ACCO Brands Corporation Reports Second Quarter Results.LINCOLNSHIRE Lincolnshire (lĭng`kənshĭr), county (1991 pop. 573,900), 2,662 sq mi (6,895 sq km), E England, on the Humber estuary, the North Sea, and The Wash. The county seat is Lincoln. , Ill. -- ACCO ACCO American College of Chiropractic Orthopedists ACCO Association of County Commissioners of Oklahoma ACCo American Cyanamid Company ACCO Adenoid Cystic Carcinoma Organization ACCO American Clip Company ACCO Assistant Central Control Officer Brands Corporation (NYSE NYSE See: New York Stock Exchange :ABD ABD n. A candidate for a doctorate who has completed all the requirements for the degree, such as courses and examinations, with the exception of the dissertation. [a(ll) b(ut) d(issertation).] ): --Office Products integration on track to achieve targeted $40 million net cost reductions --Second quarter pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma sales even with prior year, but up 2% excluding European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. office products business --Strong cash position enables $79 million debt reduction year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. --Divesting non-strategic Perma(R) corrugated cor·ru·gate v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates v.tr. To shape into folds or parallel and alternating ridges and grooves. v.intr. storage box business ACCO Brands Corporation (NYSE:ABD), a world leader in select categories of branded office products, reported its second quarter 2006 results today. Reported results include the operations of the former General Binding Corporation ("GBC GBC Game Boy Color GBC Global Business Coalition GBC Green Building Council GBC George Brown College GBC Great Basin College (Nevada) GBC General Binding Corporation GBC Greater Baltimore Committee GBC Goldey-Beacom College ") for the second quarter of 2006, but exclude them for the comparable quarter of 2005. Second quarter net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 68%, to $462.6 million, due to the August 2005 acquisition of GBC. Pro forma net sales were even with the prior year quarter. Growth in Computer Products, Other Commercial and Commercial - Industrial Print Finishing were offset by a decline in Office Products, principally the result of a decline in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). .
Excluding European office products, total company pro forma sales were
up 2% and Office Products sales were up 1%. (Refer to p. 5 for the
definition of pro forma results and non-GAAP financial measures.)The company incurred a net loss of $(9.8) million for this seasonally slower quarter, or $(0.18) per share, compared to net income of $14.2 million, or $0.40 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in the prior-year quarter. Net loss in the current quarter includes restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and non-recurring after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. costs totaling $13.1 million ($17.8 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ), or $0.25 per share, and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. after-tax expense of $2.1 million, or $0.04 per share, related to the new company's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. compensation plan and required expensing of equity compensation under FAS 123R. Adjusted pro forma net income declined to $3.3 million, or $0.06 per share, compared to $11.8 million, or $0.22 per share, in the prior-year quarter. Adjusting for incremental long-term compensation expense of $2.1 million, or $0.04 per share, current-year adjusted net income was $0.10 per share. The underlying decrease was due to operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. declines in Office Products European operations and in Computer Products, as well as investments in SG&A and higher raw material and freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or costs. These factors more than offset favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. synergies and lower interest, taxes and other expenses. (Refer to p. 12 for a reconciliation of "adjusted" results to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). .) "ACCO Brands took major strides in the integration of our office products businesses during the second quarter," said David D. Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. , chairman and chief executive officer. "We're we're Contraction of we are. we're we are pleased with the pace of our integration activities and highly confident that they will achieve the targeted $40 million of net cost synergies Cost Synergy In the context of mergers, cost synergy is the savings in operating costs expected after two companies, who compliment each other's strengths, join. Notes: The savings in operating costs usually come in the form of laying off employees. . We are also enthusiastic about future opportunities in the commercial businesses and we will discuss these opportunities at the time of our third quarter earnings announcement." The company today announced 12 additional facilities closures or downsizings, as well as a significant expansion of its strategically located Booneville, Mississippi Booneville is a city in Prentiss County, Mississippi, United States. The population was 8,625 at the 2000 census. It is the county seat of Prentiss CountyGR6. manufacturing and distribution center. In addition, the company successfully integrated key information technology systems in the U.S., Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of and Mexico Mexico, city, Mexico Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico. , creating a common technology platform for its office products businesses, and consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: its European office products sales force. These actions, in addition to the actions announced in the first quarter, will ultimately account for more than 85% of the targeted cost synergies. "As we had anticipated, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. and margins declined in the quarter, but we continue to expect comparisons in the third and fourth quarters to become increasingly positive," said Campbell. In addition to funding restructuring activities and capital investments in the business, the company has reduced debt by $79 million in 2006, far exceeding its mandatory Peremptory; obligatory; required; that which must be subscribed to or obeyed. Mandatory statutes are those that require, as opposed to permit, a particular course of action. debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan schedule. In a separate announcement, the company today also reported that it is divesting its Perma(R) corrugated storage box business. "This is an important step in continuing to sharpen sharp·en tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp our focus on core, strategic categories," said Campbell. "With this sale we're better able to focus our time and resources on opportunities that provide us with greater potential for long-term profitable growth." The Perma(R) business generated approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $30 million in net revenues in 2005. The transaction is expected to close in the third quarter. Results of Business Segments
Items Affecting Segment-level Adjusted Operating Income Comparability:
----------------------------------------------------------------------
Incremental
Equity/
Long-term
Foreign Incentive Underlying
Exchange Compensation Change in
Q2 2005 Translation Expense (1) Results Q2 2006
------- ----------- ------------ --------- -------
Office Products $21.1 $0.3 $(2.0) $(9.0) $10.4
Computer Products 12.1 - (0.2) (4.1) 7.8
Commercial - IPFG 4.3 0.1 (0.1) 0.6 4.9
Other Commercial 3.6 - (0.1) (1.6) 1.9
Corporate (5.6) - (0.9) (0.8) (7.3)
--------- ------- ----------- ------------ --------- -------
Total Adjusted OI $35.5 $0.4 $(3.3) $(14.9) $17.7
1) Expense appears in SG&A.
