ACCO Brands Corp. (ABD) filed Quarterly Report for the period ended 2009-09-30.
ACCO Brands Corporation is a world leader in branded office products. Its industry-leading brands include Swingline Kensington Wilson Jones Quartet GBC and Day-Timer among others. Under the GBC brand the Company is also a leader in the professional printing market. Acco Brands Corp. has a market cap of $353.6 million; its shares were traded at around $6.48 with a P/E ratio of 11 and P/S ratio of 0.2.
Highlight of Business Operations:
In June 2009, the Company completed the sale of its commercial print finishing business for final proceeds of $16.2 million, after final working capital adjustments made during the third quarter. As a result of the adjustments, the Company received net cash proceeds of $12.5 million and a $3.65 million note due from the buyer payable in installments of $1.325 million in June, 2011 and $2.325 million in June, 2012. Interest on the unpaid balance is payable at the rate of 4.9 percent per annum. The sale resulted in a pretax gain of $0.8 million ($0.6 million after-tax). The commercial print finishing business has been classified as a discontinued operation in our consolidated financial statements for all periods presented.
During the second quarter of 2009, the Company reflected the reduction of its business in its future forecasts, and as a result, the Company recorded a non-cash charge of $108.1 million to establish a valuation allowance against its U.S. deferred tax assets. For a further discussion see Note 17, Income Taxes. In addition, for the second quarter of 2009, the Company recorded a non-cash impairment charge of $1.8 million on certain of its trade names. For the second quarter of 2008, the Company recorded a non-cash goodwill impairment charge of $14.1 million and during the third quarter of 2008 recorded a non-cash goodwill impairment charge of $11.3 million.
On September 30, 2009, the Company issued $460.0 million aggregate principal amount of its 10.625% Senior Secured Notes due March 15, 2015 (the “Senior Secured Notes”), and entered into a four-year senior secured asset-based revolving credit facility providing for borrowings of up to $175.0 million subject to borrowing base limitations (the “ABL Facility”). Initial borrowings under the ABL Facility were $16.1 million. These funds together with the $453.1 million in net proceeds from the issuance of the Senior Secured Notes were used to (i) repay all outstanding borrowings under and terminate the Company’s prior senior secured credit agreements, (ii) repay all outstanding borrowings under and terminate the Company’s accounts receivable securitization program, (iii) terminate the Company’s cross-currency swap agreement, (iv) repurchase approximately $29.1 million aggregate principal amount of its 7 5/8% senior subordinated notes due August 15, 2015 (“Senior Subordinated Notes”) and (v) pay the fees, expenses and other costs relating to such transactions (collectively the “Refinancing Transactions”).
Other expense was $4.3 million compared to $0.7 million of expense in the prior-year quarter. In connection with the refinancing transactions that occurred in September 2009, the Company recorded a $9.1 million loss on the early extinguishment of debt associated with the repayment of $403.0 million of borrowings outstanding under its senior secured credit agreements and accounts receivable securitization facility, partially offset by a $4.9 million gain on the early extinguishment of debt in connection with the repurchase of $29.1 million of Senior Subordinated Notes. See Note 10, Long-term debt and Short-term borrowings, in the Notes to Condensed Consolidated Financial Statements for a further discussion on the Company’s refinancing transactions. During the third quarter of 2008, the Company recorded a $0.6 million gain from the early extinguishment of debt upon the redemption of $4.0 million of its outstanding Senior Subordinated Notes.
For the quarter ended September 30, 2009, the Company recorded income tax expense of $7.1 million on income before taxes of $8.8 million. This compares to income tax expense of $17.6 million on income before taxes of $2.6 million in the prior year period. The higher than expected effective tax rate for 2009 is due to operating losses in a number of countries where valuation reserves are recorded against future tax benefits. During the quarter ended September 30, 2008, the Company increased its valuation allowance by $11.0 million on domestic state deferred tax assets and tax loss carryforwards.
During the third quarter of 2009, the Company recorded charges of $0.4 million ($0.4 million after-tax) related to working capital adjustments associated with the disposition of its commercial print finishing business. Loss from discontinued operations was $0.4 million, or $0.01 per diluted share, compared to a loss of $17.7 million, or $0.33 per share, in the prior-year quarter, principally attributable to asset and goodwill impairment charges of $19.5 million.
Rate This Article: |
  |