ACCO Brands Corporation (NYSE: ABD), a world leader in select
categories of branded office products, today reported its fourth
quarter and full year results for the year ended December 31,
2010.
“I continue to be pleased with our progress,” said Robert J.
Keller, chairman and chief executive officer. “We grew sales,
expanded our margins, improved profitability and positioned
ourselves for further growth in 2011, all while facing economic
headwinds, rising commodity costs and the challenge of normalizing
compensation.”
Fourth Quarter Results
Net sales increased 6% to $372.5 million, compared to $352.8
million in the prior-year quarter. Volume increased 5% with growth
in all business segments. Fourth quarter income from continuing
operations was $5.4 million, or $0.09 per diluted share, compared
to $2.9 million, or $0.05 per diluted share, in the prior-year
quarter; current-year results are taxed at a 73.3% effective rate.
Using a normalized effective tax rate of 30% and excluding $5.6
million of restructuring and other charges in the prior-year
quarter, adjusted earnings from continuing operations were $14.1
million, or $0.25 per share, compared to $12.0 million, or $0.21
per share in the prior-year period.
Reported fourth quarter operating income increased to $35.9
million, from a reported $27.9 million or adjusted $33.5 million in
the prior-year quarter. On an adjusted basis, the increase was 7%,
which was achieved despite higher commodity costs and Sales,
General and Administrative (SG&A) costs. SG&A increased 80
basis points in the quarter, primarily driven by $6.7 million of
higher management incentive expense. EBITDA increased 8% to $50.0
million, from adjusted EBITDA of $46.2 million in the prior year,
and included a benefit from foreign currency translation of $1.5
million.
Business Segment Highlights
ACCO Brands Americas
ACCO Brands Americas fourth quarter net sales increased 3% to
$181.7 million, from $176.3 million in the prior-year quarter.
Volume grew 2% driven by increased demand from improved customer
penetration and new products. Foreign currency translation impacted
sales favorably by 1%.
ACCO Brands Americas reported fourth quarter operating income of
$17.1 million, compared to a reported $10.7 million or adjusted
$12.9 million in the prior-year quarter. Operating income increased
33% compared to the prior-year adjusted results, and operating
margin increased to 9.4% from 7.3%. Compared to the prior-year
adjusted results, operating margin benefited from lower freight and
distribution costs, other process efficiencies and improved sales
mix, which more than offset higher commodity costs and increased
salary, benefit and incentive compensation costs.
ACCO Brands International
ACCO Brands International net sales increased 7% to $139.9
million, compared to $130.6 million in the prior-year quarter.
Volume grew 7% due to new products and share gains, partially
offset by lower pricing.
ACCO Brands International reported operating income of $13.9
million, compared to a reported $14.8 million or adjusted $17.1
million in the prior-year quarter. Operating income decreased 19%
compared to prior-year adjusted results, and operating margin
declined to 9.9% from 13.1% primarily due to higher costs and an
adverse sales mix, principally in Europe.
Computer Products Group
Computer Products net sales increased 11% to $50.9 million,
compared to $45.9 million in the prior-year quarter. Volume grew
11% due to new products and growth in most markets. Foreign
currency translation had a negative 2% impact on sales.
Computer Products reported operating income of $11.6 million,
compared to a reported $8.9 million or adjusted $9.2 million in the
prior-year quarter. Operating income increased 26% compared to
prior-year adjusted results, and margin expanded to 22.8% from
20.0%. The improvement in margin was primarily due to favorable
sales mix, partially offset by higher marketing expenditures and
incentive compensation costs.
Full Year Results
For the year, net sales increased 5% to $1.33 billion, compared
to $1.27 billion in the prior-year period. Volume grew 4% with
growth in all business segments. Foreign currency translation
impacted sales favorably by 2%. The company reported income from
continuing operations of $11.5 million, or $0.20 per diluted share,
for the twelve months ending December 31, 2010, compared to a loss
of $115.8 million, or $2.13 per diluted share, in the prior-year
period. Prior-year results included net after-tax charges totaling
$141.9 million. Using a normalized effective tax rate of 30% for
the current year and excluding charges in the prior-year period,
adjusted earnings per share from continuing operations were $0.53,
compared to $0.47 in the prior-year period.