Office Products Group Office Products net sales increased 43% to $308.2 million, compared to $215.0 million in the prior-year quarter. Pro forma net sales declined 2%. Growth in the U.S., Australia Australia (ôstrāl`yə), smallest continent, between the Indian and Pacific oceans. With the island state of Tasmania to the south, the continent makes up the Commonwealth of Australia, a federal parliamentary state (2005 est. pop. and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. was offset by a decline in European operations; excluding Europe, Office Products underlying sales increased 1%. The decline in Europe was primarily in retail channels in the United Kingdom and the result of unfavorable pricing. Office Products reported an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $(4.7) million, compared to profit of $13.5 million, including restructuring and restructuring-related non-recurring charges. Adjusted pro forma operating income decreased to $10.4 million, compared to $21.1 million in the prior-year quarter, and operating income margins declined to 3.4% from 6.7%. Excluding items affecting year-over-year comparability, the underlying decline in operating profit and margin was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to European operations, specifically unfavorable pricing coupled with higher raw material costs, increased investments in SG&A infrastructure to transition the European business model, and lower sales in the United Kingdom. With the exception of increased input costs and transitional items in Europe, the company believes underlying Office Products trends in other markets are improving. The company is implementing price increases and introducing new products. Computer Products Group Computer Products sales were $51.2 million, compared to $49.1 million in the prior-year quarter, an increase of 4%. The sales growth was driven by increased sales of iPod A family of extremely popular digital media players from Apple, introduced in 2001 for the Mac and 2002 for Windows. iPods are noted for their well-designed, simple user interfaces that employ either a click wheel or touch screen (see click wheel and iPod touch). (R) accessories, mobile power adapters An external power supply for laptop computers and just about every portable or semi-portable electronic device on the market. Also called an "AC adapter," it contains a rectifier to convert AC current to DC and a transformer to convert voltage from 120 down to 9, 12, 15 or whatever is , notebook See notebook computer. 1. (computer) notebook - laptop computer. 2. (tool) notebook - Labtech Notebook. docking stations (1) A cradle for a portable device that serves to charge the unit and connect it to other sources or destinations. For example, an iPod docking station charges the iPod and connects it to a computer, speakers or TV set. and other computer accessory accessory, in criminal law, a person who, though not present at the commission of a crime, becomes a participator in the crime either before or after the fact of commission. products. This growth was lower than historical rates because of the company's planned exit from the cleaning category and one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. inventory reduction actions by two major customers. However, most of the slower growth rate was experienced in April and May, while June June: see month. returned to a more normal sales growth rate. Computer Products operating income declined to $6.5 million from $12.1 million, including restructuring and restructuring-related non-recurring charges in the current-year period. (Note: There were no specific restructuring activities in Computer Products, but the segment receives an allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of shared services shared services, n.pl the administrative, clinical, or other service functions that are common to two or more hospitals or their health care facilities and used jointly or cooperatively by them. restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. .) On an adjusted basis, operating income was $7.8 million and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: declined to 15.2% from 24.6%. Excluding items affecting year-over-year comparability, the underlying decline in operating profit and margin was due to a change in product mix, higher product costs, and planned increased investments in selling, marketing and product development activities. The company anticipates improved profitability in the seasonally stronger third and fourth quarters. Commercial-Industrial and Print Finishing Group Commercial-Industrial and Print Finishing ("IPFG") was acquired in the GBC merger and has not been merged into an existing ACCO Brands segment; therefore, it is presented on a standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. pro forma basis below. IPFG pro forma net sales increased 3%, to $47.9 million, compared to $46.7 million in the comparable prior-year quarter. Constant currency sales growth was 1%. Growth was driven by increased selling prices to recover raw material cost increases. IPFG adjusted pro forma operating income increased 14%, to $4.9 million, from $4.3 million in the prior-year quarter. Operating margins expanded 100 basis points. The increase was due to improved mix and higher selling prices, which more than offset the impact of higher raw material costs. Other Commercial Other Commercial net sales increased to $55.3 million, compared to $11.6 million in the prior-year quarter. On a pro forma basis sales increased 3%; adjusting for currency the increase was 4%. The increase was driven by price increases and volume growth, substantially new product sales generated by the document finishing business. Other Commercial operating income increased to a profit of $1.8 million, compared to a loss of $(0.3) million in the prior-year quarter. Adjusted pro forma operating income declined to $1.8 million, from $3.6 million in the prior-year quarter. The decline in profit and margins was driven by several favorable adjustments in the prior year quarter. For the six month period, adjusted pro forma operating income and margin improved from the prior year. Business Outlook ACCO Brands believes that given the current economic environment, business integration and de-leveraging should enable the company to exhibit longer-term growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. comprising revenue growth in the low- to mid-single-digits, operating income growth in the mid- mid- pref. Middle: midbrain. to high-single-digits and diluted earnings-per-share growth in the low-double-digits. The company continues to believe that full-year 2006 adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (refer to p. 12 for the calculation of adjusted EBITDA) will be comparable to 2005 pro forma levels, with the positive effects of both increased synergies and further price increases benefiting the second half of 2006. In addition, the third and fourth quarters should have better comparisons to the comparable prior-year periods when the company made stepped-up stepped-up adj. Increased in pace or intensity; heightened: a stepped-up political campaign. investments in corporate costs associated with its status as an independent public company, in Computer Products' go-to-market efforts, and in its European office products infrastructure. The third and fourth quarters of 2005 were also the periods in which the company began to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. increases in certain raw material costs. Full-year operating income and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. will be impacted by equity and incentive compensation charges relative to 2005 in connection with the new company's inaugural long-term incentive compensation plan and required stock option expensing under FAS 123R. The company anticipates the incremental pro forma net of tax cost to be approximately $10 million, or $0.19 per share, for 2006. The company still anticipates achieving a run-rate adjusted operating income margin, before restructuring, amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and stock-based compensation expense, of 12% exiting 2008, or approximately 11% including these factors. Webcast At 8:30 a.m. Eastern Time today, ACCO Brands Corporation will host a conference call to discuss the company's second quarter results. The call will be broadcast live via webcast. The webcast can be accessed through the Investor Relations Investor relations The process by which the corporation communicates with its investors. 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. Pro Forma and Non-GAAP Financial Measures In order to provide a more meaningful comparison to prior-year numbers, the company has presented pro forma results for prior-year periods assuming that the merger with GBC had occurred on January January: see month. 1, 2005, instead of August 17, 2005, the actual date of the merger. Certain pro forma results are based on SEC regulations and are on a non-GAAP basis. "Adjusted" results exclude all restructuring and restructuring-related non-recurring items for the combined pro forma company, and are non-GAAP measures. Adjusted pro forma information is provided to assist in the comparability with current-period results. 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 Reciprocally contradictory or repugnant. Things are said to be inconsistent when they are contrary to each other to the extent that one implies the negation of the other. with measures presented by other companies. (Refer to the attached pro forma schedules provided herein, as well as the company's reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to the Securities and Exchange Commission on February February: see month. 14, 2006.) About ACCO Brands Corporation ACCO Brands Corporation is a world leader in select categories of branded office products, with annual revenues of nearly $2 billion. Its industry-leading brands include Day-Timer Day-Timers Inc. (a.k.a. Day-Timer or Day Timers) is a corporation based in East Texas, PA. The primary product line consists of various styles of calendars and dated planners but they also provide many other products with a focus on time management. (R), Swingline Swingline is a division of ACCO Brands that specializes in manufacturing staplers and Hole punches. The company was formerly located in Long Island City, Queens, New York, United States, but is now headquartered with its parent company ACCO in Lincolnshire, Illinois. (R), Kensington Kensington is a district of West London, England within the Royal Borough of Kensington and Chelsea, located 2.8 miles (4.5 km) west of Charing Cross. An affluent and densely-populated area, its commercial heart is Kensington High Street and it contains the well-known museum (R), Quartet Quartet™ Respiratory care A system for diagnosing and managing obstructive sleep apnea Modes Continuous, bi-level pressure, automatic 'smart' CPAP modes. See Obstructive sleep apnea. (R), GBC(R), Rexel Rexel is a French company specializing in the distribution of electrical parts and supplies. It includes the Divisions of Page Data, Rexel Video, Ideal Electrical and John R Turk. It has offices internationally.
Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains statements which may constitute "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements as that term is defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements are subject to certain risks and uncertainties, are made as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" 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 and actual results may differ from those predicted depending on a variety of factors, including but not limited to fluctuations in 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; the dependence of the company on certain suppliers of manufactured products; the effect of consolidation in the office products industry; the risk that businesses that have been combined into the company as a result of the merger with General Binding Corporation will not be integrated successfully; the risk that targeted cost savings and synergies from the aforesaid Before, already said, referred to, or recited. This term is used frequently in deeds, leases, and contracts of sale of real property to refer to the property without describing it in detail each time it is mentioned; for example,"the aforesaid premises. merger and other previous business combinations may not be fully realized or take longer to realize than expected; disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. from business combinations making it more difficult to maintain relationships with the company's customers, employees or suppliers; 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 distribution costs distribute npl → Vertriebskosten pl , 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 from time to time in the company's SEC filings.
ACCO Brands Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per-share amounts)
Three Months Ended Six Months Ended
------------------ ------------------
June 30, June 25, % June 30, June 25, %
2006 (A) 2005 (A) Change 2006 (A) 2005 (A) Change
------------------ ------ ------------------ ------
Net sales 462.6 275.7 68% 931.2 550.5 69%
Cost of products
sold (B) 336.6 196.0 72% 674.7 387.8 74%
Advertising,
selling, general and
administrative (C) 109.6 56.6 94% 217.1 112.9 92%
Amortization of
intangibles 3.5 0.4 775% 6.0 1.0 500%
Restructuring
charges 13.0 - nm 19.8 - nm
------------------ ------------------
Operating Income
(loss) (0.1) 22.7 -100% 13.6 48.8 -72%
Interest expense 15.3 1.9 705% 30.7 3.9 687%
Other
expense/(income),
net (0.2) 0.6 -133% (1.7) 2.0 -185%
------------------ ------------------
Income before
income taxes,
minority
interest and
cumulative
effect of change
in accounting
principle (15.2) 20.2 -175% (15.4) 42.9 -136%
Income taxes (5.4) 6.0 -190% (5.6) 17.4 -132%
Minority Interest - - 0.1 -
------------------ ------------------
Net
income/(loss)
before change
in accounting
principle (9.8) 14.2 -169% (9.9) 25.5 -139%
Cumulative effect
of change in
accounting
principle, net of
tax - - nm - 3.3 nm
------------------ ------------------
Net
income/(loss) $(9.8) $14.2 -169% $(9.9) $28.8 -134%
================== ==================
Basic earnings
(loss) per common
share:
Income before
change in
accounting
principle ($0.18) $0.41 -144% ($0.18) $0.73 -125%
Change in
accounting
principle $0.00 $0.00 $0.00 $0.09
------------------ ------------------
Net income (loss) ($0.18) $0.41 -144% ($0.18) $0.82 -122%
================== ==================
Diluted earnings
(loss) per common
share:
Income before
change in
accounting
principle ($0.18) $0.40 -145% ($0.18) $0.72 -125%
Change in
accounting
principle $0.00 $0.00 $0.00 $0.09
------------------ ------------------
Net income (loss) ($0.18) $0.40 -145% ($0.18) $0.81 -122%
================== ==================
Weighted average
shares (000's
omitted):
Basic 53,353 34,969 53,177 34,969
Diluted 53,353 35,508 53,177 35,508
Actual shares at
end of period
(000's omitted) 53,516 34,969 53,516 34,969
Fully diluted
shares at end of
period (000's
omitted) 53,516 35,509 53,516 35,509
(A) The results of General Binding Corporation are included in the
current year period only as the acquisition occurred on August 17,
2005.
(B) Includes restructuring implementation related non- recurring costs
of $2.0 million and $0.0 million in three month periods and $2.4
million and $0.0 for the six month periods ended June 30, 2006 and
June 25, 2005, respectively.
(C) Includes restructuring implementation related non- recurring costs
of $2.8 million and $2.6 million in three month periods, and $5.2
million and $2.6 million for the six month periods ended June 30,
2006 and June 25, 2005, respectively.
(D) In connection with the adoption of the December 2005 long-term
executive management compensation plan and required expensing of
stock option grants under FAS 123R, the company recorded $4.6
million (1.0% of sales) and $9.1 million (1.0% of sales) of
stock-based compensation expense during the three months and six
months ended June 30, 2006, respectively.
----------------------------------------------------------------------
Statistics (as a % of Total Net Sales, except for Income tax rate)
------------------------------------------------------------------
Gross Margin (B) (C) 27.2% 28.9% 27.5% 29.6%
SG&A (B) (C) (D) 23.7% 20.5% 23.3% 20.5%
Operating Income
(B) (C) (D) 0.0% 8.2% 1.5% 8.9%
Income before
Income Taxes (B)
(C) (D) -3.3% 7.3% -1.7% 7.8%
Net Income (B) (C)
(D) -2.1% 5.2% -1.1% 5.2%
Income tax rate 35.5% 29.7% 36.4% 40.6%
----------------------------------------------------------------------
ACCO Brands Corporation
SEGMENT RESULTS
(Unaudited)
(Dollars in millions)
2006 (1) 2005 (1)
------------------------ -----------------------
Operating Operating
Net Income OI Net Income OI
Sales (2) Margin Sales (2) Margin
------------------------ -----------------------
Q1:
Office Products $311.1 $6.0 1.9% $216.3 $19.6 9.1%
Computer Products 51.9 8.3 16.0% 44.3 8.9 20.1%
Commercial-Industrial
& Print Finishing 49.6 4.8 9.7% - -
Other Commercial 56.0 4.1 7.3% 14.2 0.2 1.4%
Corporate - (9.5) -2.0% - (2.6) -0.9%
------------------------ -----------------------
Total $468.6 $13.7 2.9% $274.8 $26.1 9.5%
======================== =======================
2006 (1) 2005 (1)
------------------------ -----------------------
Operating Operating
Net Income OI Net Income OI
Sales (2) Margin Sales (2) Margin
------------------------ -----------------------
Q2:
Office Products $308.2 $(4.7) -1.5% $215.0 $13.5 6.3%
Computer Products 51.2 6.5 12.7% 49.1 12.1 24.6%
Commercial-Industrial
& Print Finishing 47.9 4.9 10.2% - -
Other Commercial 55.3 1.8 3.3% 11.6 (0.3) -2.6%
Corporate - (8.6) -1.9% - (2.6) -0.9%
------------------------ -----------------------
Total $462.6 $(0.1) 0.0% $275.7 $22.7 8.2%
======================== =======================
2006 (1) 2005 (1)
------------------------ -----------------------
Operating Operating
Net Income OI Net Income OI
Sales (2) Margin Sales (2) Margin
------------------------ -----------------------
SIX MONTHS:
Office Products $619.3 $1.3 0.2% $431.3 $33.1 7.7%
Computer Products $103.1 $14.8 14.4% $93.4 $21.0 22.5%
Commercial-Industrial
& Print Finishing $97.5 $9.7 9.9% $- $-
Other Commercial $111.3 $5.9 5.3% $25.8 $(0.1) -0.4%
Corporate $- $(18.1) -1.9% $- $(5.2) -0.9%
------------------------ -----------------------
Total $931.2 $13.6 1.5% $550.5 $48.8 8.9%
======================== =======================
Sales OI
Change Change
----------------
Q1:
Office Products 43.8% -69.4%
Computer Products 17.2% -6.7%
Commercial-Industrial
& Print Finishing
Other Commercial 294.4% n/m
Corporate 265.4%
----------------
Total 70.5% -47.5%
================
Sales OI
Change Change
----------------
Q2:
Office Products 43.3% -134.8%
Computer Products 4.3% -46.3%
Commercial-Industrial
& Print Finishing
Other Commercial 376.7% n/m
Corporate 230.8%
----------------
Total 67.8% -100.4%
================
Sales OI
Change Change
----------------
SIX MONTHS:
Office Products 43.6% -96.1%
Computer Products 10.4% -29.5%
Commercial-Industrial
& Print Finishing
Other Commercial 331.4% n/m
Corporate 248.1%
----------------
Total 69.2% -72.1%
================
(1) The results of General Binding Corporation are included in the
current year period only as the acquisition occurred on August 17,
2005.
