.05 per diluted share.
Reconciliation of Net Income to Adjusted Supplemental
EBITDA from Continuing Operations (Unaudited) (In
millions of dollars)
Nine Months Ended September 30, 2011
2010 % Change Net income $ 47.3 $ 5.6
745 % Discontinued operations (38.1 ) (2.1 ) NM Loss on bond
repurchases (C) 4.2 - NM Income taxes, impact of adjustments
5.7 10.4 (45 )%
Adjusted income from
continuing operations 19.1 13.9 37 % Adjusted interest expense,
net (C) 58.1 58.9 (1 )% Adjusted income tax expense 8.3 6.1 36 %
Depreciation (D) 20.3 22.4 (9 )% Amortization of intangibles (E)
4.8 5.1 (6 )% Adjusted other expense, net (C) - 1.2 (100 )%
Stock-based compensation expense 3.8 2.5
52 %
Adjusted supplemental EBITDA from continuing
operations $ 114.4 $ 110.1 4 % Adjusted
supplemental EBITDA from continuing operations as a % of Net Sales
11.8 % 11.9 % (C)
During the third quarter of 2011, the
company recorded a $4.2 million loss associated with bond
repurchases. $3.0 million of the premium paid was recorded in Other
expense, net and $1.2 million of accelerated debt origination costs
were recorded in Interest expense, net.
(D) Depreciation expense for the nine months ended September 30,
2011 and 2010, respectively, excludes $0.1 million and $0.2 million
that has been included in discontinued operations, which is
excluded from adjusted income from continuing operations. (E)
Amortization of intangibles for the nine months ended September 30,
2011 and 2010, both exclude $0.1 million that has been included in
discontinued operations, which is excluded from adjusted income
from continuing operations.
ACCO Brands Corporation Supplemental Business Segment
Information (Unaudited) (In millions of dollars)
2011 2010 Changes Net Sales Net Sales Margin Net Sales
OI OI Margin Net Sales OI OI Margin $
% OI $ OI % Points
Q1: ACCO
Brands Americas $ 152.2 $ 5.5 3.6 % $ 158.6 $ 8.3 5.2 % $ (6.4 ) (4
)% $ (2.8 ) (34 )% (160 ) ACCO Brands International 104.9 4.1 3.9 %
102.2 9.1 8.9 % 2.7 3 % (5.0 ) (55 )% (500 ) Computer Products 41.3
9.3 22.5 % 39.7 8.1 20.4 % 1.6 4 % 1.2 15 % 210 Corporate -
(5.6 ) - (5.0 ) - (0.6 )
Total $ 298.4 $ 13.3 4.5 % $ 300.5 $ 20.5 6.8 % $
(2.1 ) (1 )% $ (7.2 ) (35 )% (230 )
Q2: ACCO Brands
Americas $ 175.7 $ 14.5 8.3 % $ 169.9 $ 14.4 8.5 % $ 5.8 3 % $ 0.1
1 % (20 ) ACCO Brands International 105.8 9.0 8.5 % 93.2 4.9 5.3 %
12.6 14 % 4.1 84 % 320 Computer Products 48.7 13.1 26.9 % 42.1 10.7
25.4 % 6.6 16 % 2.4 22 % 150 Corporate - (6.0 )
- (5.0 ) (1.0 ) Total $ 330.2 $ 30.6
9.3 % $ 305.2 $ 25.0 8.2 % $ 25.0 8 % $ 5.6
22 % 110
Q3: ACCO Brands Americas $ 182.6 $
16.5 9.0 % $ 178.1 $ 16.5 9.3 % $ 4.5 3 % $ - 0 % (30 ) ACCO Brands
International 110.3 14.6 13.2 % 97.0 5.3 5.5 % 13.3 14 % 9.3 175 %
770 Computer Products 46.2 11.1 24.0 % 44.3 12.6 28.4 % 1.9 4 %
(1.5 ) (12 )% (440 ) Corporate - (6.8 ) -
(4.4 ) (2.4 ) Total $ 339.1 $ 35.4 10.4
% $ 319.4 $ 30.0 9.4 % $ 19.7 6 % $ 5.4 18 %
100
YTD: ACCO Brands Americas $ 510.5 $ 36.5 7.1 % $
506.6 $ 39.2 7.7 % $ 3.9 1 % $ (2.7 ) (7 )% (60 ) ACCO Brands
International 321.0 27.7 8.6 % 292.4 19.3 6.6 % 28.6 10 % 8.4 44 %