Operating income was $115.0 million for the twelve months ended
December 31, 2010, compared to a reported $79.8 million or adjusted
$103.6 million in the prior-year period. EBITDA increased 9% to
$164.0 million, from an adjusted EBITDA of $150.0 million in the
prior year, and included an $8.9 million comparative benefit from
foreign exchange. The current year results also include $26.8
million of additional salary, management incentive, and employee
benefits expense, whereas the prior year benefited from temporary
salary, management incentive and benefit reductions in the U.S. The
company generated $40 million in free cash flow during the year,
and ended the year with a cash balance of $83 million.
Business Outlook
The company anticipates that 2011 will continue to be
challenging due to uncertainty around consumer and business
spending. However, the company expects sales to increase between
2-4% before the effects of foreign currency.
In the first half of 2011, the company anticipates incurring
$6-9 million of cash costs related to the rationalization of its
European operations, with savings largely realized in the second
half of 2011. The first quarter will be most impacted by these
costs.
Based on expected improvements in gross margin, which will be
partially offset by an increase in selling, general and
administrative expenses, the company expects to grow diluted
earnings per share between 20% and 30% on a normalized tax rate
basis.
Targeted free cash flow, after interest, taxes and capital
expenditures, is expected to be approximately $50-60 million.
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 restructuring, goodwill and asset
impairment charges and unusual tax items. In addition, “adjusted”
results also exclude certain other charges recorded in the
prior-year period that did not qualify as restructuring and include
redundant warehousing or storage costs during the transition to a
new distribution center, equipment and other asset move costs,
facility overhead and maintenance costs after exit, gains on the
sale of the exited facilities and employee retention incentives.
Adjusted supplemental EBITDA from continuing operations excludes
restructuring, goodwill and asset impairment charges, and other
non-operating items, including other income/expense and stock-based
compensation expense. In addition, certain other charges recorded
in the prior-year period that did not qualify as restructuring (as
described above) are also excluded. The company has not incurred
any material restructuring and integration charges in 2010.
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 select categories
of branded office products. Its industry-leading brands include
Day-Timer®, Swingline®, Kensington®, Quartet®, GBC®, Rexel, NOBO,
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
continued 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, 2009, 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 December 31,
2010 2009
% % Excluded
Change Change
Reported Reported Charges(A)
Adjusted
Reported Adjusted Net sales
$
372.5 $ 352.8
$
-
$ 352.8
6 % 6 % Cost of products sold
253.5 244.3 (0.9 )
243.4
4 % 4 % Gross
profit
119.0 108.5 0.9 109.4
10 %
9 % Operating costs and expenses: Advertising,
selling, general and administrative expenses
81.1
75.2 (1.1 ) 74.1
8 % 9 %
Amortization of intangibles
1.7 1.8 - 1.8
(6
)% (6 )% Restructuring charges
0.3 3.6 (3.6 ) -
(92 )% NM Total operating costs and
expenses
83.1 80.6
(4.7 ) 75.9
3 % 9 %
Operating income
35.9 27.9 5.6 33.5
29
% 7 % Non-operating expense (income):
Interest expense
19.4 19.4 - 19.4
0 %
0 % Equity in earnings of joint ventures
(3.7
) (2.4 ) - (2.4 )
(54 )%
(54 )% Other income, net
-
(0.7 ) - (0.7 )
100 % 100 % Income from
continuing operations before income taxes
20.2 11.6
5.6 17.2
74 % 17 % Income tax expense
14.8 8.7 (3.5 )
5.2
70 % Income from continuing
operations
5.4 2.9 9.1 12.0
86 % Income
(loss) from discontinued operations, net of income taxes
1.4 (1.9 ) 1.6
(0.3 )
NM Net income
$ 6.8
$ 1.0 $ 10.7 $ 11.7
NM