(2) The above results include restructuring and restructuring-related
non-recurring expenses, in accordance with U.S. GAAP.
ACCO Brands Corporation
CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
June 30, December 31,
------------ ------------
2006 2005
------------ ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $41.2 $91.1
Receivables, net 403.1 438.9
Inventories, net 303.0 268.2
Deferred income taxes 41.8 37.5
Other current assets 50.1 25.3
------------ ------------
Total current assets 839.2 861.0
Property, plant and equipment, net 229.2 239.8
Deferred income taxes 7.8 17.4
Goodwill, net 443.2 433.8
Identifiable Intangibles, net 237.1 240.6
Prepaid pension 84.0 81.9
Other assets 50.5 55.0
------------ ------------
Total Assets $1,891.0 $1,929.5
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to banks $5.2 $7.0
Current portion of long-term debt 11.0 23.1
Accounts payable 185.4 150.1
Accrued compensation 30.6 27.7
Accrued customer programs 115.0 122.9
Other current liabilities 138.2 122.2
------------ ------------
Total Current Liabilities 485.4 453.0
Debt, less current portion 856.9 911.8
Deferred income taxes 74.3 94.1
Post-retirement and other liabilities 70.4 62.3
------------ ------------
Total Liabilities 1,487.0 1,521.2
------------ ------------
Stockholders' Equity
Common stock 0.5 0.5
Treasury stock, at cost (1.1) (1.1)
Paid-in capital 1,360.6 1,350.3
Unearned compensation - (5.2)
Accumulated other comprehensive income
(loss) 1.1 11.0
Accumulated deficit (957.1) (947.2)
------------ ------------
Total Stockholders' Equity 404.0 408.3
------------ ------------
Total Liabilities and Stockholders'
Equity $1,891.0 $1,929.5
============ ============
ACCO Brands Corporation
KEY STATS and RATIOS
(Unaudited)
(Dollars in millions)
---------------------------------
Net Debt 6/30/2006
--------------------------------- -------------------
Short-term debt, including
current portion of long-term
debt $16.2
Long-term debt 856.9
-------------------
Total Debt $873.1
Cash and temporary cash
investments (41.2)
-------------------
Net Debt $831.9
---------------------------------
Reconciliation of Gross Debt Three months ended Six months ended
--------------------------------- ------------------- ----------------
6/30/2006 6/30/2006
------------------- ----------------
Beginning of period $893.1 $941.9
Debt reduction (30.0) (79.3)
Impact of change in FX rates 10.0 10.5
------------------- ----------------
End of period $873.1 $873.1
---------------------------------
Leverage (debt to EBITDA) Twelve months ended
--------------------------------- -------------------
6/30/2006
-------------------
Trailing 12 months Adjusted
EBITDA $192.3
Net debt (see above) $831.9
Leverage (net debt divided by
Adjusted EBITDA 4.3
---------------------------------
Interest Coverage (EBITDA to
Interest) Twelve months ended
--------------------------------- -------------------
6/30/2006
-------------------
Trailing 12 months Adjusted
EBITDA $192.3
Trailing 12 months pro forma
interest Expense, net of
interest income $63.8
Interest Coverage (EBITDA divided
by interest expense) 3.0
ACCO Brands Corporation
SELECTED REPORTED AND PRIOR-YEAR PRO FORMA FINANCIAL INFORMATION
(Unaudited)
(Dollars in millions)
Three Months Ended
June 30, 2006 June 25, 2005
Actual Pro Forma
------------- -------------
Selected Non-cash Adjustments to Net Income (Pre-Tax):
------------------------------------------------------
Depreciation expense $10.1 $10.7
Intangible amortization expense $3.5 $2.6
Stock based compensation expense $4.6 $0.9
Selected Cash Activities (Pre-Tax):
-----------------------------------
Capital expenditures $7.2 $10.3
Restructuring & Integration activities $8.7 $2.9
Six Months Ended
June 30, 2006 June 25, 2005
Actual Pro Forma
------------- -------------
Selected Non-cash Adjustments to Net Income (Pre-Tax):
------------------------------------------------------
Depreciation expense $19.5 $21.1
Intangible amortization expense $6.0 $5.5
Stock based compensation expense $9.1 $2.5
Inventory acquisition expense $- $5.4
Selected Cash Activities (Pre-Tax):
-----------------------------------
Capital expenditures $12.1 $17.1
Restructuring & Integration activities $13.4 $3.1
ACCO Brands Corporation
COMPARISON OF REPORTED AND PRIOR-YEAR PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per-share amounts)
--------------------------------
Three Months Ended June 30,
--------------------------------
2006
--------------------------------
(A) (D) ACCO
As Less: Brands
Reported Charges Adjusted
---------- ---------- ----------
Net sales $462.6 $- $462.6
Cost of products sold 336.6 (2.0) 334.6
Advertising, selling, general and
administrative 109.6 (2.8) 106.8
Amortization of intangibles 3.5 - 3.5
Restructuring charges 13.0 (13.0) -
---------- ---------- ----------
Operating Income (loss) (0.1) 17.8 17.7
Interest expense 15.3 - 15.3
Other expense/(income), net (0.2) - (0.2)
---------- ---------- ----------
Income before/(loss) income taxes
and minority interest (15.2) 17.8 2.6
Income taxes (5.4) 4.7 (0.7)
Minority interest expense, net of tax - - -
---------- ---------- ----------
Net Income/(loss) $(9.8) $13.1 $3.3
========== ========== ==========
Pro Forma Earnings/(loss) per share:
Basic $0.06
==========
Diluted $0.06
==========
Weighted average shares outstanding:
Basic 53,353
Diluted 54,117
REFER TO RECONCILIATION OF ITEMS IMPACTING PRIOR-YEAR COMPARABILITY.
