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Delaware | 2782 | 36-2704017 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (IRS Employer Identification Number) |
Proposed Maximum | ||||||
Title of Each Class of | Aggregate Offering | Amount of | ||||
Securities To Be Registered | Price | Registration Fee | ||||
75/8% Senior Subordinated Notes due 2015 | $350,000,000(1) | $41,195 | ||||
Guarantees of the 75/8% Senior Subordinated Notes due 2015 | — | (2) | ||||
(1) | Pursuant to Rule 457(f) under the Securities Act, the book value as of October 3, 2005 of the securities for which the securities being registered are to be exchanged has been used as the basis for calculating the registration fee. |
(2) | Pursuant to Rule 457(n), no additional registration fee is payable with respect to the guarantees of the notes being registered. |
Jurisdiction of | Primary Standard | IRS Employer | ||||||||||
Exact Name of Registrant | Incorporation or | Industrial Classification | Identification | |||||||||
as Specified in its Charter* | Organization | Code Number | Number | |||||||||
ACCO Brands International, Inc. | Delaware | 2782 | 84-1688753 | |||||||||
ACCO Brands USA LLC | Delaware | 2782 | 13-2657051 | |||||||||
ACCO Europe Finance Holdings, LLC | Delaware | 2782 | 84-1688754 | |||||||||
ACCO Europe International Holdings, LLC | Delaware | 2782 | 84-1688755 | |||||||||
ACCO International Holdings, Inc. | Delaware | 2782 | 84-1688750 | |||||||||
Boone International, Inc. | California | 2782 | 33-0354886 | |||||||||
Day-Timers, Inc. | Delaware | 2782 | 13-3344667 | |||||||||
GBC International, Inc. | Nevada | 3579 | 36-3061171 | |||||||||
General Binding Corporation | Delaware | 3579 | 36-0887470 | |||||||||
Polyblend Corporation | Delaware | 2782 | ||||||||||
Swingline Inc. | Delaware | 2782 | ||||||||||
VeloBind, Incorporated | Delaware | 3555 | 94-1671377 |
* | The address for each of the additional registrants is c/o ACCO Brands Corporation, 300 Tower Parkway, Lincolnshire, Illinois, 60069. |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. |
• | will have been registered under the Securities Act; | |
• | will not bear restrictive legends restricting their transfer under the Securities Act; | |
• | will not entitle holders to the registration rights that apply to the old notes; and | |
• | will not contain provisions relating to additional interest in connection with the old notes under circumstances related to the timing of the exchange offer. |
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• | competition within the office products, document finishing and film lamination industries; | |
• | the effects of economic and political conditions; | |
• | the ability of distributors to successfully market and sell our products; | |
• | the availability and price of raw materials; | |
• | dependence on certain suppliers of manufactured products; | |
• | the effect of consolidation in the office products industry; | |
• | our ability to successfully implement, achieve and sustain manufacturing and distribution cost efficiencies and improvements, and fully realize anticipated cost savings from the integration of acquired businesses, including General Binding Corporation; | |
• | disruption from the integration of acquired businesses, including General Binding Corporation, making it more difficult to maintain relationships with customers, employees or suppliers; and | |
• | other risks and uncertainties, including those set forth in this prospectus and those detailed from time to time in ACCO Brands’ filings with the SEC. |
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• | Staplers and staples | |
• | Shredders | |
• | Trimmers | |
• | Punches | |
• | Calculators |
• | Binding and laminating equipment | |
• | Binding and laminating supplies | |
• | Report covers | |
• | Indexes | |
• | Sheet protectors |
• | Dry-erase boards | |
• | Dry-erase markers | |
• | Easels | |
• | Bulletin boards | |
• | Overhead projectors | |
• | Transparencies | |
• | Laser pointers | |
• | Screens |
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• | Ring binders | |
• | Data binders | |
• | Storage boxes | |
• | Labels | |
• | Hanging file folders | |
• | Clips and fasteners | |
• | Letter trays | |
• | Accounting supplies |
• | Security locks for laptops | |
• | Power adapters for laptops | |
• | Input devices | |
• | Computer cleaning products | |
• | Ergonomic devices | |
• | Carry cases |
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• | the execution of a credit agreement, referred to in this prospectus as our senior secured credit agreement, providing for new senior secured credit facilities, consisting of $200.0 million in non-U.S.Term Loan facilities, $400.0 million in U.S. Term Loan facilities and $150.0 million of revolving credit facilities (see “Description of Other Indebtedness — Senior Secured Credit Facilities” for a more detailed description of the senior secured credit facilities); and | |
• | the issuance of the old notes, in an aggregate principal amount of $350.0 million. |
• | repay the $625.0 million of special dividend notes issued by ACCO Brands to its stockholders prior to the spin-off; |
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• | fund the $156.4 million, including accrued interest and redemption premium, required to redeem $150.0 million outstanding principal amount of GBC’s 9.375% Senior Subordinated Notes due 2008; | |
• | fund the $148.2 million, including accrued interest and prepayment premiums, required to repay $147.3 million of other indebtedness of GBC outstanding immediately prior to the merger; | |
• | repay $43.2 million of ACCO Brands indebtedness to Fortune Brands outstanding immediately prior to the merger; and | |
• | pay other fees and expenses associated with the transactions. |
The Exchange Offer | The issuer is offering new 75/8% Senior Subordinated Notes due 2015, fully and unconditionally guaranteed by the guarantors, jointly and severally, on a senior subordinated basis, which new notes and guarantees will be registered under the Securities Act, in exchange for the old notes. | |
To exchange your old notes, you must properly tender them, and the issuer must accept them. The issuer will exchange all old notes that you validly tender and do not validly withdraw. The issuer will cancel all old notes accepted for exchange and issue registered new notes promptly after the expiration of the exchange offer. | ||
Resale of New Notes | We believe that, if you are not a broker-dealer, you may offer the new notes (together with the guarantees thereof) for resale, resell and otherwise transfer the new notes and the related guarantees without complying with the registration and prospectus delivery requirements of the Securities Act if you: | |
• are acquiring the new notes in your ordinary course of business; | ||
• are not engaged in, do not intend to engage in and have no arrangement or understanding with any person to participate in a “distribution,” as defined under the Securities Act, of the new notes; and | ||
• are not an “affiliate,” as defined under the Securities Act, of the issuer or any guarantor. | ||
Our belief that resales and other transfers of new notes would be permitted without registration or prospectus delivery under the conditions described above is based on SEC interpretations given |
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to other, unrelated issuers in transactions similar to the exchange offer. We cannot assure you that the SEC would take the same position with respect to the exchange offer. If any of the conditions described above is not satisfied, you may not rely on the SEC interpretations and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale or other transfer of the new notes. Failure to so comply may result in liability to you under the Securities Act. We will not be responsible for or indemnify you against any liability you may incur under the Securities Act. | ||
Each broker-dealer that receives new notes for its own account in exchange for old notes, where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such new notes. See “Plan of Distribution and Selling Restrictions.” | ||
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2005, unless we extend the expiration date. | |
Withdrawal | You may withdraw your tender of old notes under the exchange offer at any time before the exchange offer expires. Any withdrawal must be in accordance with the procedures described in “The Exchange Offer — Withdrawal Rights.” | |
Procedures for Tendering Old Notes | Each holder of old notes that wishes to accept the exchange offer must, before the exchange offer expires, either: | |
• transmit a properly completed and duly executed letter of transmittal, together with all other documents required by the letter of transmittal, including the old notes, to the exchange agent; or | ||
• if old notes are tendered in accordance with book-entry procedures, arrange with The Depository Trust Company, or DTC, to cause to be transmitted to the exchange agent an agent’s message indicating, among other things, the holder’s agreement to be bound by the letter of transmittal, | ||
or comply with the procedures described below under “— Guaranteed Delivery.” | ||
A holder of old notes that tenders old notes in the exchange offer must represent, among other things, that: | ||
• the holder is acquiring the new notes in its ordinary course of business; | ||
• the holder is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a distribution of the new notes; | ||
• the holder is not an affiliate of the issuer or any guarantor; and | ||
• the holder is not acting on behalf of any person who could not truthfully make the foregoing representations. |
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Do not send letters of transmittal, certificates representing old notes or other documents to us or DTC. Send these documents only to the exchange agent at the address or facsimile number given in this prospectus and in the letter of transmittal. | ||
Special Procedures for Tenders by Beneficial Owners of Old Notes | If: | |
• you beneficially own old notes; | ||
• those notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian; and | ||
• you wish to tender your old notes in the exchange offer, | ||
you should contact the registered holder as soon as possible and instruct it to tender on your behalf and comply with the instructions set forth in this prospectus and the letter of transmittal. | ||
Guaranteed Delivery | If you hold old notes in certificated form or if you own old notes in the form of a book-entry interest in a global note deposited with the trustee, as custodian for DTC, and you wish to tender those old notes, but | |
• the certificates for your old notes are not immediately available or all required documents are unlikely to reach the exchange agent before the exchange offer expires; or | ||
• you cannot complete the procedure for book-entry transfer on time, | ||
you may tender your old notes in accordance with the procedures described in “The Exchange Offer — Procedures for Tendering Old Notes — Guaranteed Delivery.” | ||
Consequences of Not Exchanging Old Notes | If you do not tender your old notes or we reject your tender, your old notes will remain outstanding and will continue to be subject to the provisions in the indenture regarding the transfer and exchange of the old notes and the existing restrictions on transfer set forth in the legends on the old notes. Holders of old notes will not be entitled to any further registration rights, except under limited circumstances with respect to specific types of holders of old notes in accordance with the registration rights agreement among the initial purchasers, the issuer and the guarantors. See “Risk Factors — Risks Associated with the Exchange Offer — Any outstanding old notes after the consummation of the exchange offer will continue to be subject to existing transfer restrictions, and the holders of old notes after the consummation of the exchange offer may not be able to sell their old notes” for further information. | |
Appraisal or Dissenters’ Rights | You do not have any appraisal or dissenters’ rights in connection with the exchange offer. |
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Certain Material U.S. Federal Tax Consequences | Your exchange of old notes for new notes will not be treated as a taxable event for U.S. federal income tax purposes. See “Certain Material U.S. Federal Tax Consequences.” | |
Conditions | The exchange offer is subject to the condition that it not violate applicable law or any SEC policy. | |
Use of Proceeds | We will not receive any proceeds from the exchange offer or the issuance of the new notes. The net proceeds from the issuance of the old notes, together with the proceeds from the other financings described in this prospectus, were used to finance the transactions. See “Use of Proceeds.” | |
Acceptance of Old Notes and Delivery of New Notes | The issuer will accept for exchange any and all old notes properly tendered prior to the expiration of the exchange offer. The issuer and the guarantors will complete the exchange offer and the issuer will issue the new notes promptly after the expiration date. | |
Exchange Agent | Wachovia Bank, National Association is serving as exchange agent for the exchange offer. The address and the facsimile and telephone numbers of the exchange agent are provided in this prospectus under “The Exchange Offer — Exchange Agent” and in the letter of transmittal. |
• | will have been registered under the Securities Act; | |
• | will not bear restrictive legends restricting their transfer under the Securities Act; | |
• | will not entitle holders to the registration rights that apply to the old notes; and | |
• | will not contain provisions relating to additional interest in connection with the old notes under circumstances related to the timing of the exchange offer. |
Issuer | ACCO Brands Corporation, a Delaware corporation | |
Notes Offered | $350,000,000 aggregate principal amount of 75/8% Senior Subordinated Notes due 2015 | |
Maturity Date | August 15, 2015 | |
Interest | Annual rate: 75/8% | |
Interest will be payable in cash on February 15 and August 15 of each year, beginning on February 15, 2006. | ||
Guarantees | The old notes are, and the new notes will be, guaranteed on a senior subordinated basis by the issuer’s domestic subsidiaries. |
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Ranking | The old notes are, and the new notes will be, the issuer’s unsecured senior subordinated obligations, ranking: | |