Per share: Basic earnings (loss) per share:
Income from continuing operations
$ 0.10 $ 0.05 $ 0.22
100
%
Income (loss) from discontinued
operations
0.03 (0.04 ) -
NM
Basic earnings per share
$ 0.12 $ 0.02 $ 0.21
NM
Diluted earnings (loss) per share:
Income from continuing operations
$ 0.09 $ 0.05 $ 0.21
80 %
Income (loss) from discontinued
operations
0.02 (0.03 ) -
NM
Diluted earnings per share
$ 0.12 $ 0.02 $ 0.21
NM
Weighted average number of shares outstanding: Basic
54.9
54.6 54.6 Diluted
57.2 56.4 56.4
Reconciliation of Reported Consolidated Results to Adjusted
Results Three Months Ended
December 31, 2010 Tax Adjustment
(in millions, except per share data)
Reported (B)
Adjusted Income from continuing operations before income
taxes
$ 20.2 $ - $ 20.2 Income tax expense (benefit)
14.8 (8.7 ) 6.1 Income from continuing
operations
$ 5.4 $ 8.7 $ 14.1 Diluted
earnings per share: Income from continuing operations
$
0.09 $ 0.25 Weighted average number of diluted shares
outstanding
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) Three Months
Ended December 31, 2010 2009 Reported Adjusted
Reported Adjusted Gross profit (Net sales, less Cost of
products sold) 31.9 % 30.8 % 31.0 % Advertising,
selling, general and administrative 21.8 % 21.3 % 21.0 % Operating
income 9.6 % 7.9 % 9.5 % Income from continuing operations before
income taxes 5.4 % 3.3 % 4.9 % Net income 1.8 % 4.2 % 0.3 % 3.3 %
Income tax rate 73.3 % 30.0 %
75.0 % 30.2 % (A)
Certain charges are excluded in order to provide a
comparison of underlying results of operations, including
restructuring charges, and certain non-recurring income tax items
related to adjustments impacting the Company’s effective tax rate.
In addition, certain other charges that have been recorded within
cost of products sold and advertising, selling, general and
administrative expenses in the prior-year period did not qualify as
restructuring. These charges included redundant warehousing or
storage costs during the transition to a new distribution center,
equipment and other asset move costs, facility overhead and
maintenance costs after exit, gains on the sale of exited
facilities and employee retention incentives. The Company has not
incurred restructuring and integration charges in 2010. (B)
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 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.
Reconciliation of Net Income to Adjusted
Supplemental EBITDA from Continuing Operations
(Unaudited) (In millions of dollars)
Three Months Ended December 31,
2010 2009 % Change Net income $ 6.8 $ 1.0 NM
Discontinued operations (1.4 ) 1.9 NM Restructuring charges - 3.6
(100 )% Other charges included in Cost of products sold (C) - 0.9
(100 )% Other charges included in Advertising, selling, general and
administrative expenses (C) - 1.1 (100 )% Asset impairment charges
- - NM Income taxes, impact of adjustments (C) 8.7
3.5 NM
Adjusted income from continuing
operations 14.1 12.0 18 % Interest expense, net 19.4 19.4 0 %
Adjusted income tax expense 6.1 5.2 17 % Depreciation (D) 7.0 8.0
(13 )% Amortization of intangibles 1.7 1.8 (6 )%
Other (income), net
- (0.7 ) 100 % Stock-based compensation expense 1.7
0.5 NM
Adjusted supplemental EBITDA from
continuing operations $ 50.0 $ 46.2 8 %
Adjusted supplemental EBITDA from continuing operations as a % of
Net Sales 13.4 % 13.1 %
(C)
Certain charges are excluded in order to provide a
comparison of underlying results of operations, including
restructuring charges and certain non-recurring income tax items
related to adjustments impacting the Company’s effective tax rate.
In addition, certain other charges that have been recorded in the
prior-year period did not qualify as restructuring. These charges
included redundant warehousing or storage costs during the
transition to a new distribution center, equipment and other asset
move costs, facility overhead and maintenance costs after exit,
gains on the sale of exited facilities and employee retention
incentives. The Company has not incurred restructuring and
integration charges in 2010.