SUPPLEMENTAL EBITDA CALCULATION
Net Income $3.3
Change in accounting principle, net
of tax -
Minority Interest expense, net of
tax -
Income tax expense (0.7)
Interest expense, net 15.3
Other (income)/expense, net (0.2)
Restructuring charges -
Amortization of Intangibles 3.5
Amortization of SO's and RSU's 4.6
Inventory acquisition expense -
Depreciation expense 9.5
----------
Supplemental EBITDA 35.3
Restructuring related charges
included in COS -
Restructuring related charges
included in SG&A -
----------
Adjusted EBITDA $35.3
==========
----------------------------------------------------------------------
Statistics (as a % of Q2 Net Sales, except for Income tax rate)
---------------------------------------------------------------
Adjusted
----------
Gross Profit (Net sales, less Cost of
products sold) 26.8%
Advertising, selling, general and
administrative 23.1%
Operating Income 3.8%
Income before income taxes and
minority interest 0.6%
Net Income 0.7%
Income tax rate -26.9%
Adjusted EBITDA 7.6%
----------------------------------------------------------------------
--------------------------------------------------
Three Months Ended June 30,
--------------------------------------------------
2005
--------------------------------------------------
(A) (B) (C) (D) ACCO
As Pro Forma ACCO Brands Less: Brands
Reported Adjustments Pro Forma Charges Adjusted
-------- ----------- ----------- ------- ---------
Net sales $275.7 $186.6 $462.3 $- $462.3
Cost of products
sold 196.0 132.2 328.2 - 328.2
Advertising,
selling, general
and administrative 56.6 44.0 100.6 (4.6) 96.0
Amortization of
intangibles 0.4 2.2 2.6 - 2.6
Restructuring
charges - 0.2 0.2 (0.2) -
-------- ----------- ----------- ------- ---------
Operating Income
(loss) 22.7 8.0 30.7 4.8 35.5
Interest expense 1.9 15.4 17.3 - 17.3
Other
expense/(income),
net 0.6 (0.4) 0.2 - 0.2
-------- ----------- ----------- ------- ---------
Income
before/(loss)
income taxes and
minority interest 20.2 (7.0) 13.2 4.8 18.0
Income taxes 6.0 (1.4) 4.6 1.6 6.2
Minority interest
expense, net of tax - - - - -
-------- ----------- ----------- ------- ---------
Net
Income/(loss) $14.2 $(5.6) $8.6 $3.2 $11.8
======== =========== =========== ======= =========
Pro Forma
Earnings/(loss) per
share:
Basic $0.17 $0.23
=========== =========
Diluted $0.16 $0.22
=========== =========
Weighted average
shares outstanding:
Basic 51,470 51,470
Diluted 52,930 52,930
REFER TO RECONCILIATION OF ITEMS IMPACTING PRIOR-YEAR COMPARABILITY.
SUPPLEMENTAL EBITDA
CALCULATION
Net Income $11.8
Change in
accounting
principle, net of
tax 0
Minority Interest
expense, net of
tax -
Income tax expense 6.2
Interest expense,
net 17.3
Other
(income)/expense,
net 0.2
Restructuring
charges -
Amortization of
Intangibles 2.6
Amortization of
SO's and RSU's 0.9
Inventory
acquisition
expense 0.0
Depreciation
expense 10.7
---------
Supplemental EBITDA 49.7
Restructuring
related charges
included in COS -
Restructuring
related charges
included in SG&A -
---------
Adjusted EBITDA $49.7
=========
----------------------------------------------------------------------
Statistics (as a % of Q2 Net Sales, except for Income tax rate)
---------------------------------------------------------------
Adjusted
---------
Gross Profit (Net
sales, less Cost of
products sold) 29.0%
Advertising,
selling, general
and administrative 20.8%
Operating Income 7.7%
Income before income
taxes and minority
interest 3.9%
Net Income 2.6%
Income tax rate 34.4%
Adjusted EBITDA 10.8%
----------------------------------------------------------------------
% Change
---------
Net sales 0%
Cost of products sold 2%
Advertising, selling, general and administrative 11%
Amortization of intangibles 35%
Restructuring charges
Operating Income (loss) -50%
Interest expense -12%
Other expense/(income), net -200%
Income before/(loss) income taxes and minority interest -86%
Income taxes nm
Minority interest expense, net of tax
Net Income/(loss) -72%
Pro Forma Earnings/(loss) per share:
Basic -74%
Diluted -73%
Weighted average shares outstanding:
Basic
Diluted
REFER TO RECONCILIATION OF ITEMS IMPACTING PRIOR-YEAR COMPARABILITY.
SUPPLEMENTAL EBITDA CALCULATION
Net Income -72.0%
Change in accounting principle, net of tax nm
Minority Interest expense, net of tax nm
Income tax expense nm
Interest expense, net -11.6%
Other (income)/expense, net nm
Restructuring charges nm
Amortization of Intangibles 34.6%
Amortization of SO's and RSU's 411.1%
Inventory acquisition expense n/a
Depreciation expense -11.2%
Supplemental EBITDA -29.0%
Restructuring related charges included in COS nm
Restructuring related charges included in SG&A nm
Adjusted EBITDA -29.0%
(A) Reported results of ACCO Brands including the results of General
Binding Corporation from the date of acquisition, August 17, 2005.
(B) Pro forma adjustments include the results of General Binding
Corporation prior to the date of acquisition, and certain pro
forma adjustments required to present the results of the combined
companies as if the merger had occurred on January 1, 2005. Please
refer to the 8-K filed February 14, 2006 for a description of
these adjustments.
(C) Sum of columns (A) and (B).
(D) Certain charges for restructuring, restructuring implementation
and merger related (2005) costs are excluded in order to provide a
comparison of the company's underlying results.
ACCO Brands Corporation
COMPARISON OF REPORTED AND PRIOR-YEAR PRO FORMA COMBINED CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per-share amounts)
--------------------------------
Six Months Ended June 30,
--------------------------------
2006
--------------------------------
(A) (D) ACCO
As Less: Brands
Reported Charges Adjusted
---------- ---------- ----------
Net sales $931.2 $- $931.2
Cost of products sold 674.7 (2.4) 672.3
Advertising, selling, general and
administrative 217.1 (5.2) 211.9
Amortization of intangibles 6.0 - 6.0
Restructuring charges 19.8 (19.8) -
---------- ---------- ----------
Operating Income 13.6 27.4 41.0
Interest expense 30.7 - 30.7
Other expense/(income), net (1.7) - (1.7)
---------- ---------- ----------
Income before/(loss) income taxes,
minority interest and change in
accounting principle (15.4) 27.4 12.0
Income taxes (5.6) 8.0 2.4
Minority interest expense, net of tax 0.1 - 0.1
---------- ---------- ----------
Net income/(loss) before change in
accounting principle (9.9) 19.4 9.5
Cumulative effect of change in
accounting principle, net of tax - - -
---------- ---------- ----------
Net Income/(loss) $(9.9) $19.4 $9.5
========== ========== ==========
Pro Forma Earnings/(loss) per share:
Basic $0.18
==========
Diluted $0.18
==========
Weighted average shares outstanding:
Basic 53,177
Diluted 54,084
REFER TO RECONCILIATION OF ITEMS IMPACTING PRIOR-YEAR COMPARABILITY.