• junior to any of the issuer’s existing and future senior indebtedness, including borrowings under our senior credit facilities; | ||
• equally with any of the issuer’s future senior subordinated indebtedness; and | ||
• senior to any of the issuer’s future indebtedness that expressly provides for its subordination to the notes. | ||
Each guarantor’s guarantee of the old notes is, and the new notes will be, that guarantor’s unsecured senior subordinated obligation, ranking: | ||
• junior to any of that guarantor’s existing and future senior indebtedness, including its guarantee of debt under our senior secured credit facilities; | ||
• equally with any of that guarantor’s future senior subordinated indebtedness; and | ||
• senior to any of that guarantor’s future indebtedness that expressly provides for its subordination to its guarantee of the notes. | ||
In the event that our secured creditors exercise their rights with respect to our assets pledged to them, our secured creditors would be entitled to be repaid in full from the proceeds of those assets before those proceeds would be available for distribution to other creditors, including holders of the notes. The assets of the issuer’s subsidiaries that are not guarantors of the notes will be subject to the prior claims of all creditors, including trade creditors, of those non-guarantor subsidiaries. | ||
As of June 2005, on a pro forma basis after giving effect to the transactions: | ||
• the issuer and its subsidiaries would have had $957.2 million principal amount of indebtedness on a consolidated basis, of which: | ||
• $607.2 million principal amount, including $600 million of borrowings and guarantees under our senior secured credit facilities, would have been contractually senior to the notes and the guarantees, and | ||
• $607.2 million principal amount would have been secured debt; | ||
• an additional $132 million would have been available for borrowing on a secured basis under our senior secured credit facilities (giving effect to $0 million in revolving credit facility borrowings and $18 million of outstanding letters of credit immediately after the completion of the merger), which borrowings would have been contractually senior to the notes and the guarantees and would be secured; and |
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• subsidiaries of the issuer that are not guarantors of the notes would have had approximately $277.1 million principal amount of indebtedness and other borrowings, including trade payables but excluding intercompany liabilities. | ||
See “Description of Other Indebtedness.” | ||
Optional Redemption | The issuer may redeem the notes, in whole or in part, prior to August 15, 2010 at a price equal to 100% of the principal amount of the notes plus a “make-whole” premium as set forth under “Description of New Notes — Optional Redemption.” On or after August 15, 2010, the issuer may redeem the notes, in whole or in part, at the redemption prices set forth under “Description of New Notes — Optional Redemption.” | |
The issuer may redeem up to 35% of the aggregate principal amount of the notes on or prior to August 15, 2008 with the proceeds of certain equity offerings, plus accrued and unpaid interest, if any, to the date of redemption. The issuer may make that redemption only if, after the redemption, at least 65% of the aggregate principal amount of the notes originally issued remains outstanding and the redemption occurs within 60 days of the date of the equity offering closing. See “Description of New Notes — Optional Redemption.” | ||
Change of Control Offer | Upon the occurrence of a change of control, holders of notes will have the right to require the issuer to repurchase some or all of their notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to the repurchase date. See “Description of Notes — Change of Control.” | |
Certain Covenants | The indenture governing the notes contains covenants limiting, among other things, the issuer’s ability and the ability of the issuer’s restricted subsidiaries to: | |
• incur additional debt; | ||
• pay dividends on capital stock or repurchase capital stock; | ||
• make certain investments; | ||
• enter into certain types of transactions with affiliates; | ||
• limit dividends or other payments by our restricted subsidiaries to us; | ||
• use assets as security in other transactions; and | ||
• sell certain assets or merge with or into other companies. | ||
These covenants are subject to important exceptions and qualifications. See “Description of New Notes.” |
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Pro Forma Fiscal | Pro Forma Combined | |||||||
Year Ended | Six Months Ended | |||||||
December 2004 | June 2005 | |||||||
Statement of Operations Data: | ||||||||
Net sales | $ | 1,888.0 | $ | 919.0 | ||||
Cost of products sold | 1,149.9 | 565.1 | ||||||
Selling, general and administrative expenses | 575.9 | 290.4 | ||||||
Amortization of identifiable intangibles | 5.3 | 2.9 | ||||||
Restructuring charges | 20.3 | 1.3 | ||||||
Interest expense, net | 65.1 | 32.6 | ||||||
Earnings from joint ventures | (1.0 | ) | (1.0 | ) | ||||
Other (income)/expense, net | (4.2 | ) | 2.7 | |||||
Income before income tax expense | 76.7 | 25.0 | ||||||
Income tax expense | 16.6 | 13.2 | ||||||
Net income before cumulative effect of accounting change | $ | 60.1 | $ | 11.8 | ||||
Balance Sheet Data (at period end): | ||||||||
Cash and cash equivalents | 28.0 | |||||||
Working capital(1) | 368.7 | |||||||
Property, plant and equipment, net | 244.2 | |||||||
Total assets | 1,880.1 | |||||||
Total debt | 957.2 | |||||||
Total shareholders’ equity | 379.5 | |||||||
Other Financial Data: | ||||||||
Depreciation expense | 46.9 | 20.7 | ||||||
Capital expenditures | 34.9 | 16.6 | ||||||
Pro forma ratio of earnings to fixed charges(2) | 2.0 | x | 1.6 | x |
(1) | Working capital is defined as total current assets less total current liabilities. |
(2) | For purposes of this computation, “earnings” consist of pre-tax income from continuing operations (excluding equity in earnings of affiliates) plus fixed charges; where “fixed charges” consist of interest expense on all indebtedness, plus capitalized interest, plus amortization of deferred costs of financing and the interest component of lease rental expense. |
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Fiscal Year Ended | Six Months Ended | |||||||||||||||||||
December 27, | June 25, | |||||||||||||||||||
2002 | 2003 | 2004 | 2004 | 2005 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Net sales | $ | 1,105.4 | $ | 1,101.9 | $ | 1,175.7 | $ | 539.6 | $ | 551.9 | ||||||||||
Cost of products sold | 698.9 | 686.8 | 714.3 | 340.4 | 337.2 | |||||||||||||||
Advertising, selling, general and administrative | 351.5 | 337.8 | 347.8 | 170.4 | 166.0 | |||||||||||||||
Amortization of intangibles | 2.1 | 1.7 | 1.3 | 0.6 | 1.0 | |||||||||||||||
Write-down of intangibles | — | 12.0 | — | — | — | |||||||||||||||
Restructuring charges | 34.3 | 17.3 | 19.4 | 19.4 | — | |||||||||||||||
Interest expense | 12.3 | 8.0 | 8.5 | 3.9 | 4.1 | |||||||||||||||
Other (income)/expense, net | 0.8 | (1.6 | ) | (5.2 | ) | (3.5 | ) | 1.6 | ||||||||||||
Income before income taxes | 5.5 | 39.9 | 89.6 | 8.4 | 42.0 | |||||||||||||||
Income tax expense | 1.3 | 13.2 | 21.1 | 6.3 | 17.0 | |||||||||||||||
Net income before cumulative effect of accounting change(1) | $ | 4.2 | $ | 26.7 | $ | 68.5 | $ | 2.1 | $ | 25.0 | ||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||
Cash and cash equivalents | $ | 43.3 | $ | 60.5 | $ | 79.8 | $ | 78.7 | $ | 18.2 | ||||||||||
Working capital(2) | 205.7 | 234.4 | 271.7 | 245.6 | 261.3 | |||||||||||||||
Property, plant and equipment, net | 195.3 | 170.0 | 157.7 | 151.4 | 154.7 | |||||||||||||||
Total assets | 860.5 | 886.7 | 984.5 | 878.7 | 877.5 | |||||||||||||||
Total debt(3) | 4.7 | 2.8 | 0.1 | 3.0 | 0.9 | |||||||||||||||
Total stockholders’ equity | 528.8 | 533.1 | 616.8 | 524.0 | 596.7 | |||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Depreciation expense | $ | 37.0 | $ | 33.3 | $ | 28.2 | $ | 14.7 | $ | 12.6 | ||||||||||
Capital expenditures | 22.0 | 16.3 | 27.6 | 11.7 | 12.8 | |||||||||||||||
Cash flow from operating activities, (use)/source | 161.9 | 67.2 | 63.7 | 29.4 | (7.5 | ) | ||||||||||||||
Cash flow from investing activities, (use)/source | (17.2 | ) | (1.7 | ) | (6.1 | ) | 4.4 | (13.0 | ) | |||||||||||
Cash flow from financing activities, (use)/source | (128.7 | ) | (56.8 | ) | (45.3 | ) | (17.7 | ) | (38.2 | ) |
(1) | Before effect of accounting change of $1.6 in June 2005 related to the elimination of a one month lag in reporting by two foreign subsidiaries to align their reporting periods with the Company’s fiscal calendar. |
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(2) | Working capital is defined as total current assets less total current liabilities. |
(3) | Total debt refers only to the portion financed by third parties and does not include any portion financed through banking relationships or lines of credit secured by ACCO Brands’ then-parent company, Fortune Brands. Interest expenses associated with Fortune Brands’ debt have been allocated to ACCO Brands for the periods presented. |
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Fiscal Year Ended | Six Months Ended | |||||||||||||||||||
December 31, | June 30, | |||||||||||||||||||
2002 | 2003 | 2004 | 2004 | 2005 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Net sales | $ | 701.7 | $ | 697.9 | $ | 712.3 | $ | 345.3 | $ | 367.1 | ||||||||||
Product cost of sales, including development and engineering | 422.5 | 418.7 | 434.9 | 212.4 | 227.5 | |||||||||||||||
Inventory rationalization and write-down charges | 1.0 | — | — | — | — | |||||||||||||||
Selling, service and administrative | 228.1 | 224.6 | 225.6 | 112.6 | 119.4 | |||||||||||||||
Earnings from joint ventures | (0.2 | ) | 0.0 | (1.3 | ) | (0.3 | ) | (1.0 | ) | |||||||||||
Interest expense | 39.9 | 34.4 | 25.9 | 13.4 | 13.6 | |||||||||||||||
Restructuring charges | 8.0 | 11.1 | 0.9 | 0.8 | 1.3 | |||||||||||||||
Other charges | 1.1 | 4.7 | 1.7 | — | 4.2 | |||||||||||||||
Other expense, net | 0.2 | 0.2 | 0.7 | 0.9 | 1.1 | |||||||||||||||
Income before taxes | 1.1 | 4.4 | 23.9 | 5.5 | 1.0 | |||||||||||||||
Income tax expense | 2.0 | 7.6 | 9.1 | 2.5 | 2.9 | |||||||||||||||
Net income (loss) before cumulative effect of accounting change(1) | $ | (1.0 | ) | $ | (3.3 | ) | $ | 14.8 | $ | 3.0 | $ | (1.9 | ) | |||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||
Cash and cash equivalents | $ | 18.3 | $ | 9.6 | $ | 6.3 | $ | 3.9 | $ | 11.9 | ||||||||||
Working capital(2) | 101.7 | 99.8 | 98.5 | 124.3 | 111.2 | |||||||||||||||
Property, plant and equipment, net | 106.9 | 95.0 | 84.7 | 87.9 | 75.0 | |||||||||||||||
Total assets | 557.4 | 530.3 | 540.5 | 537.8 | 540.5 | |||||||||||||||
Total debt (excludes interest) | 341.4 | 302.0 | 288.9 | 317.6 | 294.3 | |||||||||||||||
Total stockholders’ equity | 42.1 | 54.2 | 77.8 | 57.1 | 77.8 | |||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Depreciation and amortization(3) | $ | 24.4 | $ | 21.8 | $ | 19.1 | $ | 11.0 | $ | 10.1 | ||||||||||
Capital expenditures | 9.0 | 8.5 | 7.3 | 3.6 | 3.8 | |||||||||||||||
Cash flow from operating activities, (use)/source | 46.5 | 51.6 | 22.7 | (18.7 | ) | (3.8 | ) | |||||||||||||
Cash flow from investing activities, (use)/source | (7.7 | ) | (10.5 | ) | (8.2 | ) | (4.7 | ) | (1.0 | ) | ||||||||||
Cash flow from financing activities, (use)/source | (78.9 | ) | (41.4 | ) | (13.1 | ) | 17.0 | 9.1 |
(1) | Before cumulative effect of accounting change of $79.0 in 2002, related to the impairment of goodwill recorded in conjunction with the implementation of SFAS No. 142. |
(2) | Working capital is defined as total current assets less total current liabilities. |
(3) | Depreciation and amortization does not include patent amortization, display amortization and amortization of deferred debt cost. |
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We may not realize the anticipated benefits from the merger. |
The integration of ACCO Brands and GBC may present significant challenges. |
• | the challenge of establishing ACCO Brands as a separately traded independent public company and then integrating the GBC businesses while carrying on the ongoing operations of each business; | |
• | the necessity of coordinating geographically separate organizations; | |
• | the challenge of integrating the business cultures of each company, which may prove to be incompatible; | |
• | the challenge and cost of integrating the information technology systems of each company; and | |
• | the potential difficulties in retaining key officers and personnel. |
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We may be unable to anticipate changes in consumer preferences, which may result in decreased demand for our products. |
Our business is dependent on a limited number of customers and a substantial reduction in sales to these customers could significantly impact our operating results. |
If we do not compete successfully in the competitive office products industry, our business and revenues may be adversely affected. |
Our success will depend on our ability to attract and retain qualified personnel. |
We are subject to environmental regulation and environmental risks. |
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Our business is subject to risks associated with seasonality, which could adversely affect our cash flow, financial condition or results of operations. |
The raw materials and labor costs we incur are subject to price increases that could adversely affect our profitability. |
We will be subject to risks associated with international operations that could harm our business. |
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We will be subject to risks associated with outsourcing that could harm our business. |
We will depend on certain manufacturing sources whose inability to perform their obligations could harm our business. |
Our inability to secure and maintain rights to intellectual property could harm our business. |
As a result of the spin-off and merger, we are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequately prepared. |
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If the spin-off did not constitute a spin-off under section 355 of the Internal Revenue Code or the merger did not constitute a reorganization under section 368(a) of the Internal Revenue Code, either as a result of actions taken in connection with the spin-off or the merger or as a result of subsequent acquisitions of stock of Fortune Brands or stock of ACCO Brands, then we may be responsible for the payment of United States federal income taxes. |