(D)
Represents total depreciation less depreciation of $0.1 million for
the three months ended December 31, 2009 that have been included in
other charges, which are 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) Twelve Months Ended
December 31, 2010 2009
% % Excluded
Change
Change Reported Reported Charges(A)
Adjusted
Reported Adjusted Net
sales
$ 1,330.5 $ 1,272.5
$
-
$ 1,272.5
5 % 5 % Cost of products sold
915.1 893.2 (3.4 )
889.8
2 % 3 % Gross
profit
415.4 379.3 3.4 382.7
10 %
9 % Operating costs and expenses: Advertising,
selling, general and administrative expenses
294.0
273.1 (1.2 ) 271.9
8 % 8 %
Amortization of intangibles
6.9 7.2 - 7.2
(4
)% (4 )% Restructuring charges
(0.5
) 17.4 (17.4 ) -
NM NM Asset impairment
charges
- 1.8 (1.8
) -
(100 )% NM Total operating
costs and expenses
300.4 299.5
(20.4 ) 279.1
0 %
8 % Operating income
115.0 79.8
23.8 103.6
44 % 11 %
Non-operating expense (income): Interest expense
78.2
67.0 - 67.0
17 % 17 % Equity in
earnings of joint ventures
(8.3 ) (4.4
) - (4.4 )
(89 )% (89 )% Other
expense, net (B)
1.4 5.1
- 5.1
(73 )% (73
)% Income from continuing operations before income
taxes
43.7 12.1 23.8 35.9
NM 22
% Income tax expense (C)
32.2
127.9 (118.1 ) 9.8
(75
)% Income (loss) from continuing operations
11.5
(115.8 ) 141.9 26.1
NM Income (loss) from
discontinued operations, net of income taxes
0.9
(10.3 ) 3.0 (7.3 )
NM Net income (loss)
$ 12.4 $
(126.1 ) $ 144.9 $ 18.8
NM
Per share: Basic earnings (loss) per share: Income (loss)
from continuing operations
$ 0.21 $
(2.13 ) $ 0.48
NM
Income (loss) from discontinued
operations
0.02 (0.19 ) (0.13 )
NM Basic earnings
(loss) per share
$ 0.23 $ (2.32
) $ 0.35
NM Diluted earnings (loss) per share:
Income (loss) from continuing operations
$ 0.20
$ (2.13 ) $ 0.47
NM
Income (loss) from discontinued
operations
0.02 (0.19 ) (0.13 )
NM Diluted
earnings (loss) per share
$ 0.22 $
(2.32 ) $ 0.34
NM Weighted average
number of shares outstanding: Basic
54.8 54.5 54.5
Diluted
57.2 54.5 56.1
Reconciliation of
Reported Consolidated Results to Adjusted Results
Twelve Months Ended December 31, 2010
Tax Adjustment (in millions, except per
share data)
Reported (D) Adjusted Income from
continuing operations before income taxes
$ 43.7 $ -
$ 43.7 Income tax expense (benefit)
32.2 (19.1
) 13.1 Income from continuing operations
$
11.5 $ 19.1 $ 30.6 Diluted earnings per share:
Income from continuing operations
$ 0.20 $ 0.53
Weighted average number of diluted shares outstanding
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) Twelve Months Ended
December 31, 2010 2009 Reported Adjusted Reported
Adjusted Gross profit (Net sales, less Cost of products
sold) 31.2 % 29.8 % 30.1 % Advertising, selling,
general and administrative 22.1 % 21.5 % 21.4 % Operating income
8.6 % 6.3 % 8.1 % Income from continuing operations before income
taxes 3.3 % 1.0 % 2.8 % Net income 0.9 % 2.4 % (9.9 )% 1.5 % Income
tax rate 73.7 % 30.0 % NM
27.3 % (A) Certain
charges are excluded in order to provide a comparison of underlying
results of operations, including restructuring charges, and certain
non-recurring income tax items related to adjustments impacting the
Company’s effective tax rate. In addition, certain other charges
that have been recorded within cost of products sold and
advertising, selling, general and administrative expenses in the
prior-year period did not qualify as restructuring. These charges
included redundant warehousing or storage costs during the
transition to a new distribution center, equipment and other asset
move costs, facility overhead and maintenance costs after exit,
gains on the sale of exited facilities and employee retention
incentives. The Company has not incurred restructuring and
integration charges in 2010. (B) During 2009, the Company recorded
a net loss on the early extinguishment of debt of $4.2 million,
$0.07 per diluted share. (C) During 2009, the Company recorded a
non-cash charge of $108.1 million to establish a valuation
allowance against its U.S. deferred tax assets. (D) 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 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.