SUPPLEMENTAL EBITDA CALCULATION
Net Income $9.5
Change in accounting principle, net
of tax -
Minority Interest expense, net of
tax 0.1
Income tax expense 2.4
Interest expense, net 30.7
Other (income)/expense, net (1.7)
Restructuring charges -
Amortization of Intangibles 6.0
Amortization of SO's and RSU's 9.1
Inventory acquisition expense -
Depreciation expense 18.9
----------
Supplemental EBITDA 75.0
Restructuring related charges included in COS -
Restructuring related charges included in SG&A -
----------
Adjusted EBITDA $75.0
==========
----------------------------------------------------------------------
Statistics (as a % of YTD Net Sales, except for Income tax rate)
----------------------------------------------------------------
Adjusted
----------
Gross Profit (Net sales, less Cost of products
sold) 27.3%
Advertising, selling, general and
administrative 22.8%
Operating Income 4.4%
Income before income taxes, minority interest and change in
accounting principle 1.3%
Net Income 1.0%
Income tax rate 20.0%
Adjusted EBITDA 8.1%
----------------------------------------------------------------------
--------------------------------------------------
Six Months Ended June 30,
--------------------------------------------------
2005
--------------------------------------------------
(A) (B) (C) (D) ACCO
As Pro Forma ACCO Brands Less: Brands
Reported Adjustments Pro Forma Charges Adjusted
-------- ----------- ----------- ------- ---------
Net sales $550.5 $366.5 $917.0 $- $917.0
Cost of products
sold 387.8 264.9 652.7 - 652.7
Advertising,
selling, general
and administrative 112.9 92.3 205.2 (7.1) 198.1
Amortization of
intangibles 1.0 4.5 5.5 - 5.5
Restructuring
charges - 1.3 1.3 (1.3) -
-------- ----------- ----------- ------- ---------
Operating Income 48.8 3.5 52.3 8.4 60.7
Interest expense 3.9 30.7 34.6 - 34.6
Other
expense/(income),
net 2.0 (0.1) 1.9 - 1.9
-------- ----------- ----------- ------- ---------
Income
before/(loss)
income taxes,
minority interest
and change in
accounting
principle 42.9 (27.1) 15.8 8.4 24.2
Income taxes 17.4 (7.4) 10.0 2.8 12.8
Minority interest
expense, net of tax - - - - -
-------- ----------- ----------- ------- ---------
Net income/(loss)
before change in
accounting
principle 25.5 (19.7) 5.8 5.6 11.4
Cumulative effect of
change in
accounting
principle, net of
tax 3.3 - 3.3 - 3.3
-------- ----------- ----------- ------- ---------
Net
Income/(loss) $28.8 $(19.7) $9.1 $5.6 $14.7
======== =========== =========== ======= =========
Pro Forma
Earnings/(loss) per
share:
Basic $0.18 $0.29
=========== =========
Diluted $0.17 $0.28
=========== =========
Weighted average
shares outstanding:
Basic 51,470 51,470
Diluted 52,930 52,930
REFER TO RECONCILIATION OF ITEMS IMPACTING PRIOR-YEAR COMPARABILITY.
SUPPLEMENTAL EBITDA
CALCULATION
Net Income $14.7
Change in
accounting
principle, net of
tax (3.3)
Minority Interest
expense, net of
tax -
Income tax expense 12.8
Interest expense,
net 34.6
Other
(income)/expense,
net 1.9
Restructuring
charges -
Amortization of
Intangibles 5.5
Amortization of
SO's and RSU's 2.5
Inventory
acquisition
expense 5.4
Depreciation
expense 21.1
---------
Supplemental EBITDA 95.2
Restructuring
related charges
included in COS -
Restructuring
related charges
included in SG&A -
---------
Adjusted EBITDA $95.2
=========
----------------------------------------------------------------------
Statistics (as a % of YTD Net Sales, except for Income tax rate)
----------------------------------------------------------------
Adjusted
---------
Gross Profit (Net
sales, less Cost of
products sold) 28.8%
Advertising,
selling, general
and administrative 21.6%
Operating Income 6.6%
Income before income
taxes, minority
interest and change
in accounting
principle 2.6%
Net Income 1.6%
Income tax rate 52.9%
Adjusted EBITDA 10.4%
----------------------------------------------------------------------
% Change
---------
Net sales 2%
Cost of products sold 3%
Advertising, selling, general and administrative 7%
Amortization of intangibles 9%
Restructuring charges
Operating Income -32%
Interest expense -11%
Other expense/(income), net -189%
Income before/(loss) income taxes, minority interest and
change in accounting principle -50%
Income taxes nm
Minority interest expense, net of tax
Net income/(loss) before change in accounting principle -17%
Cumulative effect of change in accounting principle, net of
tax
Net Income/(loss) -35%
Pro Forma Earnings/(loss) per share:
Basic -37%
Diluted -35%
Weighted average shares outstanding:
Basic
Diluted
REFER TO RECONCILIATION OF ITEMS IMPACTING PRIOR-YEAR COMPARABILITY.
SUPPLEMENTAL EBITDA CALCULATION
Net Income -35%
Change in accounting principle, net of tax nm
Minority Interest expense, net of tax nm
Income tax expense nm
Interest expense, net -11%
Other (income)/expense, net nm
Restructuring charges nm
Amortization of Intangibles 9%
Amortization of SO's and RSU's 264%
Inventory acquisition expense n/a
Depreciation expense -10%
Supplemental EBITDA -21%
Restructuring related charges included in COS nm
Restructuring related charges included in SG&A nm
Adjusted EBITDA -21%
(A) Reported results of ACCO Brands including the results of General
Binding Corporation from the date of acquisition, August 17, 2005.
(B) Pro forma adjustments include the results of General Binding
Corporation prior to the date of acquisition, and certain pro
forma adjustments required to present the results of the combined
companies as if the merger had occurred on January 1, 2005. Please
refer to the 8-K filed February 14, 2006 for a description of
these adjustments.
(C) Sum of columns (A) and (B).
(D) Certain charges for restructuring, restructuring implementation
and merger related (2005) costs are excluded in order to provide
a comparison of the company's underlying results.