• | the failure of the spin-off to constitute a spin-off under section 355 of the Internal Revenue Code, or | |
• | the subsequent disqualification of the distribution of ACCO Brands common stock to Fortune Brands stockholders in connection with the spin-off as tax-free to Fortune Brands for United States federal income tax purposes, |
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Our substantial indebtedness could adversely affect our results of operations and financial condition and prevent the issuer and the guarantors from fulfilling their obligations under the notes and the guarantees. |
• | limiting our ability to obtain additional financing to fund growth, working capital, capital expenditures, debt service requirements or other cash requirements; | |
• | limiting our operational flexibility due to the covenants contained in our debt agreements; | |
• | limiting our ability to invest operating cash flow in our business due to debt service requirements; | |
• | limiting our ability to compete with companies that are not as highly leveraged and that may be better positioned to withstand economic downturns; | |
• | increasing our vulnerability to economic downturns and changing market conditions; and | |
• | to the extent that our debt is subject to floating interest rates, increasing our vulnerability to fluctuations in market interest rates. |
We are subject to restrictive debt covenants, which may restrict our operational flexibility. |
Our ability to incur additional debt could further exacerbate the risks associated with our current significant level of indebtedness. |
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We will require a significant amount of cash to service our debts. Our ability to generate cash depends on many factors beyond our control. |
As a holding company conducting operations through our subsidiaries, the cash we generate may be not available to satisfy our obligations under the notes or the guarantors’ obligations under their guarantees. |
We may not be able to repurchase the notes upon a change of control. |
Federal and state laws permit a court to void the guarantees under some circumstances. |
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• | was insolvent, or became insolvent, when it incurred that indebtedness; | |
• | was left with an unreasonably small amount of capital on account of incurring that indebtedness; or | |
• | intended to, or believed that it would, be unable to pay its debts as they matured. |
• | the sum of its debts is greater than the fair value of its property; | |
• | the present fair value of its assets is less than the amount that it will be required to pay on its existing debts as they become due; or | |
• | it cannot pay its debts as they become due. |
Your right to receive payments on the notes will be junior to the issuer’s existing and future senior indebtedness, and the guarantees of the notes will be junior to all of the guarantors’ existing and future senior indebtedness. |
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Our secured creditors will be entitled to be paid in full from the proceeds of our pledged assets before those proceeds will be available for payment on the notes. |
Not all of the issuer’s subsidiaries will guarantee the notes. The assets of the non-guarantor subsidiaries will be subject to the prior claims of all claims of all creditors of those non-guarantor subsidiaries. |
The market price for the notes may be volatile. |
Any outstanding old notes after the consummation of the exchange offer will continue to be subject to existing transfer restrictions, and the holders of old notes after the consummation of the exchange offer may not be able to sell their old notes. |
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Lack of an active market for the new notes may adversely affect the liquidity and market price of the new notes. |
If you fail to comply with the procedures for tendering old notes, your old notes will remain outstanding after the consummation of the exchange offer. |
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The Merger |
The Spin-Off |
• | the execution of a credit agreement, referred to in this prospectus as our senior secured credit agreement, providing for new senior secured credit facilities, consisting of $200.0 million in non-U.S. Term Loan facilities, $400.0 million in U.S. Term Loan facilities and $150.0 million of revolving credit facilities (see “Description of Other Indebtedness — Senior Secured Credit Facilities” for a more detailed description of the senior secured credit facilities); and | |
• | the issuance of the old notes, in an aggregate principal amount of $350.0 million. |
• | repay the $625.0 million of special dividend notes issued by ACCO Brands to its stockholders prior to the spin-off; | |
• | fund the $156.4 million, including accrued interest and redemption premium, required to redeem $150.0 million outstanding principal amount of GBC’s 9.375% Senior Subordinated Notes due 2008; | |
• | fund the $148.2 million, including accrued interest and prepayment premiums, required to repay $147.3 million of other indebtedness of GBC outstanding immediately prior to the merger; | |
• | repay $43.2 million of ACCO Brands indebtedness to Fortune Brands outstanding immediately prior to the merger; and | |
• | pay other fees and expenses associated with the transactions. |
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As of | ||||||
June 2005 | ||||||
(Unaudited) | ||||||
(Dollars in | ||||||
millions) | ||||||
Cash and cash equivalents | $ | 28.0 | ||||
Debt: | ||||||
Revolving Credit Facility(1) | $ | 0.0 | ||||
Non-U.S. Term Loan Facilities | 200.0 | |||||
U.S. Term Loan Facility | 400.0 | |||||
Senior subordinated notes offered hereby | 350.0 | |||||
Other debt(2) | 7.2 | |||||
Total debt | 957.2 | |||||
Shareholders’ equity | 379.5 | |||||
Total capitalization | $ | 1,336.7 | ||||
(1) | As of the closing date, the amount available for borrowings under the revolving credit facility was $145.8 million, giving effect to $0.0 million in revolving credit facility borrowings and $4.2 million of outstanding letters of credit immediately after the completion of the merger. |
(2) | Consists principally of borrowings under non-U.S. bank lines that were not refinanced in the transactions. |
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ACCO | |||||||||||||||||||||||||
Effect of | Brands | ||||||||||||||||||||||||
Dividend to | Adjusted for | Pro Forma | Pro Forma | ||||||||||||||||||||||
ACCO Brands | Shareholders(1) | Dividend | GBC | Adjustments | Combined | ||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||
Cash and cash equivalents | $ | 18.2 | $ | 18.2 | $ | 11.9 | $ | (25.9 | )(a) | $ | 28.0 | ||||||||||||||
(293.0 | )(b) | ||||||||||||||||||||||||
(625.0 | )(c) | ||||||||||||||||||||||||
(8.2 | )(d) | ||||||||||||||||||||||||
950.0 | (e) | ||||||||||||||||||||||||
Accounts Receivable, net of allowances | 267.0 | 267.0 | 140.3 | 407.3 | |||||||||||||||||||||
Inventories, net | 187.8 | 187.8 | 100.3 | 11.4 | (f) | 299.5 | |||||||||||||||||||
Prepaid expenses & other current assets | 31.7 | 31.7 | 24.0 | 1.9 | (g) | 58.8 | |||||||||||||||||||
1.2 | (g) | ||||||||||||||||||||||||
Total Current Assets | 504.7 | — | 504.7 | 276.5 | 12.4 | 793.6 | |||||||||||||||||||
Net property, plant and equipment | 154.7 | 154.7 | 75.0 | 14.5 | (h) | 244.2 | |||||||||||||||||||
Goodwill | 148.7 | 426.4 | (i) | 426.4 | |||||||||||||||||||||
(148.7 | )(j) | ||||||||||||||||||||||||
Identifiable Intangibles, net of amortization | 115.9 | 115.9 | 1.2 | 137.5 | (k) | 253.4 | |||||||||||||||||||
(1.2 | )(j) | ||||||||||||||||||||||||
Prepaid pension expense | 84.9 | 84.9 | 3.2 | 88.1 | |||||||||||||||||||||
Other non-current assets | 17.3 | 17.3 | 35.9 | 25.9 | (a) | 74.4 | |||||||||||||||||||
(4.9 | )(a) | ||||||||||||||||||||||||
6.1 | (g) | ||||||||||||||||||||||||
(5.9 | )(g) | ||||||||||||||||||||||||
Total Assets | 877.5 | — | 877.5 | 540.5 | 462.1 | 1,880.1 | |||||||||||||||||||
Accounts Payable | 101.6 | 101.6 | 50.0 | 151.6 | |||||||||||||||||||||
Customer program liabilities | 76.3 | 76.3 | 25.5 | 101.8 | |||||||||||||||||||||
Salaries, wages & other compensation | 17.4 | 17.4 | 14.4 | 31.8 | |||||||||||||||||||||
Deferred Revenue | 12.4 | 12.4 | |||||||||||||||||||||||
Other current liabilities | 47.2 | 47.2 | 33.7 | 4.2 | (l) | 102.1 | |||||||||||||||||||
(2.3 | )(b) | ||||||||||||||||||||||||
19.3 | (m) | ||||||||||||||||||||||||
Notes Payable to Banks | 0.9 | 0.9 | 6.3 | 7.2 | |||||||||||||||||||||
Current Maturities of Long-Term Debt | 23.0 | (25.7 | )(b) | 18.0 | |||||||||||||||||||||
2.7 | (b) | ||||||||||||||||||||||||
18.0 | (e) | ||||||||||||||||||||||||
Dividend Payable to Shareholders | 625.0 | 625.0 | (625.0 | )(c) | |||||||||||||||||||||
Total Current Liabilities | 243.4 | 625.0 | 868.4 | 165.3 | (608.8 | ) | 424.9 | ||||||||||||||||||
Long-term Debt | 265.0 | (265.0 | )(b) | 932.0 | |||||||||||||||||||||
932.0 | (e) | ||||||||||||||||||||||||
Accrued pension and post-retirement benefits | 25.1 | 25.1 | 17.0 | 8.5 | (n) | 52.9 | |||||||||||||||||||
2.3 | (n) | ||||||||||||||||||||||||
Other non-current liabilities | 12.3 | 12.3 | 15.4 | 63.1 | (o) | 90.8 | |||||||||||||||||||
Stockholder’s Equity: | |||||||||||||||||||||||||
Common Stock | 0.1 | 0.1 | 2.3 | (2.3 | )(q) | 0.1 | |||||||||||||||||||
Additional Paid-in-Capital | 1,528.7 | (625.0 | ) | 903.7 | 11.1 | 427.0 | (p) | 1,316.6 | |||||||||||||||||
(11.1 | )(q) | ||||||||||||||||||||||||
(8.2 | )(d) | ||||||||||||||||||||||||
(5.9 | )(g) | ||||||||||||||||||||||||
Retained Earnings (Deficit) | (938.2 | ) | (938.2 | ) | 76.3 | (76.3 | )(q) | (938.2 | ) | ||||||||||||||||
Unearned Compensation | (5.1 | )(r) | (5.1 | ) | |||||||||||||||||||||
Accumulated other comprehensive income | 6.1 | 6.1 | (11.9 | ) | 11.9 | (q) | 6.1 | ||||||||||||||||||
Total Liabilities & Stockholder’s Equity | $ | 877.5 | $ | — | $ | 877.5 | $ | 540.5 | $ | 462.1 | $ | 1,880.1 |
(1) | Gives effect to the dividend payable to ACCO World’s parent and minority interest investor of $613.3 and $11.7, respectively, which will be declared and paid immediately prior to the spin-off of ACCO World. |
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(a) | Reflects an adjustment to capitalize estimated debt issuance costs of $25.9 associated with the issuance of the notes and borrowings under our new senior secured credit facilities, the elimination of GBC’s existing capitalized debt issuance costs of $4.9 as a result of management’s plan to repay the related debt in connection with the completion of the merger. | |
(b) | Represents payoff of GBC debt of: $265.0 long-term portion, $23.0 current portion, $2.3 of accrued interest and recognition of $2.7 adjustment to fair value of the debt which equates to the pre-payment penalty for early extinguishment of the debt. | |
(c) | Reflects payment following the merger of ACCO World and GBC, of the aggregate $625.0 loan notes with respect to the dividend to ACCO World’s stockholders, the funds for which are expected to be obtained from the issuance of the notes and borrowings under our new senior secured credit facilities. | |
(d) | Represents the return of cash owned by Fortune Brands of $8.2 in order to leave ACCO World with $10.0 of net cash prior to financing arrangements pursuant to the distribution agreement. | |
(e) | Represents the issuance of the notes and estimated borrowings under our new senior secured credit facilities totaling $950.0, of which $18.0 of credit facility borrowings is scheduled to be repaid within the first 12 months after the completion of the merger and is reflected as the current portion of long-term debt in the pro forma balance sheet. The following table describes the estimated notes outstanding and borrowings under our new senior secured credit facilities of the combined company immediately following the merger on a pro forma basis as of June 2005. |
Pro Forma Amount | ||||||
Outstanding as of | ||||||
June 2005 | ||||||
(Dollars in millions) | ||||||
Bank debt: | ||||||
Revolving Credit Facilities — 5 Years(1) | $ | 0.0 | ||||
Non-U.S. Term Loan Facilities — 5 Years | 200.0 | |||||
U.S. Term Loan Facility — 7 Years | 400.0 | |||||
Total bank debt | 600.0 | |||||
Notes — 10 yr fixed | 350.0 | |||||
Total | $ | 950.0 | ||||
(1) | $150 commitment, of which $132.0 would be available for additional borrowings (after giving effect to $18.0 of outstanding letters of credit as of June 2005, on a pro forma basis). |
(f) | Reflects an adjustment to record the estimated fair market value of work-in-process and finished goods inventory, less the estimated additional costs required to complete work-in-process inventory and to sell or dispose of all inventories acquired at the date of merger. The asset is expected to be amortized over one average inventory turn (approximately three months). | |
(g) | Represents the following adjustments to deferred tax assets: recognition of a $1.9 current deferred tax asset related to the elimination of existing GBC prepaid debt issuance costs, recognition of a $1.2 deferred tax asset related to severance payable to the GBC CEO, and elimination of the existing GBC non-current deferred tax liability (netted in assets) of $6.1 related to intangible asset amortization. These were partly offset by a $5.9 elimination of GBC deferred tax assets which will no longer be realized due to GBC’s deconsolidation from their majority shareholder, Lane Industries (the offset will be a reduction of paid in capital). | |
(h) | Reflects an adjustment to record property, plant and equipment at their estimated fair values. This asset is expected to be amortized over a 10-year weighted average useful life. |
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(i) | The calculation of estimated goodwill is equal to the consideration given in determining the purchase price, offset by the estimated fair value of net assets acquired, net of related taxes, as described in the following table. |
(Dollars in millions) | |||||
Calculation of Goodwill: | |||||
Consideration given for the GBC business (see note “p”) | $ | 411.8 | |||
Plus fair value of liabilities assumed: | |||||
Accounts payable and accrued liabilities | 102.3 | ||||
Debt | 299.3 | ||||
Other liabilities | 141.9 | ||||
Fair value of stock options outstanding | 34.5 | (1) | |||
Total Consideration, plus liabilities and stock options | 989.8 | ||||