Reconciliation of Net Income to Adjusted Supplemental
EBITDA from Continuing Operations (Unaudited) (In
millions of dollars) Twelve Months Ended
December 31, 2010 2009 %
Change Net income (loss) $ 12.4 $ (126.1 ) NM Discontinued
operations (0.9 ) 10.3 NM Restructuring charges - 17.4 (100 )%
Other charges included in Cost of products sold (E) - 3.4 (100 )%
Other charges included in Advertising, selling, general and
administrative expenses (E) - 1.2 (100 )% Asset impairment charges
- 1.8 (100 )% Income taxes, impact of adjustments (E,F) 19.1
118.1 (84 )%
Adjusted income from
continuing operations 30.6 26.1 17 % Interest expense, net 78.2
67.0 17 % Adjusted income tax expense 13.1 9.8 34 % Depreciation
29.6 32.0 (8 )% Amortization of intangibles 6.9 7.2 (4 )%
Other (income), net (G)
1.4 5.1 (73 )% Stock-based compensation expense (H) 4.2
2.8 50 %
Adjusted supplemental EBITDA from
continuing operations $ 164.0 $ 150.0 9 %
Adjusted supplemental EBITDA from continuing operations as a % of
Net Sales 12.3 % 11.8 %
(E)
Certain charges are excluded in order to provide a
comparison of underlying results of operations, including
restructuring charges and certain non-recurring income tax items
related to adjustments impacting the Company’s effective tax rate.
In addition, certain other charges that have been recorded in the
prior-year period did not qualify as restructuring. These charges
included redundant warehousing or storage costs during the
transition to a new distribution center, equipment and other asset
move costs, facility overhead and maintenance costs after exit,
gains on the sale of exited facilities and employee retention
incentives. The Company has not incurred restructuring and
integration charges in 2010.
(F)
During 2009, the Company recorded a non-cash charge of $108.1
million to establish a valuation allowance against its U.S.
deferred tax assets.
(G)
Other expense for 2009 includes a net loss on the early
extinguishment of debt of $4.2 million.
(H)
Stock-based compensation expense for the twelve months ended
December 31, 2009, excludes $0.2 million that have been included in
restructuring charges, which are excluded from adjusted income from
continuing operations.
ACCO Brands Corporation
Supplemental Business Segment Information (Unaudited)
(In millions of dollars) 2010 2009
Changes
Reported vs. Reported vs. Reported vs.
Adjusted Reported Reported Reported Excluded Adjusted Adjusted OI
Net Sales Net Sales Adjusted Adjusted Margin Net Sales OI
OI Margin Net Sales OI Charges OI (A)
Margin (A) $ % OI $ OI % Points
Q1: ACCO Brands Americas $ 158.6 $ 8.3 5.2% $ 157.7 $ 6.2 $
0.3 $ 6.5 4.1% $ 0.9 1% $ 1.8 28% 110 ACCO Brands International
112.5 10.2 9.1% 100.3 5.6 2.6 8.2 8.2% 12.2 12% 2.0 24% 90 Computer
Products 39.7 8.1 20.4% 35.4 4.8 0.5 5.3 15.0% 4.3 12% 2.8 53% 540