ACCO Brands Corporation
COMPARISON OF REPORTED AND PRIOR-YEAR PRO FORMA SEGMENT RESULTS
(Unaudited)
(Dollars in millions)
2006
--------------------------------------------
Reported Adjusted
Net Reported Excluded Adjusted OI
Sales OI Charges OI Margin
-------- -------- -------- -----------------
Q1:
Office Products $311.1 $6.0 $8.3 $14.3 4.6%
Computer Products 51.9 8.3 - 8.3 16.0%
Commercial - IPFG 49.6 4.8 - 4.8 9.7%
Other Commercial 56.0 4.1 - 4.1 7.3%
-
Corporate - (9.5) 1.3 (8.2) 3.0%
-------- -------- -------- -----------------
Total $468.6 $13.7 $9.6 $23.3 5.0%
======== ======== ======== =================
2006
--------------------------------------------
Reported Adjusted
Net Reported Excluded Adjusted OI
Sales OI Charges OI Margin
-------- -------- -------- -----------------
Q2:
Office Products $308.2 $(4.7) $15.1 $10.4 3.4%
Computer Products 51.2 6.5 1.3 7.8 15.2%
Commercial - IPFG 47.9 4.9 - 4.9 10.2%
Other Commercial 55.3 1.8 0.1 1.9 3.4%
-
Corporate - (8.6) 1.3 (7.3) 3.0%
-------- -------- -------- -----------------
Total $462.6 $(0.1) $17.8 $17.7 3.8%
======== ======== ======== =================
2006
--------------------------------------------
Reported Adjusted
Net Reported Excluded Adjusted OI
Sales OI Charges OI Margin
-------- -------- -------- -----------------
SIX MONTHS:
Office Products $619.3 $1.3 $23.4 $24.7 4.0%
Computer Products 103.1 14.8 1.3 16.1 15.6%
Commercial - IPFG 97.5 9.7 - 9.7 9.9%
Other Commercial 111.3 5.9 0.1 6.0 5.4%
Corporate - (18.1) 2.6 (15.5) 1.5%
-------- -------- -------- -----------------
Total $931.2 $13.6 $27.4 $41.0 4.4%
======== ======== ======== =================
2005
--------------------------------------------
Pro
Forma Pro Adjusted
Net Forma Excluded Adjusted OI
Sales OI Charges OI Margin
-------- -------- -------- -----------------
Q1:
Office Products $310.5 $19.2 $1.0 $20.2 6.5%
Computer Products 44.3 8.9 - 8.9 20.1%
Commercial - IPFG 46.3 2.3 - 2.3 5.0%
Other Commercial 53.6 1.4 - 1.4 2.6%
-
Corporate - (10.2) 2.6 (7.6) -1.7%
-------- -------- -------- -----------------
Total $454.7 $21.6 $3.6 $25.2 5.5%
======== ======== ======== =================
2005
--------------------------------------------
Pro
Forma Pro Adjusted
Net Forma Excluded Adjusted OI
Sales OI Charges OI Margin
-------- -------- -------- -----------------
Q2:
Office Products $313.0 $18.8 $2.3 $21.1 6.7%
Computer Products 49.1 12.1 - 12.1 24.6%
Commercial - IPFG 46.7 4.3 - 4.3 9.2%
Other Commercial 53.5 3.6 - 3.6 6.7%
-
Corporate - (8.1) 2.5 (5.6) -1.2%
-------- -------- -------- -----------------
Total $462.3 $30.7 $4.8 $35.5 7.7%
======== ======== ======== =================
2005
--------------------------------------------
Pro
Forma Pro Adjusted
Net Forma Excluded Adjusted OI
Sales OI Charges OI Margin
-------- -------- -------- -----------------
SIX MONTHS:
Office Products $623.5 $38.0 $3.3 $41.3 6.6%
Computer Products 93.4 21.0 - 21.0 22.5%
Commercial - IPFG 93.0 6.6 - 6.6 7.1%
Other Commercial 107.1 5.0 - 5.0 4.7%
Corporate - (18.3) 5.1 (13.2) 1.5%
-------- -------- -------- -----------------
Total $917.0 $52.3 $8.4 $60.7 6.6%
======== ======== ======== =================
Percent Change - Sales
--------------------------------------------
Pro Forma Currency Calendar Underlying
Net Sales Translation Days Growth
--------------------------------------------
Q1:
Office Products 0.2% -2.6% 0.2% 2.6%
Computer Products 17.2% -2.9% 1.8% 18.3%
Commercial - IPFG 7.1% -2.1% 0.0% 9.2%
Other Commercial 4.5% -1.5% -1.4% 7.4%
Corporate
--------------------------------------------
Total 3.1% -2.5% 0.1% 5.5%
============================================
Percent Change - Sales
--------------------------------------------
Pro Forma Currency Calendar Underlying
Net Sales Translation Days Growth
--------------------------------------------
Q2:
Office Products -1.5% 0.1% 0.0% -1.6%
Computer Products 4.3% 0.6% -0.3% 4.0%
Commercial - IPFG 2.6% 1.2% 0.0% 1.4%
Other Commercial 3.4% -0.4% 0.1% 3.7%
Corporate
--------------------------------------------
Total 0.1% 0.2% 0.0% -0.1%
============================================
Percent Change - Sales
--------------------------------------------
Pro Forma Currency Calendar Underlying
Net Sales Translation Days Growth
--------------------------------------------
SIX MONTHS:
Office Products -0.7% -1.2% 0.1% 0.4%
Computer Products 10.4% -1.1% 0.7% 10.8%
Commercial - IPFG 4.8% -0.5% 0.0% 5.3%
Other Commercial 3.9% -1.0% -0.6% 5.5%
Corporate
--------------------------------------------
Total 1.5% -1.1% 0.1% 2.5%
============================================
Change - OI
-----------------------------------------
Adjusted OI Adjusted OI BP chng
$ % Margins
-----------------------------------------
Q1:
Office Products (5.9) -29.2% (1.9)
Computer Products (0.6) -6.7% (4.1)
Commercial - IPFG 2.5 108.7% 4.7
Other Commercial 2.7 192.9% 4.7
Corporate
-----------------------------------------
Total (1.9) -7.5% (0.5)
=========================================
Change - OI
-----------------------------------------
Adjusted OI Adjusted OI BP chng
$ % Margins
-----------------------------------------
Q2:
Office Products (10.7) -50.7% (3.3)
Computer Products (4.3) -35.5% (9.4)
Commercial - IPFG 0.6 14.0% 1.0
Other Commercial (1.7) -47.2% (3.3)
Corporate
-----------------------------------------
Total (17.8) -50.1% (3.9)
=========================================
Change - OI
-----------------------------------------
Adjusted OI Adjusted OI BP chng
$ % Margins
-----------------------------------------
SIX MONTHS:
Office Products (16.6) -40.2% (2.6)
Computer Products (4.9) -23.3% (6.9)
Commercial - IPFG 3.1 47.0% 2.8
Other Commercial 1.0 20.0% 0.7
Corporate
-----------------------------------------
Total (19.7) -32.5% (2.2)
=========================================
Price, Volume, Currency Analysis
(Unaudited)
Q1 2006 Percent Change - Sales
-----------------------------------------------------
Pro Forma
Net Sales Currency Change in
Growth Translation Calendar Price Volume
-----------------------------------------------------
Office Products 0.2% -2.6% 0.2% 0.2% 2.4%
Computer Products 17.2% -2.9% 1.8% 2.7% 15.6%
Commercial - IPFG 7.1% -2.1% 0.0% 1.7% 7.5%
Other Commercial 4.5% -1.5% -1.4% 3.0% 4.4%
----------------------------------------------------------------------
Total 3.1% -2.5% 0.1% 0.9% 4.6%
Q2 2006 Percent Change - Sales
-----------------------------------------------------
Pro Forma
Net Sales Currency Change in
Growth Translation Calendar Price Volume
-----------------------------------------------------
Office Products -1.5% 0.1% 0.0% 0.1% -1.7%
Computer Products 4.3% 0.6% -0.3% -0.2% 4.2%
Commercial - IPFG 2.6% 1.2% 0.0% 1.3% 0.1%
Other Commercial 3.4% -0.4% 0.1% 2.2% 1.5%
----------------------------------------------------------------------
Total 0.1% 0.2% 0.0% 0.4% -0.5%
SIX MONTHS 2006 Percent Change - Sales
-----------------------------------------------------
Pro Forma
Net Sales Currency Change in
Growth Translation Calendar Price Volume
-----------------------------------------------------
Office Products -0.7% -1.2% 0.1% 0.1% 0.3%
Computer Products 10.4% -1.1% 0.7% 1.2% 9.6%
Commercial - IPFG 4.8% -0.5% 0.0% 1.5% 3.8%
Other Commercial 3.9% -1.0% -0.6% 2.6% 2.9%
----------------------------------------------------------------------
Total 1.5% -1.1% 0.1% 0.7% 1.8%
Incremental Long-term Incentive Compensation Expense
by Pro forma Segment (pre-tax)
Actual Q1 Actual Q1 Incremental
2006 2005 Expense vs.