Less allocation to assets acquired: | |||||
Accounts receivable | 140.3 | ||||
Inventory | 111.7 | ||||
Fixed assets | 89.5 | ||||
Identifiable intangible assets | 137.5 | ||||
Other assets | 79.3 | ||||
Unearned compensation | 5.1 | ||||
563.4 | |||||
Calculated Goodwill | $ | 426.4 | |||
(1) | The calculation of consideration given for the GBC business includes an assignment of estimated fair value of GBC stock options outstanding of $34.5, which is required as a result of the excess of fair value price per share over average exercisable price per share. |
(j) | Represents the elimination of GBC’s existing goodwill and purchased identifiable intangibles (already incorporated into the fair value assigned in note “k” below). | |
(k) | Reflects an adjustment to record purchased identifiable intangibles at their estimated fair values (e.g. trademarks, developed technology and customer relationships). The developed technology and customer relationship assets are expected to be amortized over a 15 year average useful life. | |
(l) | Represents the liability to be recognized at date of merger for severance to be paid to the GBC CEO shortly after the merger/close date. | |
(m) | Represents transaction related costs of $19.3 (including legal, audit, consulting and other service costs) which would have been incurred and capitalized as a result of the merger. | |
(n) | Represents the $8.5 elimination of unrecognized actuarial losses and prior service costs in order to recognize the pension and post-retirement liabilities at fair value (as of December 31, 2004 valuation), and an additional $2.3 liability related to pension benefits which will vest upon the termination of the GBC CEO. | |
(o) | Reflects the deferred tax liability adjustment of $63.1 resulting from the recognition of asset revaluations (inventory and property, plant & equipment) and purchased identifiable intangibles. |
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(p) | The calculation of consideration given for the GBC business is described in the following table. |
(Dollars in millions) | |||||
Calculated consideration for the GBC business: | |||||
Value of pre-merger GBC shares exchanged(1) | 392.5 | ||||
Fair value of GBC stock options outstanding(2) | 34.5 | ||||
Consideration for the GBC business, before costs to acquire | $ | 427.0 | |||
Estimated costs to acquire the GBC business(3) | 19.3 | ||||
Total Consideration for the GBC business | $ | 446.3 | |||
(1) | Number of shares of ACCO Brands common stock issued to GBC shareholders of 17,063,835 multiplied by the closing price of GBC stock of $23.00 on the date immediately prior to the merger. | |
(2) | The calculation of consideration given for the GBC business includes an assignment of fair value of GBC stock options outstanding of $34.5, which is required as a result of the excess of fair value price per share over average exercisable price per share. | |
(3) | Represents M&A advisory, legal, valuation and other capitalizable transaction service fees. |
(q) | Reflects the elimination of GBC’s historical common stock, paid in capital, retained earnings (deficit) and other comprehensive income. | |
(r) | Included in the recognition of fair value for GBC stock options outstanding, is $5.1 which represents the fair value of unearned compensation for stock options which will not vest immediately upon change of control (at the merger date), and which will be amortized based on the remaining vesting period. |
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Pro Forma | ||||||||||||||||||
ACCO | GBC | Pro Forma | Combined | |||||||||||||||
Brands | Fiscal | Adjustments | Fiscal | |||||||||||||||
Fiscal Year | Year | Fiscal Year | Year | |||||||||||||||
(Dollars in millions, except per-share amounts) | ||||||||||||||||||
Net Sales | $ | 1,175.7 | $ | 712.3 | $ | 1,888.0 | ||||||||||||
Costs and Expenses: | ||||||||||||||||||
Cost of products sold | 714.3 | 434.9 | $ | 0.7 | (s) | 1,149.9 | ||||||||||||
Selling, general and administrative | 347.8 | 225.9 | 1.7 | (t) | 575.9 | |||||||||||||
0.5 | (s) | |||||||||||||||||
Amortization of Identifiable Intangibles | 1.3 | 0.8 | 3.2 | (u) | 5.3 | |||||||||||||
Restructuring Charges | 19.4 | 0.9 | 20.3 | |||||||||||||||
Interest Expense, net | 8.5 | 25.9 | (34.4 | )(v) | 65.1 | |||||||||||||
3.9 | (w) | |||||||||||||||||
61.2 | (x) | |||||||||||||||||
Earnings from joint ventures | (0.6 | ) | (0.4 | ) | (1.0 | ) | ||||||||||||
Other (income)/expense, net | (4.6 | ) | 0.4 | (4.2 | ) | |||||||||||||
Income/(Loss) before income tax expense | 89.6 | 23.9 | (36.8 | ) | 76.7 | |||||||||||||
Income Tax expense/(benefit) | 21.1 | 9.1 | (13.6 | )(y) | 16.6 | |||||||||||||
Net Income/(Loss) | $ | 68.5 | $ | 14.8 | $ | (23.2 | ) | $ | 60.1 | |||||||||
Pro Forma Net Income/(Loss) per common share: | ||||||||||||||||||
Basic Shares Outstanding | 35.0 | 16.2 | 51.2 | |||||||||||||||
Diluted Shares Outstanding | 35.4 | 16.8 | 0.5 | (z) | 52.7 | |||||||||||||
Basic Net Income per common share | $ | 1.17 | ||||||||||||||||
Diluted Net Income per common share | $ | 1.14 | ||||||||||||||||
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ACCO | Pro Forma | Pro Forma | |||||||||||||||
Brands | GBC | Adjustments | Combined | ||||||||||||||
Six Month | Six Month | Six Month | Six Month | ||||||||||||||
Interim | Interim | Interim | Interim | ||||||||||||||
(Dollars in millions, except per-share amounts) | |||||||||||||||||
Net Sales | $ | 551.9 | $ | 367.1 | $ | 919.0 | |||||||||||
Costs and Expenses: | |||||||||||||||||
Cost of products sold | 337.2 | 227.5 | $ | 0.4 | (s) | 565.1 | |||||||||||
Selling, general and administrative | 166.0 | 123.3 | 0.8 | (t) | 290.4 | ||||||||||||
0.3 | (s) | ||||||||||||||||
Amortization of Identifiable Intangibles | 1.0 | 0.3 | 1.6 | (u) | 2.9 | ||||||||||||
Restructuring Charges | 1.3 | 1.3 | |||||||||||||||
Interest Expense, net | 4.1 | 13.6 | (17.7 | )(v) | 32.6 | ||||||||||||
2.0 | (w) | ||||||||||||||||
30.6 | (x) | ||||||||||||||||
Earnings from joint ventures | (1.0 | ) | (1.0 | ) | |||||||||||||
Other (income)/expense, net | 1.6 | 1.1 | 2.7 | ||||||||||||||
Income/(loss) before income tax expense | 42.0 | 1.0 | (18.0 | ) | 25.0 | ||||||||||||
Income Tax expense/(benefit) | 17.0 | 2.9 | (6.7 | )(y) | 13.2 | ||||||||||||
Income/(loss) before change in accounting principle | 25.0 | (1.9 | ) | (11.3 | ) | 11.8 | |||||||||||
Pro Forma Net Income/(loss) per common share: | |||||||||||||||||
Basic Shares Outstanding | 35.0 | 16.4 | 51.4 | ||||||||||||||
Diluted Shares Outstanding | 35.4 | 16.4 | 0.9 | (z) | 52.7 | ||||||||||||
Basic Income/(loss) before change in accounting principle per common share | $ | 0.23 | |||||||||||||||
Diluted Income/(loss) before change in accounting principle per common share | $ | 0.22 | |||||||||||||||
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(s) | Represents the incremental depreciation expense recorded to reflect the fixed asset step-up to fair value (ten-year weighted average useful life). Assumes a depreciation allocation of 58% to cost of goods sold and 42% to selling, general and administrative expense based on the plans of GBC. | |
(t) | Represents amortization of unearned compensation related to stock options and restricted stock units (RSUs) which will not vest upon change of control (at the merger close date). The portion related to stock options of $3.5 is expected to be amortized over the remaining vesting period of four years. The portion related to RSUs of $1.6 is expected to be amortized over the remaining vesting period of two years. | |
(u) | Represents the amortization of fair value assigned to developed technology and customer relationships. (Assumes a 15-year useful life based on the estimated period of asset retention and related cash flows.) | |
(v) | Reflects reversal of interest expense and debt issuance amortization related to pre-existing debt for each of ACCO World and GBC. | |
(w) | Reflects annual amortization of capitalizable debt issuance costs of $3.9 related to the new debt of the combined company, as described in the following table. Estimated debt issuance costs are amortized over the life of the related debt. Estimated debt issuance costs, amortization period and cost per year are as follows: |
Amortization | |||||||||||||
Issuance | |||||||||||||
Fee | # Years | Per Year | |||||||||||
Revolving Credit Facilities | — | — | — | ||||||||||
U.S. Term Loan Facility — 7 Years | — | — | — | ||||||||||
Non-U.S. Term Loan Facilities — 5 Years | — | — | — | ||||||||||
Combined Loan Fees(1) | $ | 16.0 | 5.6 | (2) | $ | 2.9 | |||||||
Notes — 10 yr fixed | 9.9 | 10.0 | 1.0 | ||||||||||
Total | $ | 25.9 | $ | 3.9 | |||||||||
(1) | Fees related to the above facilities are not currently separable. | |
(2) | Weighted average number of years based on the weighted average life of Term Loan facilities and the Revolving Credit Facilities. |
(x) | Represents estimated annual interest expense recognized on the initial debt structure of the combined company, as calculated in the following table. Interest expense is based on the following estimated debt financing arrangements contemplated in connection with the spin-off of ACCO World and merger of ACCO World and GBC. |
Interest | ||||||||||||||
Debt Facility | Expense | |||||||||||||
Bank debt: | ||||||||||||||
Revolving Credit Facility — used(1) | $ | 0.0 | $ | 0.0 | ||||||||||
Revolving Credit Facility — unused(1) | 150.0 | 0.8 | ||||||||||||
U.S. Term Loan Facility — 7 years(2) | 400.0 | 22.6 | ||||||||||||
Pound Sterling Term Loan facility — 5 years(2) | 115.0 | 7.6 | ||||||||||||
Euro dollar Term Loan Facility — 5 years(2) | 85.0 | 3.5 | ||||||||||||
Total bank debt (used) | 600.0 | 33.7 | ||||||||||||
Notes — 10 yr fixed | 350.0 | 26.7 | ||||||||||||
Sub-total Bank and Bond Debt used | 950.0 | 6.36% | (3) | 60.4 | ||||||||||
Total Credit Facilities and Bond Debt available | $ | 1,100.0 | $ | 61.2 | ||||||||||
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Estimated U.S. LIBOR = 3.89%, estimated GBP LIBOR = 4.6%, estimated EURIBOR = 2.14% |
(1) | Floating interest rate based on LIBOR plus applicable margin; a 0.5% interest rate is applied to any unused facility as an administrative fee. | |
(2) | Floating interest rate based on LIBOR (or EURIBOR) plus applicable margin. | |
(3) | Estimated weighted average interest rate on use of the facilities (excluding the revolving credit facility fee as described above). |
A change in interest rate of one-eighth of one percent would change interest expense as follows: |
Revolving Credit Facility — used | $ | 0.0 | ||
Revolving Credit Facility — unused | 0.0 | |||
U.S. Term Loan Facility | 0.5 | |||
Pound Sterling Term Loan facility | 0.1 | |||
Euro dollar Term Loan Facility | 0.1 | |||
Total | $ | 0.7 | ||
(y) | Assumes estimated average effective income tax rate of 37% on the sum of pre-tax adjustments of the combined company. | |
(z) | Incremental dilution resulting from GBC stock options. Because the purchase price at fair value exceeds the average GBC exercisable stock price at the end of the period, additional GBC options are considered dilutive (also, for the six months ended June 30, 2005, GBC recorded a net loss and as a result options are excluded from the calculation of diluted shares outstanding for the GBC business only). |
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Six Months | |||||||||||||||||||||||||||||
Fiscal Year Ended December 27, | Ended June 25, | ||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2004 | 2005 | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||
Net sales(1) | $ | 1,354.2 | $ | 1,176.3 | $ | 1,105.4 | $ | 1,101.9 | $ | 1,175.7 | $ | 539.6 | $ | 551.9 | |||||||||||||||
Cost of products sold | 919.2 | 800.9 | 698.9 | 686.8 | 714.3 | 340.4 | 337.2 | ||||||||||||||||||||||
Advertising, selling, general and administrative expense | 384.8 | 354.2 | 351.5 | 337.8 | 347.8 | 170.4 | 166.0 | ||||||||||||||||||||||
Amortization of intangibles | 22.8 | 6.4 | 2.1 | 1.7 | 1.3 | 0.6 | 1.0 | ||||||||||||||||||||||
Write-down of intangibles(2) | 498.0 | 64.4 | — | 12.0 | — | — | — | ||||||||||||||||||||||
Restructuring charges | 10.1 | 28.0 | 34.3 | 17.3 | 19.4 | 19.4 | — | ||||||||||||||||||||||
Interest expense | 36.4 | 21.4 | 12.3 | 8.0 | 8.5 | 3.9 | 4.1 | ||||||||||||||||||||||
Other (income)/expense, net | 1.5 | 0.7 | 0.8 | (1.6 | ) | (5.2 | ) | (3.5 | ) | 1.6 | |||||||||||||||||||
Income/(loss) before income taxes(3) | (518.6 | ) | (99.7 | ) | 5.5 | 39.9 | 89.6 | 8.4 | 42.0 | ||||||||||||||||||||
Income tax expense/(benefit) | (10.6 | ) | (15.9 | ) | 1.3 | 13.2 | 21.1 | 6.3 | 17.0 | ||||||||||||||||||||
Net income/(loss) before cumulative effect of accounting change(4) | $ | (508.0 | ) | $ | (83.8 | ) | $ | 4.2 | $ | 26.7 | $ | 68.5 | $ | 2.1 | $ | 25.0 | |||||||||||||
Change in accounting principle | — | — | — | — | — | — | 1.6 | ||||||||||||||||||||||
Net income/(loss) | $ | (508.0 | ) | $ | (83.8 | ) | $ | 4.2 | $ | 26.7 | $ | 68.5 | $ | 2.1 | $ | 26.6 | |||||||||||||
Balance sheet data (at period end): | |||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 30.3 | $ | 24.9 | $ | 43.3 | $ | 60.5 | $ | 79.8 | $ | 78.7 | $ | 18.2 | |||||||||||||||
Working capital(5) | 422.0 | 284.1 | 205.7 | 234.4 | 271.7 | 245.6 | 261.3 | ||||||||||||||||||||||
Property, plant and equipment, net | 259.4 | 233.8 | 195.3 | 170.0 | 157.7 | 151.4 | 154.7 | ||||||||||||||||||||||
Total assets | 1,171.2 | 930.8 | 860.5 | 886.7 | 984.5 | 878.7 | 877.5 | ||||||||||||||||||||||
Total debt(6) | 5.7 | 4.7 | 4.7 | 2.8 | 0.1 | 3.0 | 0.9 | ||||||||||||||||||||||
Total stockholders’ equity(7) | 890.2 | 672.1 | 528.8 | 533.1 | 616.8 | 524.0 | 596.7 |
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Six Months | |||||||||||||||||||||||||||||
Fiscal Year Ended December 27, | Ended June 25, | ||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2004 | 2005 | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||
Depreciation expense | $ | 43.3 | $ | 40.8 | $ | 37.0 | $ | 33.3 | $ | 28.2 | $ | 14.7 | $ | 12.6 | |||||||||||||||
Capital expenditures | 30.4 | 19.7 | 22.0 | 16.3 | 27.6 | 11.7 | 12.8 | ||||||||||||||||||||||
Cash flow from operating activities, (use)/source | 35.5 | 148.6 | 161.9 | 67.2 | 63.7 | 29.4 | (7.5 | ) | |||||||||||||||||||||
Cash flow from investing activities, (use)/source | (27.8 | ) | (18.6 | ) | (17.2 | ) | (1.7 | ) | (6.1 | ) | 4.4 | (13.0 | ) | ||||||||||||||||
Cash flow from financing activities, (use)/source | (9.8 | ) | (135.4 | ) | (128.7 | ) | (56.8 | ) | (45.3 | ) | (17.7 | ) | (38.2 | ) | |||||||||||||||