Corporate - (5.0) - (3.2) - (3.2) - (1.8) Total $ 310.8 $ 21.6 6.9%
$ 293.4 $ 13.4 $ 3.4 $ 16.8 5.7% $ 17.4 6% $ 4.8 29% 120
Q2: ACCO Brands Americas $ 169.9 $ 14.4 8.5% $ 162.0 $ 5.6 $
4.1 $ 9.7 6.0% $ 7.9 5% $ 4.7 48% 250 ACCO Brands International
104.5 6.2 5.9% 102.7 1.2 6.6 7.8 7.6% 1.8 2% (1.6) (21)% (170)
Computer Products 42.1 10.7 25.4% 39.1 7.9 1.3 9.2 23.5% 3.0 8% 1.5
16% 190 Corporate - (5.0) - (3.7) - (3.7) (1.3) Total $
316.5 $ 26.3 8.3% $ 303.8 $ 11.0 $ 12.0 $ 23.0 7.6% $ 12.7 4% $ 3.3
14% 70
Q3: ACCO Brands Americas $ 178.1 $ 16.5 9.3% $
175.5 $ 16.1 $ 0.3 $ 16.4 9.3% $ 2.6 1% $ 0.1 1% 0 ACCO Brands
International 108.3 6.5 6.0% 104.4 5.8 2.0 7.8 7.5% 3.9 4% (1.3)
(17)% (150) Computer Products 44.3 12.6 28.4% 42.6 10.1 0.5 10.6
24.9% 1.7 4% 2.0 19% 350 Corporate - (4.4) - (4.5) - (4.5)
0.1 Total $ 330.7 $ 31.2 9.4% $ 322.5 $ 27.5 $ 2.8 $ 30.3 9.4% $
8.2 3% $ 0.9 3% 0
Q4: ACCO Brands Americas $ 181.7 $
17.1 9.4% $ 176.3 $ 10.7 $ 2.2 $ 12.9 7.3% $ 5.4 3% $ 4.2 33% 210
ACCO Brands International 139.9 13.9 9.9% 130.6 14.8 2.3 17.1 13.1%
9.3 7% (3.2) (19)% (320) Computer Products 50.9 11.6 22.8% 45.9 8.9
0.3 9.2 20.0% 5.0 11% 2.4 26% 280 Corporate - (6.7) - (6.5) 0.8
(5.7) (1.0) Total $ 372.5 $ 35.9 9.6% $ 352.8 $ 27.9 $ 5.6 $
33.5 9.5% $ 19.7 6% $ 2.4 7% 10
YTD: ACCO Brands
Americas $ 688.3 $ 56.3 8.2% $ 671.5 $ 38.6 $ 6.9 $ 45.5 6.8% $
16.8 3% $ 10.8 24% 140 ACCO Brands International 465.2 36.8 7.9%
438.0 27.4 13.5 40.9 9.3% 27.2 6% (4.1) (10)% (140) Computer
Products 177.0 43.0 24.3% 163.0 31.7 2.6 34.3 21.0% 14.0 9% 8.7 25%
330 Corporate - (21.1) - (17.9) 0.8 (17.1) (4.0) Total $
1,330.5 $ 115.0 8.6% $ 1,272.5 $ 79.8 $ 23.8 $ 103.6 8.1% $ 58.0 5%
$ 11.4 11% 50
(A) Adjusted results exclude asset impairment charges,
restructuring, as well as certain other charges recorded in the
prior-year period that did not qualify as restructuring.
ACCO Brands Corporation Supplemental Net Sales Growth
Analysis (Unaudited)
Percent Change - Sales Net Comparable
Sales Currency Sales Growth
Translation Growth Price
Volume Q1 2010: ACCO Brands Americas 0.6 % 3.2 % (2.6
%) (1.5 %) (1.1 %) ACCO Brands International 12.2 % 15.5 % (3.3 %)
(1.4 %) (1.9 %) Computer Products 12.1 % 5.4 % 6.7 % (0.3 %) 7.0 %
Total 5.9 % 7.7 % (1.8 %) (1.3 %) (0.5 %)
Q2 2010:
ACCO Brands Americas 4.9 % 2.0 % 2.9 % (2.4 %) 5.3 % ACCO Brands
International 1.8 % 2.3 % (0.5 %) (3.1 %) 2.6 % Computer Products
7.7 % (0.3 %) 8.0 % 1.5 % 6.5 % Total 4.2 % 1.8 % 2.4 % (2.1 %) 4.5
%
Q3 2010: ACCO Brands Americas 1.5 % 1.0 % 0.5 %
(1.4 %) 1.9 % ACCO Brands International 3.7 % 0.1 % 3.6 % (3.4 %)
7.0 % Computer Products 4.0 % (2.3 %) 6.3 % (0.5 %) 6.8 % Total 2.5
% 0.3 % 2.2 % (1.9 %) 4.1 %
Q4 2010: ACCO Brands
Americas 3.1 % 1.1 % 2.0 % 0.1 % 1.9 % ACCO Brands International