200 Computer Products 136.2 33.5 24.6 % 126.1 31.4 24.9 % 10.1 8 %
2.1 7 % (30 ) Corporate - (18.4 ) -
(14.4 ) (4.0 ) Total $ 967.7 $ 79.3 8.2 % $
925.1 $ 75.5 8.2 % $ 42.6 5 % $ 3.8 5 % 0
ACCO Brands Corporation Supplemental Net
Sales Growth Analysis (Unaudited) Percent
Change - Sales Net Comparable Sales
Currency Sales Growth
Translation Growth
Price Volume Q1 2011: ACCO
Brands Americas (4.0%) 1.4% (5.4%) 1.1% (6.5%) ACCO Brands
International 2.6% 4.7% (2.1%) 1.2% (3.3%) Computer Products 4.0%
1.3% 2.7% 1.8% 0.9% Total (0.7%) 2.5% (3.2%) 1.2% (4.4%)
Q2 2011: ACCO Brands Americas 3.4% 1.5% 1.9% 1.5% 0.4% ACCO
Brands International 13.5% 14.6% (1.1%) 3.3% (4.4%) Computer
Products 15.7% 5.8% 9.9% 1.7% 8.2% Total 8.2% 6.1% 2.1% 2.1% 0.0%
Q3 2011: ACCO Brands Americas 2.5% 1.2% 1.3% 1.7%
(0.4%) ACCO Brands International 13.7% 10.9% 2.8% 4.5% (1.7%)
Computer Products 4.3% 4.1% 0.2% (1.1%) 1.3% Total 6.2% 4.5% 1.7%
2.2% (0.5%)
2011 YTD: ACCO Brands Americas 0.8% 1.4%
(0.6%) 1.5% (2.1%) ACCO Brands International 9.8% 9.9% (0.1%) 3.0%
(3.1%) Computer Products 8.0% 3.8% 4.2% 0.7% 3.5% Total 4.6% 4.4%
0.2% 1.8% (1.6%)
ACCO Brands Corporation
Key Stats and Ratios (Unaudited) (In millions of
dollars) Net Debt
Calculation September 30, 2011
December 31, 2010 Current debt obligations, including
current portion of long-term debt $ 0.2 $ 0.2
Long-term debt obligations 668.6 727.4
Total outstanding debt 668.8 727.6 Less: cash and cash equivalents
41.3 83.2 Net debt $ 627.5 $
644.4
Twelve
Months Ended Twelve Months Ended Leverage Ratio (Debt
to EBITDA from Continuing Operations) September 30,
2011 September 30, 2010 Trailing twelve
months (TTM) adjusted supplemental EBITDA from Continuing
Operations (A) $ 162.7 $ 155.3 Net debt $ 627.5 $ 711.8 Gross debt
$ 668.8 $ 726.1 Total Leverage (net debt divided by TTM
adjusted supplemental EBITDA from Continuing Operations) 3.9 4.6
Senior-Secured Leverage (senior-secured debt ($422.5 million
as of September 30, 2011 and $454.8 million as of September 30,
2010) divided by TTM adjusted supplemental EBITDA from Continuing
Operations) 2.6 2.9
As
of and for the As of and for the Twelve Months
Ended Twelve Months Ended Working Capital per Dollar
Sales Ratio (Working Capital to Sales) September 30,
2011 September 30, 2010 Current assets,
excluding cash and cash equivalents (B) $ 512.5 $ 531.1 Current
liabilities, excluding current debt obligations (C) 254.9
283.2 Net working capital $ 257.6 $ 247.9
Trailing twelve months (TTM) net sales (A) $ 1,327.2 $
1,267.8 Working capital ratio (net working capital divided
by TTM net sales) (A) 19.4 % 19.6 %
(A) Management believes these measures provide
investors with helpful supplemental information regarding the
underlying performance of the Company from year to year. These
measures may be inconsistent with similar measures presented by
other companies. (B) Balance is comprised of receivables,
inventories, current deferred income taxes and other current
assets. (C) Balance is comprised of accounts payable, accrued
compensation, accrued customer programs and other current
liabilities.