Ratio of earnings to fixed charges(8) | — | x | — | x | 1.3 | x | 3.6 | x | 6.4 | x | 2.1 | x | 6.5 | x | |||||||||||||||
Basic earnings (loss) per common share: | |||||||||||||||||||||||||||||
Income (loss) before change in accounting principle | $ | (14.51 | ) | $ | (2.39 | ) | $ | 0.12 | $ | 0.76 | $ | 1.96 | $ | 0.06 | $ | 0.71 | |||||||||||||
Change in accounting principle | — | — | — | — | — | — | 0.05 | ||||||||||||||||||||||
Net income (loss) | (14.51 | ) | (2.39 | ) | 0.12 | 0.76 | 1.96 | 0.06 | 0.76 |
(1) | The net sales decline from 2000 to 2001 of $177.9 was due to strategic decisions to minimize reinvestment in declining product categories (including Day-Timers, labels, filing and business essentials), strategic product category exits (including Kensington imaging, joysticks and media), the adverse impact of foreign exchange translation ($27.1), and economic slowdown after the September 11th tragedy in the U.S. |
(2) | In 2000, ACCO Brands recorded a write-down of goodwill of $498.0 due to a significant shortfall in earnings compared to plans and to prior year, as well as softening conditions in the industry and strategic reviews concerning the direction of the business. In 2001, ACCO Brands recorded a write-off of certain identifiable intangible assets of $64.4 due to diminished fair values resulting from business repositioning and restructuring activities. |
(3) | Income before income taxes and net income were impacted by restructuring-related expenses included in cost of products sold and advertising, selling, general and administrative expenses of $29.8, $13.9, $20.2, $22.2, $17.4 and $2.9 for the fiscal year ended December 27, 2001, 2002, 2003, 2004 and the six months ended June 25, 2004 and 2005, respectively. |
(4) | Before effect of accounting change of $1.6 in June 2005 related to the elimination of a one month lag in reporting by two foreign subsidiaries to align their reporting periods with the Company’s fiscal calendar. |
(5) | Working capital is defined as total current assets less total current liabilities. |
(6) | Total debt refers only to the portion financed by third parties and does not include any portion financed through banking relationships or lines of credit secured by ACCO Brands’ then-parent company, Fortune Brands. Interest expenses associated with Fortune Brands’ debt have been allocated to ACCO Brands for the periods presented. |
(7) | If the stockholders’ equity at June 25, 2005 included the declaration of the $625.0 dividend payable to ACCO Brands stockholders prior to the spin-off, total stockholders’ equity would be reduced to $(28.3) on a pro forma basis. |
(8) | For purposes of this computation, “earnings” consist of pre-tax income from continuing operations (excluding equity in earnings of affiliates) plus fixed charges; where “fixed charges” consist of interest expense on all indebtedness, plus capitalized interest, plus amortization of deferred costs of financing and the interest component of lease rental expense. For the years ended December 27, 2000 and 2001, the earnings short-fall required to cover fixed charges was $518.8 and $99.7, respectively. |
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Six Months | |||||||||||||||||||||||||||||
Fiscal Year Ended December 31, | Ended June 30, | ||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2004 | 2005 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||
Net sales | $ | 824.6 | $ | 711.9 | $ | 701.7 | $ | 697.9 | $ | 712.3 | $ | 345.3 | $ | 367.1 | |||||||||||||||
Product cost of sales, including development and engineering | 499.7 | 431.8 | 422.5 | 418.7 | 434.9 | 212.4 | 227.5 | ||||||||||||||||||||||
Inventory rationalization and write-down charges | — | 8.8 | 1.0 | — | — | — | — | ||||||||||||||||||||||
Selling, service and administrative | 256.1 | 232.5 | 228.1 | 224.6 | 225.6 | 112.6 | 119.4 | ||||||||||||||||||||||
Earnings from joint ventures | (0.8 | ) | (0.6 | ) | (0.2 | ) | 0.0 | (1.3 | ) | (0.3 | ) | (1.0 | ) | ||||||||||||||||
Interest expense | 45.5 | 37.2 | 39.9 | 34.4 | 25.9 | 13.4 | 13.6 | ||||||||||||||||||||||
Restructuring charges | 0.8 | 7.3 | 8.0 | 11.1 | 0.9 | 0.8 | 1.3 | ||||||||||||||||||||||
Other charges | 3.6 | 6.2 | 1.1 | 4.7 | 1.7 | — | 4.2 | ||||||||||||||||||||||
Other expense, net(1) | 12.9 | 13.0 | 0.2 | 0.2 | 0.7 | 0.9 | 1.1 | ||||||||||||||||||||||
Income before taxes and cumulative effect of accounting change | 6.8 | (24.3 | ) | 1.1 | 4.4 | 23.9 | 5.5 | 1.0 | |||||||||||||||||||||
Income tax expense/(benefit) | 4.3 | (4.8 | ) | 2.0 | 7.6 | 9.1 | 2.5 | 2.9 | |||||||||||||||||||||
Net income (loss) before cumulative effect of accounting change | 2.4 | (19.5 | ) | (1.0 | ) | (3.3 | ) | 14.8 | 3.0 | (1.9 | ) | ||||||||||||||||||
Cumulative effect of accounting change, net of taxes(1) | — | — | (79.0 | ) | — | — | — | — | |||||||||||||||||||||
Net income (loss) after cumulative effect of accounting change | $ | 2.4 | $ | (19.5 | ) | $ | (80.0 | ) | $ | (3.3 | ) | $ | 14.8 | $ | 3.0 | $ | (1.9 | ) | |||||||||||
Balance sheet data (at period end): | |||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 9.1 | $ | 59.9 | $ | 18.3 | $ | 9.6 | $ | 6.3 | $ | 3.9 | $ | 11.9 | |||||||||||||||
Working capital(2) | 159.3 | 164.3 | 101.7 | 99.8 | 98.5 | 124.3 | 111.2 | ||||||||||||||||||||||
Property, plant and equipment, net | 135.1 | 124.6 | 106.9 | 95.0 | 84.7 | 87.9 | 75.0 | ||||||||||||||||||||||
Total assets | 761.3 | 719.6 | 557.4 | 530.3 | 540.5 | 537.8 | 540.5 | ||||||||||||||||||||||
Total debt (excludes interest) | 407.3 | 418.5 | 341.4 | 302.0 | 288.9 | 317.6 | 294.3 | ||||||||||||||||||||||
Total stockholders’ equity | 147.7 | 123.9 | 42.1 | 54.2 | 77.8 | 57.1 | 77.8 |
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Six Months | |||||||||||||||||||||||||||||
Fiscal Year Ended December 31, | Ended June 30, | ||||||||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | 2004 | 2005 | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||
Depreciation and amortization(3) | $ | 33.5 | $ | 34.1 | $ | 24.4 | $ | 21.8 | $ | 19.1 | $ | 11.0 | $ | 10.1 | |||||||||||||||
Capital expenditures | 19.6 | 14.9 | 9.0 | 8.5 | 7.3 | 3.6 | 3.8 | ||||||||||||||||||||||
Cash flow from operating activities, (use)/source | 74.7 | 51.2 | 46.5 | 51.6 | 22.7 | (18.7 | ) | (3.8 | ) | ||||||||||||||||||||
Cash flow from investing activities, (use)/source | (17.7 | ) | (14.5 | ) | (7.7 | ) | (10.5 | ) | (8.2 | ) | (4.7 | ) | (1.0 | ) | |||||||||||||||
Cash flow from financing activities, (use)/source | (61.1 | ) | 12.0 | (78.9 | ) | (41.4 | ) | (13.1 | ) | 17.0 | 9.1 |
(1) | In 2002, GBC adopted SFAS No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142). The cumulative effect of accounting change related to the adoption of SFAS No. 142 was $79.0 million, net of taxes. Goodwill amortization of $9.7 million in both 2000 and 2001 was included in other expense. |
(2) | Working capital is defined as total current assets less total current liabilities. |
(3) | Depreciation and amortization does not include patent amortization, display amortization and amortization of deferred debt cost. |
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Table of Contents
Selected Currency Trends | |
YTD Averages | |
U.S. Dollars/ Local Currency Unit | |
(2002 = 100) |
Currency | 2002 | 2003 | 2004 | |||||||||
Pound Sterling | 100 | 109 | 122 | |||||||||
Euro | 100 | 119 | 132 | |||||||||
Australian Dollar | 100 | 118 | 136 | |||||||||
Canadian Dollar | 100 | 112 | 121 | |||||||||
Mexican Peso | 100 | 90 | 86 |
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45
Table of Contents
Revenue Recognition |
Allowances for Doubtful Accounts and Sales Returns |
46
Table of Contents
Inventories |
Property, Plant and Equipment |
Buildings | 40 to 50 years | |||
Leasehold improvements | 1 to 10 years | |||
Machinery, equipment and furniture | 3 to 10 years | |||
Computer hardware and software | 3 to 7 years | |||
Automobiles | 2 to 4 years |
Long-lived Assets |
Intangibles |
47
Table of Contents
Employee Benefit Plans |
Customer Program Costs |
48
Table of Contents
Net Sales |
Restructuring |
49
Table of Contents
Fiscal Year 2004 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(Dollars in millions) | |||||||||||||||||
Reported Results | $ | 1,175.7 | $ | 461.4 | $ | 347.8 | $ | 92.9 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring costs | — | — | — | 19.4 | |||||||||||||
Restructuring-related costs | — | 8.9 | 13.3 | 22.2 |
Fiscal Year 2003 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(Dollars in millions) | |||||||||||||||||
Reported Results | $ | 1,101.9 | $ | 415.1 | $ | 337.8 | $ | 46.3 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring costs | — | — | — | 17.3 | |||||||||||||
Restructuring-related costs | — | 10.9 | 9.3 | 20.2 |
Gross Profit |
SG&A |
Operating Income |
Interest, Other Expense/(Income) and Income Taxes |
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Table of Contents
Net Income |
ACCO U.S. |
ACCO Europe |
Rest of the World |
Day-Timers |
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Net Sales |
Restructuring |
Fiscal Year 2003 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(Dollars in millions) | |||||||||||||||||
Reported Results | $ | 1,101.9 | $ | 415.1 | $ | 337.8 | $ | 46.3 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring costs | — | — | — | 17.3 | |||||||||||||
Restructuring-related costs | — | 10.9 | 9.3 | 20.2 |
Fiscal Year 2002 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(Dollars in millions) | |||||||||||||||||
Reported Results | $ | 1,105.4 | $ | 406.5 | $ | 351.5 | $ | 18.6 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring costs | — | — | — | 34.3 | |||||||||||||
Restructuring-related costs | — | 5.3 | 8.6 | 13.9 |
Gross Profit |
SG&A |
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Table of Contents
Operating Income |
Interest, Other Expense/(Income) and Income Taxes |
Net Income |
ACCO U.S. |
ACCO Europe |
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Table of Contents
Rest of the World |
Day-Timers |
Net Sales |
Restructuring |
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Table of Contents
Three Months Ended June 25, 2005 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(In millions of dollars) | |||||||||||||||||
Reported results | $ | 279.5 | $ | 108.9 | $ | 84.0 | $ | 24.5 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring-related costs | — | — | $ | 2.9 | $ | 2.9 |
Three Months Ended June 25, 2004 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(In millions of dollars) | |||||||||||||||||
Reported results | $ | 268.7 | $ | 98.1 | $ | 85.8 | $ | (4.8 | ) | ||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring costs | — | — | — | $ | 16.8 | ||||||||||||
Restructuring-related costs | — | $ | 7.0 | $ | 5.8 | $ | 12.8 |
Gross Profit |
SG&A (Advertising, selling, general and administrative expenses) |
Operating Income |
Interest, Other Expense/(Income) and Income Taxes |
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Table of Contents
Net Income |
ACCO U.S. |
ACCO Europe |
Trading Companies |
Day-Timers |
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Table of Contents
Net Sales |
Restructuring |
Six Months Ended June 25, 2005 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(In millions of dollars) | |||||||||||||||||
Reported results | $ | 551.9 | $ | 214.7 | $ | 166.0 | $ | 47.7 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring-related costs | — | — | $ | 2.9 | $ | 2.9 |
Six Months Ended June 25, 2004 | |||||||||||||||||
Gross | Operating | ||||||||||||||||
Net Sales | Profit | SG&A | Income | ||||||||||||||
(In millions of dollars) | |||||||||||||||||
Reported results | $ | 539.6 | $ | 199.2 | $ | 170.4 | $ | 8.8 | |||||||||
Restructuring and restructuring-related charges included in the above numbers | |||||||||||||||||
Restructuring costs | — | — | — | $ | 19.4 | ||||||||||||
Restructuring-related costs | — | $ | 8.8 | $ | 8.6 | $ | 17.4 |
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Table of Contents
Gross Profit |
SG&A (Advertising, selling, general and administrative expenses) |
Operating Income |
Interest, Other Expense/(Income) and Income Taxes |
Net Income |
ACCO U.S. |
58
Table of Contents
ACCO Europe |
Trading Companies |
Day-Timers |
Cash Flow from Operating Activities |
59
Table of Contents
Cash Flow from Investing Activities |
Cash Flow from Financing Activities |
Adequacy of Liquidity Sources |
Foreign Exchange Risk Management |
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Table of Contents
Average | Fair | |||||||||||||||
Exchange | Notional | Market | Gain | |||||||||||||
Forward Contracts as of June 25, 2005 | Rate | Amount | Value | (Loss) | ||||||||||||
Currency Sold | ||||||||||||||||
Sell Euro/ Buy USD | 1.28 | $ | 4.2 | $ | 4.3 | $ | 0.1 | |||||||||
Sell GBP/ Buy USD | 1.85 | 21.0 | 21.5 | 0.5 | ||||||||||||
Sell Euro/ Buy GBP | 0.70 | 1.7 | 1.8 | 0.1 | ||||||||||||
Other | 0.8 | 0.8 | ||||||||||||||
Total | $ | 27.7 | $ | 28.4 | $ | 0.7 | ||||||||||
Interest Rate Risk Management |
Commercial and Consumer Group |
Products | Customers/Channels | |
Binding, punching and laminating equipment | Indirect (approximately 70%) | |
Visual communications products | Direct (approximately 30%) | |
Document shredders | ||
Custom binders and folders | ||
Desktop accessories | ||
Related maintenance and repair services |
Industrial and Print Finishing Group |
Products | Customers/Channels | |
Thermal and pressure sensitive-laminating films | Primarily direct | |
Mid-range and commercial high-speed laminators | ||
Large-format digital print laminators |
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Europe Group |
Products | Customers/Channels | |
The Europe Group primarily distributes the CCG product range to customers in Europe | Indirect (approximately 80%) |
Sales |
Twelve Months Ended | |||||||||
December 31, | |||||||||
2004 | 2003 | ||||||||
Commercial and Consumer Group | $ | 447,011 | $ | 460,243 | |||||
Industrial and Print Finishing Group | 157,447 | 137,064 | |||||||
Europe Group | 107,860 | 100,601 | |||||||
Net Sales | $ | 712,318 | $ | 697,908 | |||||
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Gross Margins, Costs and Expenses |
Earnings from Joint Ventures |
Segment Operating Income |
Segment | |||||||||
Operating Income | |||||||||
Twelve Months Ended | |||||||||
December 31, | |||||||||
2004 | 2003 | ||||||||
Commercial and Consumer Group | $ | 48,142 | $ | 59,211 | |||||
Industrial and Print Finishing Group | 21,563 | 17,965 | |||||||
Europe Group | 6,880 | 6,085 | |||||||