7.1 % 0.5 % 6.6 % (0.8 %) 7.4 % Computer Products 10.9 % (2.0 %)
12.9 % 1.7 % 11.2 % Total 5.6 % 0.5 % 5.1 % 0.0 % 5.1 %
2010 YTD: ACCO Brands Americas 2.5 % 1.8 % 0.7 % (1.3 %) 2.0
% ACCO Brands International 6.2 % 4.3 % 1.9 % (2.1 %) 4.0 %
Computer Products 8.6 % (0.1 %) 8.7 % 0.7 % 8.0 % Total 4.6 % 2.4 %
2.2 % (1.3 %) 3.5 %
ACCO Brands Corporation Key
Stats and Ratios (Unaudited) (In millions of
dollars) Net Debt
Calculation
December 31, 2010
December 31, 2009
Current debt obligations, including current portion of long-term
debt $ 0.2 $ 0.7 Long-term debt obligations
727.4 725.1 Total outstanding debt 727.6 725.8
Less: cash and cash equivalents 83.2 43.6
Net debt $ 644.4 $ 682.2
Twelve Months Ended Twelve Months Ended
Leverage Ratio (Debt to EBITDA from Continuing Operations)
December 31, 2010
December 31, 2009
Trailing twelve months (TTM) adjusted supplemental EBITDA from
Continuing Operations (A) $ 164.0 $ 150.0 Net debt (see above) $
644.4 $ 682.2 Gross debt (see above) $ 727.6 $ 725.8 Total
Leverage (net debt divided by TTM adjusted supplemental EBITDA from
Continuing Operations) 3.9 4.5 Senior-Secured Leverage
(senior-secured debt [$456.3 million as of December 31, 2010 and
$454.5 million as of December 31, 2009] divided by TTM adjusted
supplemental EBITDA from Continuing Operations) 2.8 3.0
Twelve Months Ended Twelve
Months Ended Working Capital per Dollar Sales Ratio (Working
Capital to Sales)
December 31, 2010
December 31, 2009
Current assets, excluding cash and cash equivalents (B) $ 537.5 $
493.5 Current liabilities, excluding current debt obligations (C)
327.7 298.2 Net working capital $ 209.8
$ 195.3 Trailing twelve months (TTM) net sales (A) $ 1,330.5
$ 1,272.5 Working capital ratio (net working capital divided
by TTM net sales) (A) 15.8 % 15.3 % (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 Selected Financial Information
(Unaudited) (In millions of dollars)
Three Months Ended December 31,
2010
2009
Selected Non-Cash Items Included in Net Income (Pre-tax):
Depreciation expense $ 7.0 $ 8.1 Intangible amortization
expense $ 1.7 $ 1.8 Stock-based compensation expense $ 1.7 $ 0.5
Selected Cash Investing and Restructuring Activities
(Pre-tax): Capital expenditures $ 3.9 $ 2.6 Restructuring and
integration activities $ 0.8 $ 6.2
Twelve Months
Ended December 31,
2010
2009
Selected Non-Cash Items Included in Net Income (Pre-tax):
Depreciation expense $ 29.6 $ 32.1 Intangible amortization expense
$ 6.9 $ 7.2 Stock-based compensation expense $ 4.2 $ 3.0
Selected Cash Investing and Restructuring Activities
(Pre-tax): Capital expenditures $ 12.6 $ 10.3 Restructuring and
integration activities (A) $ 7.5 $ 38.3 (A) Includes
stock-based compensation expense of $0.2 million that has been
reported as a component of restructuring charges for the twelve
months ended December 31, 2009.