ACCO Brands
Corporation Reconciliation of Net Income (Loss) to Adjusted
Supplemental EBITDA from Continuing Operations
(Unaudited) (In millions of dollars)
Three
Months Ended December 31, March 31,
June 30, September 30, Trailing 2010
2011 2011 2011 Twelve
Months Net sales $ 359.5 $
298.4 $ 330.2 $ 339.1
$ 1,327.2 Net income (loss) $ 6.8 $ (8.1 ) $
43.7 $ 11.7 $ 54.1 Discontinued operations (2.5 ) (0.9 ) (37.4 )
0.2 (40.6 ) Loss on bond repurchases - - - 4.2 4.2 Income taxes,
impact of adjustments 8.7
5.8 2.3
(2.4 ) 14.4 Adjusted income (loss) from
continuing operations 13.0 (3.2 ) 8.6 13.7 32.1 Adjusted
interest expense, net 19.4 19.2 19.5 19.4 77.5 Adjusted income tax
expense (benefit) 5.5 (1.3 ) 3.7 5.9 13.8 Depreciation expense 7.1
7.1 6.8 6.4 27.4 Amortization of intangibles 1.6 1.7 1.6 1.5 6.4
Adjusted other (income) expense, net - (0.2 ) - 0.2 - Stock-based
compensation expense 1.7
0.8 2.0 1.0
5.5 Adjusted supplemental EBITDA from
continuing operations $ 48.3 $ 24.1
$ 42.2 $ 48.1 $
162.7
ACCO Brands
Corporation and Subsidiaries Condensed Consolidated Balance
Sheets September 30, December 31,
2011 2010 (in millions of dollars)
(unaudited) Assets Current assets: Cash and cash
equivalents $ 41.3 $ 83.2 Accounts receivable, net 254.5 274.8
Inventories 217.7 205.9 Deferred income taxes 7.5 9.1 Other current
assets 32.6 24.0 Assets of discontinued operations 0.2
23.7 Total current assets 553.8 620.7
Total property, plant and equipment 477.6 474.1 Less accumulated
depreciation (325.8 ) (310.9 ) Property, plant and
equipment, net 151.8 163.2 Deferred income taxes 12.4 10.6 Goodwill
136.2 136.9 Identifiable intangibles, net 132.4 137.0 Other assets
63.7 71.8 Assets of discontinued operations -
9.4 Total assets $ 1,050.3 $ 1,149.6
Liabilities and Stockholders' Deficit Current liabilities:
Current portion of long-term debt $ 0.2 $ 0.2 Accounts payable
105.7 110.3 Accrued compensation 19.5 23.9 Accrued customer program
liabilities 57.4 72.8 Accrued interest 4.2 22.0 Other current
liabilities 65.9 84.1 Liabilities of discontinued operations
2.2 14.6 Total current liabilities 255.1 327.9
Long-term debt 668.6 727.4 Deferred income taxes 83.1 81.2
Pension and post retirement benefit obligations 63.2 74.9 Other
non-current liabilities 12.9 12.7 Liabilities of discontinued
operations - 5.3 Total liabilities
1,082.9 1,229.4 Stockholders'
deficit: Common stock 0.6 0.6 Treasury stock (1.7 ) (1.5 ) Paid-in
capital 1,405.0 1,401.1 Accumulated other comprehensive loss (89.9
) (86.1 ) Accumulated deficit (1,346.6 ) (1,393.9 )
Total stockholders' deficit (32.6 ) (79.8 ) Total
liabilities and stockholders' deficit $ 1,050.3 $ 1,149.6
ACCO Brands Corporation and
Subsidiaries Condensed Consolidated Statements of Cash
Flows (Unaudited) Nine Months Ended
September 30, (in millions of dollars)
2011
2010 Operating activities Net income $ 47.3 $
5.6 Other non-cash charges - 0.4 Gain on sale of assets (40.8 )
(0.1 ) Depreciation 20.4 22.6 Amortization of debt issuance costs
and bond discount 6.7 4.7 Amortization of intangibles 4.9 5.2
Stock-based compensation 3.8 2.5 Loss on debt redemption 2.9 -
Changes in balance sheet items: Accounts receivable 17.7 0.8
Inventories (13.5 ) (28.4 ) Other assets (4.5 ) (7.2 ) Accounts
payable (4.5 ) 9.0 Accrued expenses and other liabilities (58.5 )
(38.0 ) Accrued income taxes (2.6 ) 8.2 Equity in earnings of joint
ventures, net of dividends received (1.2 ) (0.2 ) Net
cash used by operating activities (21.9 ) (14.9 )
Investing
activities Additions to property, plant and equipment (10.6 )
(8.7 ) Assets acquired (1.4 ) (1.1 ) Proceeds (payments) from the
sale of discontinued operations 54.6 (3.8 ) Proceeds from the
disposition of assets 0.3 0.7 Other 0.6 -
Net cash provided (used) by investing activities 43.5 (12.9
)
Financing activities (Repayments) proceeds of long-term
debt (62.8 ) 0.4 Repayments of short term debt, net - (0.8 ) Cost
of debt issuance - (0.8 ) Other (0.2 ) (0.1 ) Net
cash used by financing activities (63.0 ) (1.3 ) Effect of foreign
exchange rate changes on cash (0.5 ) (0.2 ) Net
decrease in cash and cash equivalents (41.9 ) (29.3 )
Cash and
cash equivalents Beginning of period 83.2
43.6 End of period $ 41.3 $ 14.3
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