Unallocated corporate items | (23,539 | ) | (28,548 | ) | |||||
Total | $ | 53,046 | $ | 54,713 | |||||
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Restructuring and Other |
Asset | ||||||||||||||||
Impairments | ||||||||||||||||
and Other | ||||||||||||||||
Project | Severance | Exist Costs | Lease Cost | Total | ||||||||||||
Relocating manufacturing from Booneville to Nuevo Laredo | $ | 2.6 | $ | 4.5 | — | $ | 7.1 | |||||||||
Plant closure — Amelia, Virginia | 0.2 | — | — | 0.2 | ||||||||||||
Reduction-in-force programs | 2.5 | — | — | 2.4 | ||||||||||||
Sublease manufacturing facility | — | — | 1.4 | 1.4 | ||||||||||||
$ | 5.2 | $ | 4.5 | $ | 1.4 | $ | 11.1 | |||||||||
Interest Expense |
Other (Income) Expense |
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Table of Contents
Income Taxes |
Net Income (Loss) |
Sales |
Twelve Months Ended | |||||||||
December 31, | |||||||||
2003 | 2002 | ||||||||
Commercial and Consumer Group | $ | 460,243 | $ | 467,543 | |||||
Industrial and Print Finishing Group | 137,064 | 138,299 | |||||||
Europe Group | 100,601 | 95,886 | |||||||
Net Sales | $ | 697,908 | $ | 701,728 | |||||
Gross Margins, Costs and Expenses |
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Table of Contents
Earnings from Joint Ventures |
Segment Operating Income |
Segment | |||||||||
Operating Income | |||||||||
Twelve Months Ended | |||||||||
December 31, | |||||||||
2003 | 2002 | ||||||||
Commercial and Consumer Group | $ | 59,211 | $ | 62,261 | |||||
Industrial and Print Finishing Group | 17,965 | 19,418 | |||||||
Europe Group | 6,085 | 1,359 | |||||||
Unallocated corporate items | (28,548 | ) | (31,691 | ) | |||||
Total | $ | 54,713 | $ | 51,347 | |||||
Inventory Rationalization |
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Restructuring and Other |
Asset | ||||||||||||||||
Impairments | ||||||||||||||||
and Other | ||||||||||||||||
Project | Severance | Exist Costs | Lease Cost | Total | ||||||||||||
Relocating manufacturing from Booneville to Nuevo Laredo | $ | 2.6 | $ | 4.5 | $ | — | $ | 7.1 | ||||||||
Plant closure — Amelia, Virginia | 0.2 | — | — | 0.2 | ||||||||||||
Reduction-in-force programs | 2.5 | — | — | 2.4 | ||||||||||||
Sublease manufacturing facility | — | — | 1.4 | 1.4 | ||||||||||||
$ | 5.2 | $ | 4.5 | $ | 1.4 | $ | 11.1 | |||||||||
Asset | ||||||||||||||||
Impairments | ||||||||||||||||
and Other | ||||||||||||||||
Project | Severance | Exist Costs | Lease Cost | Total | ||||||||||||
Buffalo Grove facility closure | $ | 0.7 | $ | 1.6 | $ | 0.8 | $ | 3.1 | ||||||||
Downsizing of Amelia facility | 0.8 | 0.3 | — | 1.1 | ||||||||||||
Commercial and Consumer Group | 1.6 | 0.2 | — | 1.8 | ||||||||||||
Reduction in support functions | 2.0 | — | — | 2.0 | ||||||||||||
$ | 5.1 | $ | 2.1 | $ | 0.8 | $ | 8.0 | |||||||||
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Interest Expense |
Other (Income) Expense |
Income Taxes |
Cumulative Effect of Accounting Change |
Net Loss |
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Sales |
Three Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
Commercial and Consumer Group | $ | 117,511 | $ | 108,897 | ||||
Industrial and Print Finishing Group | 42,067 | 39,107 | ||||||
Europe Group | 27,322 | 26,371 | ||||||
Net Sales | $ | 186,900 | $ | 174,375 | ||||
Gross Margins, Costs and Expenses |
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Segment Operating Income |
Segment | ||||||||
Operating Income | ||||||||
Three Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
Commercial and Consumer Group | $ | 11,647 | $ | 11,267 | ||||
Industrial and Print Finishing Group | 5,699 | 5,067 | ||||||
Europe Group | 2,099 | 1,444 | ||||||
Unallocated corporate items | (6,303 | ) | (6,053 | ) | ||||
Total | $ | 13,142 | $ | 11,725 | ||||
Restructuring and Other |
Interest Expense |
Income Taxes |
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Net Income (Loss) |
Sales |
Six Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
Commercial and Consumer Group | $ | 225,787 | $ | 214,325 | ||||
Industrial and Print Finishing Group | 84,065 | 76,910 | ||||||
Europe Group | 57,200 | 54,071 | ||||||
Net Sales | $ | 367,052 | $ | 345,306 | ||||
Gross Margins, Costs and Expenses |
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Segment Operating Income |
Segment | ||||||||
Operating Income | ||||||||
Six Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
Commercial and Consumer Group | $ | 20,487 | $ | 19,919 | ||||
Industrial and Print Finishing Group | 11,455 | 9,925 | ||||||
Europe Group | 3,904 | 3,594 | ||||||
Unallocated corporate items | (14,693 | ) | (12,775 | ) | ||||
Total | $ | 21,153 | $ | 20,663 | ||||
Restructuring and Other |
Interest Expense |
Income Taxes |
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Net Income (Loss) |
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Office Products |
• | Staplers and staples | |
• | Shredders | |
• | Trimmers |
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• | Punches | |
• | Calculators |
• | Binding and laminating equipment | |
• | Binding and laminating supplies | |
• | Report covers | |
• | Indexes | |
• | Sheet protectors |
• | Dry-erase boards | |
• | Dry-erase markers | |
• | Easels | |
• | Bulletin boards | |
• | Overhead projectors | |
• | Transparencies | |
• | Laser pointers | |
• | Screens |
• | Ring binders | |
• | Data binders | |
• | Storage boxes | |
• | Labels | |
• | Hanging file folders | |
• | Clips and fasteners |
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• | Letter trays | |
• | Accounting supplies |
Commercial Products |
Computer Products |
• | Security locks for laptops | |
• | Power adapters for laptops | |
• | Input devices | |
• | Computer cleaning products | |
• | Ergonomic devices | |
• | Carry cases |
Leading Market Positions and Brand Names |
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Low-Cost Operator with Industry-Leading Supply Chain |
Decentralized Business Model |
Diverse Revenue Base with Global Platform |
Strong Free Cash Flow Generation |
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Strong and Incentivized Management Team |
Realize Synergies from Business Combination |
Selectively Participate in Multiple Product Categories |
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Invest in Research, Marketing and Innovation |
Utilize a Combination of Manufacturing and Outsourcing |
Overview |
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Key Demand Drivers |
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Office Products |
Commercial Products |
Computer Products |
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Representative Customers in the | ||||
Channel | United States | Representative Customers in Europe | ||
Commercial contract stationers | Staples SCC, Office Depot BSD, Corporate Express (Buhrmann NV), OfficeMax (Boise) | Office Depot (Guilbert), Lyrco, Corporate Express (Buhrmann NV) | ||
Office products superstores | Staples, Office Depot, OfficeMax | Staples, Office Depot, Globus, Ryman | ||
Office products wholesalers | United Stationers, S.P. Richards | Spicers, Kingfield/ Heath | ||
Mass merchandisers, club stores and retailers | Wal-Mart, Sam’s Club, Target, Walgreens, Costco | Macro/ Metro, Auchan, Wal-Mart/ ASDA, Carrefour, Costco | ||
Mail order distributors | Quill (Staples), Viking (Office Depot) | Viking (Office Depot), Quill/ JPG (Staples) | ||
Computer products wholesalers | Ingram, Tech Data, Synnex, D&H | Ingram, GP Associates, IME, Tech Data, ADL | ||
Consumer electronics retailers | Best Buy, Comp USA, Circuit City | PC World, Dixons/ Elkjob, PC City, FNAC, Saturn | ||
Other indirect (independents, buying groups, etc.) | BPGI | BPGI, Soennecken | ||
Direct commercial | Kinko’s, Phoenix Color, Coral Graphics | Rotoplast, Wolff Trading, CG Graph |
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Product Category | Competitors in the United States | Competitors in Europe | ||
Office Products | Customers’ sourcing | Customers’ sourcing | ||
Workspace Tools | Stanley Bostich, Hunt, Accentra, Fellowes | LegaMaster, Rapid, Esselte, Schleicher, Fellowes, Intimus, Novus | ||
Document Communication | Esselte, Avery Dennison | Esselte, Hamelin, Herlitz, Fellowes | ||
Visual Communication | 3M, Rose Art, Board Dudes, Dalite | 3M, LegaMaster, Bisilque, Aubecq, Ghent | ||
Storage & Organization | Avery Dennison, Esselte, Cardinal, Fellowes, Smead | Esselte, Hamelin, Herlitz, Avery, Smead | ||
Commercial Products | ||||
Industrial Print and Film | Neschen, Transilwrap, Mactac, Flexcon, D&K, Bryce | Neschen, Deprosa, GMP, D&K | ||
Document Finishing | Spiral Binding, Southwest Plastics, PDI, Bryce, CP Borg | Renz, Attalus, HOP | ||
Day-Timers | Mead, Franklin Covey | Filofax, Franklin Covey | ||
Computer Products | ||||
Kensington | Belkin, Targus, Logitech, Microsoft, Fellowes | Belkin, Targus, Logitech, Microsoft, Fellowes |
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Location | Functional Use | Owned/Leased | |||
U.S. Properties: | |||||
Corona, California | Distribution/Manufacturing | Leased | |||
Ontario, California | Distribution/Manufacturing | Leased | |||
Atlanta, Georgia | Distribution/Manufacturing | Leased | |||
Addison, Illinois | Distribution/Manufacturing | Owned/Leased | |||
Hanover Park, Illinois | Distribution | Leased | |||
Lincolnshire, Illinois | Manufacturing | Leased | |||
Wheeling, Illinois | Manufacturing | Leased | |||
Hagerstown, Maryland | Manufacturing | Owned | |||
Booneville, Mississippi | Distribution/Manufacturing | Owned/Leased | |||
Ogdensburg, New York | Distribution/Manufacturing | Owned/Leased | |||
East Texas, Pennsylvania | Distribution/Manufacturing/Office | Owned | |||
Madison, Wisconsin | Manufacturing | Leased | |||
Pleasant Prairie, Wisconsin | Manufacturing | Leased | |||
Non-U.S. Properties: | |||||
Sydney, Australia | Distribution/Manufacturing/Office | Owned | |||
Brampton, Canada | Distribution/Manufacturing/Office | Leased | |||
Concord, Canada | Distribution | Leased | |||
Don Mills, Canada | Distribution/Manufacturing | Leased | |||
Tabor, Czech Republic | Distribution/Manufacturing | Owned | |||
Audenshaw, England | Distribution | Leased | |||
Basingstoke, England | Distribution | Leased | |||
Denton, England | Manufacturing | Owned | |||
Halesowen, England | Distribution | Owned | |||
Keswick, England | Manufacturing | Owned | |||
Peterborough, England | Manufacturing | Owned | |||
Dijon, France | Distribution | Leased | |||
Rudesberg, Germany | Distribution | Leased | |||
Dublin, Ireland | Distribution | Owned | |||
Dublin, Ireland | Manufacturing | Leased | |||
Tornaco, Italy | Distribution | Leased | |||
Turin, Italy | Distribution | Leased | |||
Asan, Korea | Manufacturing | Owned | |||
Lerma, Mexico | Manufacturing/Office | Owned | |||
Nogales, Mexico | Manufacturing | Owned | |||
Nuevo Laredo, Mexico | Manufacturing | Leased |
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Location | Functional Use | Owned/Leased | ||
Tlalnepantla, Mexico | Distribution | Leased | ||
Born, Netherlands | Distribution | Leased | ||
Kerkrade, Netherlands | Distribution/Manufacturing | Owned/Leased | ||
Wellington, New Zealand | Distribution/Office | Owned | ||
Arcos de Valdevez, Portugal | Manufacturing | Owned | ||
Llantrisant, Wales | Manufacturing | Owned |
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Name | Age | Position | ||||
David D. Campbell | 55 | Chairman, Chief Executive Officer and Director | ||||
Neal V. Fenwick | 44 | Executive Vice President and Chief Financial Officer | ||||
Dennis Chandler | 51 | Chief Operating Officer, Office Products Division | ||||
Boris Elisman | 43 | President, Kensington Computer Accessories | ||||
John Turner | 56 | President, Industrial and Print Finishing Group | ||||
Thomas P. O’Neill, Jr. | 52 | Vice President, Finance and Accounting | ||||
Steven Rubin | 58 | Vice President, General Counsel and Secretary | ||||
George V. Bayly | 62 | Director | ||||
Dr. Patricia O. Ewers | 70 | Director | ||||
G. Thomas Hargrove | 66 | Director | ||||
Robert J. Keller | 51 | Director | ||||
Pierre E. Leroy | 57 | Director | ||||
Gordon R. Lohman | 71 | Director | ||||
Forrest M. Schneider | 58 | Director | ||||
Norman H. Wesley | 55 | Director |
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ACCO Brands |
Long-Term | |||||||||||||||||||||||||||||
Annual Compensation | Compensation | ||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||
Other Annual | Underlying | LTIP | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Compensation | Options/ | Payout | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | SARs (#) | ($)(3) | ($)(4) | ||||||||||||||||||||||
David Campbell | 2004 | 525,000 | 1,273,116 | 30,780 | 75,000 | 3,885,480 | 103,854 | ||||||||||||||||||||||
Chairman of the Board, President and | 2003 | 500,000 | 1,183,100 | 25,841 | 75,000 | 581,429 | 92,473 | ||||||||||||||||||||||
Chief Executive Officer | 2002 | 475,000 | 1,369,640 | 15,952 | 66,700 | 241,656 | 87,546 | ||||||||||||||||||||||
Neal V. Fenwick | 2004 | 286,886 | 434,568 | — | 18,000 | 1,500,000 | 3,446 | ||||||||||||||||||||||
Executive Vice President and | 2003 | 261,417 | 406,411 | — | 15,000 | — | 3,416 | ||||||||||||||||||||||
Chief Financial Officer | 2002 | 248,509 | 507,916 | — | 15,350 | — | 3,128 | ||||||||||||||||||||||
Dennis Chandler | 2004 | 293,700 | 437,586 | — | 18,000 | 1,500,000 | 14,334 | ||||||||||||||||||||||
Chief Operating Officer, | 2003 | 260,550 | 348,239 | — | 15,000 | — | 13,580 | ||||||||||||||||||||||
Office Products Division | 2002 | 236,736 | 380,243 | — | 12,700 | — | 12,456 |
(1) | The annual bonus amounts are earned and accrued during the fiscal year indicated, and paid subsequent to the end of such year. |
Messrs. Campbell, Fenwick and Chandler received payments under two incentive plans, a traditional annual incentive plan and three one-year transitional incentive plans. Payments under the traditional annual incentive plan for 2004, 2003 and 2002 were: $558,400, $475,750 and $331,265 for Mr. Campbell; $228,018, $194,236 and $196,404 for Mr. Fenwick; and $208,086, $136,064 and $137,956 for Mr. Chandler. Payments under the one-year transitional incentive plans for 2004, 2003 and 2002 were: $688,875, $707,250 and $1,038,375 for Mr. Campbell; $206,550, $212,175 and $311,512 for Mr. Fenwick; and $229,500, $212,175 and $242,288 for Mr. Chandler. |
(2) | “Other Annual Compensation” for Mr. Campbell represents dividends paid on performance awards under Fortune Brands’ Long-Term Incentive Plans. |