ACCO Brands
Corporation Reconciliation of Net Income (Loss) to Adjusted
Supplemental EBITDA from Continuing Operations
(Unaudited) (In millions of dollars)
Three Months Ended
March 31,
June 30,
September 30, December 31, Trailing
2010
2010
2010
2010
Twelve Months Net sales
$
310.8 $ 316.5 $ 330.7 $ 372.5 $
1,330.5 Net income (loss)
$
(4.7 )
$
4.9
$
5.4
$
6.8
$
12.4 Discontinued operations 0.2 0.3 - (1.4 ) (0.9 ) Restructuring
charges - - - - - Other charges included in COS - - - - - Other
charges included in SG&A - - - - - Asset impairment charges - -
- - - Income taxes, impact of adjustments 6.1
- 4.3 8.7 19.1
Adjusted income from continuing operations
1.6
5.2
9.7
14.1
30.6 Interest expense, net 19.5 19.7 19.6 19.4 78.2 Adjusted
income tax expense 0.7 2.2 4.1 6.1 13.1 Depreciation expense 7.7
7.3 7.6 7.0 29.6 Amortization of intangibles 1.8 1.7 1.7 1.7 6.9
Other (income) expense, net 1.0 0.3 0.1 - 1.4 Stock-based
compensation expense 0.8 1.6
0.1 1.7 4.2
Adjusted supplemental EBITDA from continuing operations $ 33.1
$ 38.0 $ 42.9 $ 50.0 $ 164.0
ACCO Brands Corporation and
Subsidiaries
Condensed Consolidated Balance
Sheets
December 31, December 31,
2010
2009
(in millions of dollars)
(unaudited) Assets Current assets:
Cash and cash equivalents $ 83.2 $ 43.6 Accounts receivable, net
283.2 259.9 Inventories 216.1 202.4 Deferred income taxes 12.9 9.8
Other current assets 25.3 21.4 Total
current assets 620.7 537.1 Property, plant and equipment, net 163.5
181.1 Deferred income taxes 48.7 31.5 Goodwill 144.4 143.4
Identifiable intangibles, net 138.2 145.8 Other assets 72.2
67.9 Total assets $ 1,187.7 $ 1,106.8
Liabilities and Stockholders' Deficit Current
liabilities: Notes payable to banks $ - $ 0.5 Current portion of
long-term debt 0.2 0.2 Accounts payable 114.8 101.0 Accrued
compensation 26.1 18.9 Accrued customer program liabilities 72.8
74.6 Accrued interest 22.0 20.0 Other current liabilities 90.5 78.1
Liabilities of discontinued operations 1.5 5.6
Total current liabilities 327.9 298.9 Long-term debt 727.4
725.1 Deferred income taxes 119.6 86.6 Pension and post retirement
benefit obligations 74.9 94.6 Other non-current liabilities
17.7 18.8 Total liabilities 1,267.5
1,224.0 Commitments and Contingencies
Stockholders' deficit: Common stock 0.6 0.5 Treasury stock
(1.5 ) (1.4 ) Paid-in capital 1,401.1 1,397.0 Accumulated other
comprehensive loss (86.1 ) (107.0 ) Accumulated deficit
(1,393.9 ) (1,406.3 ) Total stockholders' deficit
(79.8 ) (117.2 ) Total liabilities and stockholders' deficit
$ 1,187.7 $ 1,106.8
ACCO Brands Corporation
and Subsidiaries Condensed Consolidated Statements of Cash
Flows (Unaudited) Twelve Months
Ended December 31, (in millions of dollars)
2010
2009
Operating activities Net income (loss) from continuing
operations $
11.5
$ (115.8 ) Net loss from discontinued operations
0.9
(10.3 ) Deferred income tax provision 12.3 112.7 Asset impairment
and other non-cash charges 0.7 6.3 (Gain) loss on sale of assets
(1.5 ) 0.8 Depreciation 29.6 32.1 Amortization of debt issuance
costs/bond discount 6.3 6.5 Amortization of intangibles 6.9 7.2
Stock-based compensation 4.2 3.0 Loss on retirement of bank debt -
4.0 Changes in balance sheet items: Accounts receivable (18.5 )
41.5 Inventories (9.8 ) 78.7 Other assets (5.1 ) 10.2 Accounts
payable 14.8 (54.9 ) Accrued expenses and other liabilities (2.2 )
(37.5 ) Accrued taxes 7.7 (8.8 ) Other operating activities, net
(2.9 ) (4.2 ) Net cash provided by operating
activities 54.9 71.5
Investing activities Additions to
property, plant and equipment (12.6 ) (10.3 ) Assets acquired (1.1
) (3.4 ) (Payments) proceeds from the sale of discontinued
operations (3.7 ) 9.2 Proceeds from the disposition of assets
2.5 0.6 Net cash used by investing
activities (14.9 ) (3.9 )
Financing activities Proceeds from
long-term borrowings 1.5 469.3 Repayments of long-term debt (0.2 )
(397.9 ) Repayments of short-term debt, net (0.5 ) (54.2 ) Payment
of Euro debt hedge - (40.8 ) Cost of debt issuance (0.8 ) (20.6 )
Exercise of stock options (0.1 ) (0.3 ) Net cash used
by financing activities (0.1 ) (44.5 ) Effect of foreign exchange
rate changes on cash (0.3 ) 2.4 Net increase
in cash and cash equivalents 39.6 25.5
Cash and cash
equivalents Beginning of period 43.6 18.1
End of period $ 83.2 $ 43.6
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