expense expense Prior Year
Office Products $2.2 $0.2 $2.0
Computer Products 0.2 0.0 0.2
Commercial - IPFG 0.1 0.0 0.1
Other Commercial 0.1 0.2 (0.1)
Corporate 1.9 1.7 0.2
------------------------------ ------------ ------------ ------------
Total $4.5 $2.1 $2.4
Actual Q2 Actual Q2 Incremental
2006 2005 Expense vs.
expense expense Prior Year
Office Products $2.1 $0.1 $2.0
Computer Products 0.2 0.0 0.2
Commercial - IPFG 0.1 0.0 0.1
Other Commercial 0.1 0.0 0.1
Corporate 1.9 1.0 0.9
------------------------------ ------------ ------------ ------------
Total $4.4 $1.1 $3.3
Actual Six Actual Six Incremental
Month 2006 Month 2005 Expense vs.
expense expense Prior Year
Office Products $4.3 $0.3 $4.0
Computer Products 0.4 0.0 0.4
Commercial - IPFG 0.2 0.0 0.2
Other Commercial 0.2 0.2 0.0
Corporate 3.8 2.7 1.1
------------------------------ ------------ ------------ ------------
Total $8.9 $3.2 $5.7
Office Products Integration Update -
Facility Closures or Consolidations
------------------------------------
----------------------------------------------------------------------
Second Quarter 2006 - 12 affected facilities:
----------------------------------------------------------------------
Basingstoke, England Distribution, Office Products Group telesales
and customer service facility will close in
September, 2006. Functions will be
consolidated into two existing U.K.
facilities.
----------------------------------------------------------------------
Bellmawr, New Jersey Distribution facility was consolidated with
an existing facility in East Texas,
Pennsylvania, completed in July.
----------------------------------------------------------------------
Booneville, Mississippi Manufacturing and distribution facility will
be significantly expanded in 2006 and 2007.
This will become the principal distribution
hub for U.S. operations and will incorporate
integrated manufacturing of freight-intensive
product (large dry-erase boards and ring
binders).
----------------------------------------------------------------------
Gelnhausen, Germany Sales office and operations were consolidated
into a sales office in Germany as part of the
integration of the European office products
sales force, completed in July.
----------------------------------------------------------------------
Hanover Park Storage and Organization distribution
(Muirfield), Illinois facility will close in early 2007.
Distribution will be transferred into the
Booneville, Mississippi facility.
----------------------------------------------------------------------
Lincolnshire, Illinois Storage and Organization manufacturing
facility will close in early 2007.
Manufacturing will be moved into the
Booneville, Mississippi facility.
----------------------------------------------------------------------
Manchester, England Distribution center will close in August 2006
and will be consolidated into another center
in the U.K.
----------------------------------------------------------------------
Milan, Italy Customer service and marketing office was
consolidated into an existing facility in
Turin, Italy as part of the integration of
the European office products sales force,
completed in June.
----------------------------------------------------------------------
Nuevo Laredo, Mexico Three plants, which manufacture products for
the Document Communication and Visual
Communication business units, will close
completely in the third quarter of 2007.
Previously, the company had announced a
shutdown of one of the four plants to occur
in the spring of 2007. Certain Document
Communication products will be outsourced and
others manufactured at the company's Lerma,
Mexico facility. Certain Visual
Communications products will be outsourced,
and others will be manufactured at the
Booneville, Mississippi facility.
----------------------------------------------------------------------
Tabor, Czech Republic Sales office will close in the third quarter
of 2006 and sales will be outsourced.
----------------------------------------------------------------------
Wheeling, Illinois Portion of Storage and Organization plant
that manufactures certain non-paper clip
fasteners will close in the fall of 2006.
Manufacturing will be outsourced.
----------------------------------------------------------------------
Wolka Kosowska, Poland Distribution center will close in the third
quarter of 2006. Distribution will be
outsourced and sales and marketing team will
move to a new location.
----------------------------------------------------------------------
----------------------------------------------------------------------
First Quarter 2006 - Nine affected facilities:
----------------------------------------------------------------------
Corona, California Visual Communication plant closed.
Manufacturing was partly consolidated at
another plant and partly outsourced.
----------------------------------------------------------------------
Dublin, Ireland Document Communication plant closed.
Manufacturing was consolidated at another
plant.
----------------------------------------------------------------------
Jestetten, Germany Storage and Organization plant will close
later this year. Manufacturing will be
consolidated at another plant.
----------------------------------------------------------------------
Llantrisant, Wales Visual Communications and Storage and
Organization plant will close September 1,
2006. Manufacturing will be partly
consolidated and partly outsourced.
----------------------------------------------------------------------
Nogales, Mexico Portion of plant that manufactures products
for Workspace Tools will close by year-end.
Manufacturing will be outsourced.
----------------------------------------------------------------------
Nuevo Laredo, Mexico Portion of plant that manufactures products
for Document Communication will close in the
spring of 2007. Manufacturing will be
outsourced.
----------------------------------------------------------------------
Ontario, California Portion of plant that manufactures storage
boxes for Storage and Organization will close
this month. Manufacturing will be
consolidated at another plant.
----------------------------------------------------------------------
Pleasant Prairie, Portion of Document Communication plant will
Wisconsin be closed by mid-2007. Manufacturing will be
partly consolidated and partly outsourced.
----------------------------------------------------------------------
Tlalnepantla, Mexico Distribution center has been consolidated
into another center in Mexico.
----------------------------------------------------------------------
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