(3) | The amounts listed in the “LTIP Payout” column for Messrs. Campbell, Fenwick and Chandler are the value of performance awards for the performance period that ended in the year reported and paid subsequent to the end of such year. Amounts listed represent a one-time, non-recurring incentive payment of $3,150,000 for Mr. Campbell, and $1,500,000 for each of Messrs. Fenwick and Chandler related to a three-year incentive plan aligned to certain business repositioning and restructuring goals established by Fortune Brands. |
Additionally, Mr. Campbell received performance shares under the Fortune Brands Performance Share Plan with a value of $735,480 in 2004, $581,429 in 2003, and $241,656 in 2002. |
(4) | The amount listed in the “All Other Compensation” column includes: (a) ACCO Brands contributions to the tax qualified defined contribution plans, (b) profit-sharing amounts under the |
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Fortune Brands Supplemental Plan, and (c) the value of premiums paid by ACCO Brands under executive long term disability and life insurance programs. As described below: |
(a) | Defined Contribution Plan and Supplemental Plan Contributions. Amounts are contributions made to individual defined contribution plan accounts pursuant to ACCO Brands’ matching contribution policy in 2004, 2003 and 2002: $21,963, $21,980 and $24,044 for Mr. Campbell in the Fortune Brands Plans; and $9,225, $9,022 and $8,581 for Mr. Chandler in the ACCO Brands Plan. | |
(b) | Additional Life Insurance and Long Term Disability Programs. Certain executive officers receive life insurance and long term disability programs in addition to those offered to the general employee population. The amounts include the dollar value of life insurance premiums paid by ACCO Brands in 2004, 2003 and 2002. These amounts are: $8,941, $8,378 and $7,423 for Mr. Campbell; $2,046, $2,016 and $2,016 for Mr. Fenwick; and $3,709, $3,158 and $2,730 for Mr. Chandler. In addition, the following amounts relate to company payment of supplemental long-term disability insurance premiums in 2004, 2003 and 2002: $1,333, $1,400 and $1,169 for Mr. Campbell; $1,400, $1,400 and $1,112 for Mr. Fenwick; and $1,400, $1,400 and $1,145 for Mr. Chandler. |
GBC |
Long-Term | |||||||||||||||||||||||||||||
Annual Compensation | Compensation | ||||||||||||||||||||||||||||
Awards | Payouts | ||||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||||
Other Annual | Underlying | LTIP | All Other | ||||||||||||||||||||||||||
Salary | Bonus | Compensation | Options/ | Payout | Compensation | ||||||||||||||||||||||||
Name and Principal Position | Year | ($) | ($)(1) | ($)(2) | SARs (#) | ($) | ($)(6) | ||||||||||||||||||||||
John Turner | 2004 | 304,881 | (7) | 106,708 | — | 20,000 | 42,987 | (3) | 14,318 | ||||||||||||||||||||
President, Industrial and | 2003 | 293,155 | 20,521 | — | 20,000 | 21,599 | (4) | 16,820 | |||||||||||||||||||||
Print Finishing Group | 2002 | 292,378 | 80,618 | 1,983 | 30,000 | 82,504 | (5) | 15,558 | |||||||||||||||||||||
Steven Rubin | 2004 | 218,395 | (7) | 33,748 | — | 7,500 | 12,681 | (3) | 11,274 | ||||||||||||||||||||
Vice President, | 2003 | 214,274 | 32,141 | — | 7,500 | 25,780 | (4) | 11,700 | |||||||||||||||||||||
General Counsel and | 2002 | 207,384 | 72,853 | 782 | 9,000 | 24,958 | (5) | 10,608 | |||||||||||||||||||||
Secretary |
(1) | Annual bonus amounts we earned and accrued during the fiscal years indicated, and paid subsequent to the end of such year. |
(2) | The above named individuals received certain non-cash personal benefits, the aggregate cost of which to GBC was below applicable reporting thresholds. The amounts included in this column represent the amounts included in income to the named individuals for such personal benefits. |
(3) | Represents the value of restricted stock units awarded to the named individuals on February 26, 2004 as of that date which were earned for the year 2004 pursuant to performance criteria established by the Executive Compensation and Development Committee of the Board of Directors of GBC. In general, the performance based restricted stock units which were earned were to have vested in full on February 26, 2007, provided the named individual remains continuously employed by GBC or its subsidiaries until such date. No dividends were to be paid on restricted stock units. The target performance restricted stock unit awards for 2004 for the named individuals were 4,267 units for Mr. Turner and 1,600 units for Mr. Rubin. The total number of restricted stock units actually earned for the year 2004 by the named individuals and their aggregate market value at December 31, 2004 was: Mr. Turner, 2,588 units valued at $33,799; and Mr. Rubin, 971 units valued at $12,681. The aggregate market value is based on the fair market value of GBC common stock as of December 31, 2004 of $13.06. Completion of the merger resulted in the accelerated vesting of those restricted stock |
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units which had been earned as of the effective date of the merger plus a pro rata portion of the remaining target restricted stock units, with each being converted into one share of unrestricted stock of ACCO Brands. The vesting date for the non-accelerated portion of these restricted stock units was February 26, 2007 (with the holder needing be employed by GBC or an affiliate thereof through February 27, 2007). |
(4) | Represents the value of restricted stock units awarded to the named individuals on February 27, 2003 as of that date which were earned for the years 2003 and 2004 pursuant to performance criteria established by the Executive Compensation and Development Committee of the Board of Directors of GBC. In general, the performance based restricted stock units which were earned were to have vested in full on February 27, 2006, provided the named individual remained continuously employed by GBC or its subsidiaries until such date. No dividends were to be paid on restricted stock units. The target performance restricted stock unit awards for the years 2003 and 2004 for the named individuals were 9,248 units for Mr. Turner and 3,468 units for Mr. Rubin. The total number of restricted stock units actually earned for the years 2003 and 2004 by the named individuals and their aggregate market value at December 31, 2004 was: Mr. Turner, 5,265 units valued at $68,761; and Mr. Rubin, 1,974 units valued at $25,780. The aggregate market value is based on the fair market value of GBC common stock as of December 31, 2004 of $13.06. Completion of the merger resulted in the accelerated vesting of those restricted stock units which had been earned in addition to the remaining target award for the year 2005 with each being converted into one share of unrestricted stock of ACCO Brands. |
(5) | Represents the value of restricted stock units awarded to the named individuals on February 15, 2002 as of that date. These restricted stock units vested on February 15, 2005. At that time, all restrictions on those units lapsed and an equivalent number of shares of the GBC common stock was distributed to the named individuals. The total number of the restricted stock units awarded in 2002 and their aggregate market value at December 31, 2004 was: Mr. Turner, 6,371 units valued at $83,205; and Mr. Rubin, 1,911 units valued at $24,958. The aggregate market value is based on the fair market value of the GBC common stock as of December 31, 2004 of $13.06. |
(6) | These amounts represent contributions by GBC to GBC’s 401(k) Savings and Retirement Plan on behalf of the named individuals and to their respective accounts established pursuant to GBC’s non-tax qualified Supplemental Deferred Compensation Plan. |
(7) | Current annualized base salaries for Messrs. Turner and Rubin are $317,000 and $300,000 respectively. |
ACCO Brands |
Percent of Total | ||||||||||||||||||||
Number of | Options/SARs | |||||||||||||||||||
Securities | Granted to | |||||||||||||||||||
Underlying | ACCO Brands | Exercise or | Grant Date | |||||||||||||||||
Options/SARs | Employees in | Base Price | Expiration | Present | ||||||||||||||||
Name | Granted (#)(1) | Fiscal year(2) | ($/SH) | Date | Value ($)(3) | |||||||||||||||
David Campbell | 75,000 | 19.0 | 72.75 | 10/28/14 | 16.44 | |||||||||||||||
Neal V. Fenwick | 18,000 | 4.6 | 72.75 | 10/28/14 | 16.44 | |||||||||||||||
Dennis Chandler | 18,000 | 4.6 | 72.75 | 10/28/14 | 16.44 |
(1) | All options are for shares of common stock of Fortune Brands. No stock appreciation rights (“SARs”) were granted during 2004. Options are generally not exercisable for one year after the date of grant. The options granted during 2004 become exercisable in three equal annual installments beginning one year after the date of grant. |
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(2) | The percentage reported for Messrs. Campbell, Fenwick and Chandler represents the percentage of Fortune Brands stock options granted in 2004 to ACCO Brands employees, not to employees of Fortune Brands as a whole. |
(3) | “Grant Date Present Value” for Messrs. Campbell, Fenwick and Chandler was determined using the Black-Scholes option pricing model based on the following assumptions: |
(a) | an expected option term of four and a half years which is less than the actual ten-year term of the options, reflecting the historical data regarding the average length of time an optionee holds the option before exercising; | |
(b) | a risk-free weighted-average rate of return of 3.2%, the rate of a five-year U.S. Treasury Zero Coupon Bond corresponding to the expected option term; | |
(c) | stock price volatility of 26.7% based on daily closing stock market quotations for the period March 2000 to September 2004; and | |
(d) | a yield of 1.8% based on the annual dividend rate of $1.32 per share at the date of grant. |
GBC |
Number of | Percent of Total | |||||||||||||||||||
Securities | Options/SARs | |||||||||||||||||||
Underlying | Granted to GBC | Exercise or | Grant Date | |||||||||||||||||
Options/SARs | Employees in | Base Price | Expiration | Present | ||||||||||||||||
Name | Granted (#)(1) | Fiscal Year | ($/SH) | Date | Value ($)(2) | |||||||||||||||
John Turner | 20,000 | 4.2 | 16.61 | 2/25/14 | 12.02 | |||||||||||||||
Steven Rubin | 7,500 | 1.6 | 16.61 | 2/25/14 | 12.02 |
(1) | All options granted to the named individuals were granted under GBC’s 2001 Stock Incentive Plan for Employees. Twenty-five percent (25%) of each option first becomes exercisable one (1) year after the respective grant date and an additional 25% vests on each successive anniversary of the grant date. All of these options were granted at the fair market value of GBC’s common stock on the grant date in the NASDAQ stock market. No SARs were granted in connection with these option grants. Completion of the merger would result in accelerated vesting of these options. |
(2) | Based on the Black-Scholes stock option pricing model. Option term was assumed to be ten years and various assumptions were made for volatility (59.2%) and risk free interest rates (4.41%). The actual value, if any, a named individual may realize will depend on the market value of the underlying shares at the time the option is exercised, so there is no assurance the value realized will be at or near the value estimated by the Black-Scholes model. GBC’s use of this model should not be construed as an endorsement of its accuracy at valuing stock options. |
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ACCO Brands |
Number of Securities | Value of Unexercised | |||||||||||||||
Underlying Unexercised | In-The-Money | |||||||||||||||
Shares | Options/SARs at | Options/SARs at | ||||||||||||||
Acquired on | Value | FY-End (#) | FY-End ($) | |||||||||||||
Exercise | Realized | Exercisable/ | Exercisable/ | |||||||||||||
Name | (#)(1) | ($) | Unexercisable | Unexercisable(2) | ||||||||||||
David Campbell | 79,184 | 3,635,019 | 145,109/147,233 | 5,255,272/1,942,553 | ||||||||||||
Neal V. Fenwick | 1,250 | 54,844 | 57,284/33,116 | 2,308,540/420,597 | ||||||||||||
Dennis Chandler | 11,000 | 485,643 | 44,467/32,233 | 1,802,530/395,803 |
(1) | No SARs were exercised during 2004 and no SARs were outstanding as of December 31, 2004. |
(2) | Based on fair market value of $71.49 per share of Fortune Brands common stock on December 31, 2004. |
GBC |
Number of Securities | Value of Unexercised | |||||||||||||||
Underlying Unexercised | In-The-Money | |||||||||||||||
Shares | Options/SARs at | Options/SARs at | ||||||||||||||
Acquired on | Value | FY-End (#) | FY-End ($) | |||||||||||||
Exercise | Realized | Exercisable/ | Exercisable/ | |||||||||||||
Name | (#)(1) | ($) | Unexercisable | Unexercisable(2) | ||||||||||||
John Turner | 9,000 | 85,500 | 62,250/78,375 | 206,890/218,030 | ||||||||||||
Steven Rubin | 3,805 | 30,607 | 19,813/21,350 | 67,005/37,500 |
(1) | No SARs were exercised during 2004 and no SARs were outstanding as of December 31, 2004. |
(2) | Based on fair market value of $13.06 per share of GBC common stock on December 31, 2004. |
Performance or | Estimated Future Payouts Under | |||||||||||||||||||
Number of Shares, | Other Period Until | Non-Stock Price-Based Plans | ||||||||||||||||||
Units or Other | Maturation or | |||||||||||||||||||
Name | Rights (#)(1) | Payout | Threshold ($) | Target ($) | Maximum ($) | |||||||||||||||
David Campbell | 750 | 3 yrs. | 75,000 | 300,000 | 750,000 | |||||||||||||||
Neal V. Fenwick | 225 | 3 yrs. | 22,500 | 90,000 | 225,000 | |||||||||||||||
Dennis Chandler | 250 | 3 yrs. | 25,000 | 100,000 | 250,000 |
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(1) | The payout figures represent the number of dollars that were to have been awarded upon attainment of the Operating Income, Return on Net Tangible Assets, Reductions in Sales, General and Administrative costs, and Net Sales Growth targets for the Performance Period 2004-2006. |
ACCO Brands Corporation Pension Plan |
(A) For credited service accrued prior to January 1, 2002: |
0.75% of Final Average Base Earnings up to Social Security Covered Compensation, plus 1.25% of Final Average Base Earnings in excess of Social Security Covered Compensation, multiplied by the number of years of Credited Service accrued prior to January 1, 2002 (up to a maximum of 30 years). | |
“Final Average Base Earnings” is defined as average base compensation (base rate of pay) during the five consecutive calendar years within the 10 years of service prior to the date of termination that provide the highest average. | |
“Covered Compensation” is defined as the 35 year average of the FICA taxable wage bases ending with the earlier of the year the participant reaches Social Security retirement age or the year of termination or retirement. |
(B) For credited service accrued after December 31, 2001: |
1.25% of Final Average Total Earnings multiplied by the number of years of Credited Service accrued after December 31, 2001. | |
“Final Average Total Earnings” is defined as average total earnings (base rate of pay plus annual bonus) during the five consecutive calendar years within the 10 years of service prior to the date of termination that provide the highest average. |
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Fortune Brands Pension Plan |
Estimated Annual Retirement Benefits for Representative Years of Credited Service | ||||||||||||||||||||||||
Remuneration | 10 | 15 | 20 | 25 | 30 | 35 | ||||||||||||||||||
$ 500,000 | $ | 87,500 | $ | 131,250 | $ | 156,250 | $ | 187,500 | $ | 225,000 | $ | 262,500 | ||||||||||||
600,000 | 105,000 | 157,500 | 187,500 | 225,000 | 270,000 | 315,000 | ||||||||||||||||||
700,000 | 122,500 | 183,750 | 218,750 | 262,500 | 315,000 | 367,500 | ||||||||||||||||||
800,000 | 140,000 | 210,000 | 250,000 | 300,000 | 360,000 | 420,000 | ||||||||||||||||||
900,000 | 157,500 | 236,250 | 281,250 | 337,500 | 405,000 | 472,500 | ||||||||||||||||||
1,000,000 | 175,000 | 262,500 | 312,500 | 375,000 | 450,000 | 525,000 | ||||||||||||||||||
1,100,000 | 192,500 | 288,750 | 343,750 | 412,500 | 495,000 | 577,500 | ||||||||||||||||||
1,200,000 | 210,000 | 315,000 | 375,000 | 450,000 | 540,000 | 630,000 | ||||||||||||||||||
1,300,000 | 227,500 | 341,250 | 406,250 | 487,500 | 585,000 | 682,500 | ||||||||||||||||||
1,400,000 | 245,000 | 367,500 | 437,500 | 525,000 | 630,000 | 735,000 | ||||||||||||||||||
1,600,000 | 280,000 | 420,000 | 500,000 | 600,000 | 720,000 | 840,000 | ||||||||||||||||||
1,800,000 | 315,000 | 472,500 | 562,500 | 675,000 | 810,000 | 945,000 | ||||||||||||||||||
2,000,000 | 350,000 | 525,000 | 625,000 | 750,000 | 900,000 | 1,050,000 |
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ACCO Europe Pension Plan |
Estimated Annual Retirement Benefits for Representative Years of Credited Service | ||||||||||||||||||||||||
Remuneration | 10 | 15 | 20 | 25 | 30 | 35 | ||||||||||||||||||
$ 188,400 | $ | 35,500 | $ | 53,300 | $ | 71,100 | $ | 88,800 | $ | 106,600 | $ | 124,400 | ||||||||||||
282,500 | 53,300 | 80,000 | 106,600 | 133,300 | 159,900 | 186,600 | ||||||||||||||||||
376,700 | 71,100 | 106,600 | 142,200 | 177,700 | 213,200 | 248,800 | ||||||||||||||||||
470,900 | 88,800 | 133,300 | 177,700 | 222,100 | 266,500 | 311,000 | ||||||||||||||||||
565,100 | 106,600 | 159,900 | 213,200 | 266,500 | 319,900 | 373,200 | ||||||||||||||||||
659,300 | 124,400 | 186,600 | 248,800 | 311,000 | 373,200 | 435,400 | ||||||||||||||||||
753,400 | 142,200 | 213,200 | 284,300 | 355,400 | 426,500 | 497,600 | ||||||||||||||||||
847,600 | 159,900 | 239,900 | 319,900 | 399,800 | 479,800 | 559,700 | ||||||||||||||||||
941,800 | 177,700 | 266,500 | 355,400 | 444,200 | 533,100 | 621,900 | ||||||||||||||||||
1,036,000 | 195,500 | 293,200 | 390,900 | 488,700 | 586,400 | 684,100 | ||||||||||||||||||
1,130,200 | 213,200 | 319,900 | 426,500 | 533,100 | 639,700 | 746,300 |
(1) | The table above assumes the exchange rate of £1.00 = $1.884, which was in effect on May 9, 2005. |
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• | continued participation in our medical and dental plans on a cost-sharing basis for two years following termination; | |
• | to the extent not already vested and exercisable, he would be entitled to exercise any or all stock options (other than stock options issued in 2005) that were outstanding immediately prior to the merger for the earlier of one year following termination or the expiration date of the stock option; | |
• | outplacement services of an amount not to exceed ten percent of his base salary in effect at the time of termination; and | |
• | a gross-up for any “golden parachute” excise tax that may be payable by him under Section 4999 of the Internal Revenue Code, and any income and employment withholding taxes on the gross-up payment, with respect to the severance payments and other benefits due to him (whether under the change in control plan or otherwise), unless the amount of any “excess parachute payments” paid or payable to him does not exceed 330% of his base pay as determined pursuant to Section 280G of the Internal Revenue Code, in which case the gross-up payment shall not be paid and the severance payable to him will be reduced so that no amounts paid or payable to the executive will be deemed “excess parachute payments” for purposes of Section 4999 of the Internal Revenue Code. |
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• | each person who owns more than 5% of the outstanding shares of the issuer’s common stock; | |
• | the named executive officers; | |
• | the directors of the issuer; and | |
• | all directors and executive officers of the issuer as a group. |
Beneficial Ownership | |||||||||||||||||
Number of | |||||||||||||||||
Number of | Shares Subject to | ||||||||||||||||
Name | Shares | Options(1) | Total | Percent | |||||||||||||
Lane Industries, Inc. | 9,873,237 | (2) | — | 9,873,237 | 18.9 | % | |||||||||||
1200 Shermer Road, 4th Floor | |||||||||||||||||
Northbrook, Illinois 60062 | |||||||||||||||||
Ariel Capital Management, LLC | 4,162,383 | (3) | — | 4,162,383 | 8.0 | ||||||||||||
200 E. Randolph Drive, Suite 2900 | |||||||||||||||||
Chicago, Illinois 60601 | |||||||||||||||||
Scout Capital Management, L.L.C. and affiliates(4) | 2,637,100 | — | 2,637,100 | 5.0 | |||||||||||||
320 Park Avenue, 33rd Floor | |||||||||||||||||
New York, New York 10022 | |||||||||||||||||
David D. Campbell | 5,843 | (5) | 281,208 | 287,051 | * | ||||||||||||
George V. Bayly | — | 25,000 | 25,000 | * | |||||||||||||
Dr. Patricia O. Ewers | 1,472 | — | 1,472 | * | |||||||||||||
G. Thomas Hargrove | 10,000 | 15,000 | 25,000 | * | |||||||||||||
Robert J. Keller | — | — | — | * | |||||||||||||
Pierre E. Leroy | 317 | — | 317 | * | |||||||||||||
Gordon R. Lohman | 352 | — | 352 | * | |||||||||||||
Forrest M. Schneider | 20,474 | (6) | 15,000 | 35,474 | * | ||||||||||||
Norman H. Wesley | 29,671 | — | 29,671 | * | |||||||||||||
Neal V. Fenwick | 2,515 | (7) | 64,267 | 66,782 | * | ||||||||||||
Dennis Chandler | 2,570 | 60,746 | 63,316 | * | |||||||||||||
John Turner | 16,321 | 70,250 | 86,571 | * | |||||||||||||
Steven Rubin | 18,968 | 37,038 | 56,006 | * | |||||||||||||
All directors and executive officers as a group (14 persons) | 108,506 | 568,509 | 677,015 | 1.3 |
* | Less than 1% |
(1) | Indicates the number of shares of ACCO Brands common stock issuable upon the exercise of options exercisable within 60 days of September 20, 2005. |
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(2) | Based solely on a Schedule 13D filed with the SEC on August 26, 2005 by Lane Industries, Inc., a Delaware corporation. |
(3) | Based solely on (a) a Schedule 13G filed with the SEC on February 14, 2005 by Ariel Capital Management, LLC reporting shared voting power with respect to 2,634,133 shares of GBC common stock and shared dispositive power with respect to 4,159,333 shares of GBC common stock and (b) the assumption that such shares were replaced by shares of the issuer’s common stock in accordance with the terms of the merger. |
(4) | Based solely on a Schedule 13G filed with the SEC on September 9, 2005 by Scout Capital Partners, L.P., a Delaware limited partnership (“Scout Partners”), reporting shared voting and dispositive power with respect to 62,800 shares directly owned by it; Scout Capital Partners II, L.P., a Delaware limited partnership (“Scout Partners II”), reporting shared voting and dispositive power with respect to 308,900 shares directly owned by it; Scout Capital, L.L.C., a Delaware limited liability company (“Scout Capital”), reporting shared voting and dispositive power with respect to the shares directly owned by Scout Partners and Scout Partners II; Scout Capital Management, L.L.C., a Delaware limited liability company (“Scout Capital Management”), which serves as investment manager to Scout Capital Fund, Ltd. (“Scout Capital Fund”) and Scout Capital Fund II, Ltd. (“Scout Capital Fund II”), each a Cayman Islands exempted company, and other discretionary managed accounts (collectively, the “Accounts”), reporting shared voting and dispositive power with respect to 2,265,400 shares, consisting of the shares directly owned by Scout Partners and Scout Partners II and shares directly owned by the Accounts; and Adam Weiss and James Crichton reporting shared voting and dispositive power with respect to the shares directly owned by each of Scout Partners, Scout Partners II, Scout Capital Fund, Scout Capital Fund II and the Accounts. |
(5) | Includes 163 shares owned by Mr. Campbell through the Fortune Brands savings plan. |
(6) | Includes 2,375 shares owned by Mr. Schneider’s wife and 600 shares owned by his children. |
(7) | Includes 430 shares owned by Mr. Fenwick’s wife and an additional 286 shares held by Mr. Fenwick’s wife through the Fortune Brands savings plan. |
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Registration Rights Agreement |
Tax Allocation Agreement |
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• | a $400.0 million U.S. term loan facility; | |
• | a $130.0 million dollar revolving credit facility (including a $40.0 million letter of credit sublimit and a provision for loans, referred to as swing-line loans, that may be requested on an expedited basis in a maximum aggregate amount of $30.0 million); | |
• | a £63.6 million sterling term loan facility; | |
• | a €68.2 million euro term loan facility; and | |
• | a $20.0 million dollar equivalent euro revolving credit facility. |
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• | limit the incurrence of additional indebtedness, liens, capital expenditures, loans and investments; | |
• | limit the ability of the borrowers and their respective subsidiaries to take action with respect to dividends, redemptions and repurchases with respect to capital stock; | |
• | place limitations on prepayments, redemptions and repurchases of debt; | |
• | limit the borrowers’ and their respective subsidiaries’ ability to enter into mergers, consolidations, acquisitions, asset dispositions and sale/leaseback transactions and transactions with affiliates; and | |
• | restrict changes in business, amendments of debt, organizational documents and other material agreements, and place restrictions on distributions from subsidiaries, the issuance and sale of capital stock of subsidiaries and other matters customarily restricted in senior secured loan agreements. |
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• | file with the SEC an exchange offer registration statement relating to the new notes on or prior to April 4, 2006; | |
• | use their commercially reasonable efforts to cause the registration statement to become effective on or prior to June 13, 2006; and | |
• | use their commercially reasonable efforts to consummate the exchange offer not more than 30 business days (or longer if required by applicable law) after the date notice of the exchange offer is mailed to holders of the notes. |
• | will have been registered under the Securities Act; | |
• | will not bear restrictive legends restricting their transfer under the Securities Act; | |
• | will not entitle holders to the registration rights that apply to the old notes; and | |
• | will not contain provisions relating to additional interest in connection with the old notes under circumstances related to the timing of the exchange offer. |
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• | to extend the expiration date; | |
• | to delay the acceptance of any old notes; | |
• | to terminate the exchange offer and not accept any old notes for exchange if the issuer determines that any of the conditions to the exchange offer described below under “— Conditions to the Exchange Offer” have not occurred or have not been satisfied; and | |
• | to amend the terms of the exchange offer in any manner. |
Valid Tender |
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• | transmit a properly completed and duly executed letter of transmittal, together with all other documents required by the letter of transmittal, to the exchange agent at the address provided below under “— Exchange Agent”; or | |
• | if old notes are tendered in accordance with the book-entry procedures described below under “— Book-Entry Transfers,” arrange with DTC to cause an agent’s message to be transmitted to the exchange agent at the address provided below under “— Exchange Agent.” |
• | you have full power and authority to tender, exchange, sell, assign and transfer old notes; | |
• | we will acquire good, marketable and unencumbered title to the tendered old notes, free and clear of all liens, restrictions, charges and other encumbrances; and | |
• | the old notes tendered for exchange are not subject to any adverse claims or proxies. |
• | the exchange agent must receive the certificates for the old notes being tendered; or | |
• | the exchange agent must receive a confirmation, referred to as a “book-entry confirmation,” of the book-entry transfer of the old notes being tendered into the exchange agent’s account at DTC, and the book-entry confirmation must include an agent’s message; or | |
• | the holder must comply with the guaranteed delivery procedures described below under “— Guaranteed Delivery.” |
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Signature Guarantees |
• | by a registered holder of old notes, unless such holder has completed either the box entitled “Special Issuance Instructions” or the box entitled “Special Delivery Instructions” on the letter of transmittal; or | |
• | for the account of an eligible institution. |
• | a bank; | |
• | a broker, dealer, municipal securities broker or dealer or government securities broker or dealer; | |
• | a credit union; | |
• | a national securities exchange, registered securities association or clearing agency; or | |
• | a savings association. |
Book-Entry Transfers |
• | the letter of transmittal or an agent’s message in lieu of the letter of transmittal, with any required signature guarantees and any other required documents, such as endorsements, bond powers, opinions of counsel, certifications and powers of attorney, if applicable, must be transmitted to and received by the exchange agent prior to the expiration date at the address given below under “— Exchange Agent”; or | |
• | the guaranteed delivery procedures described below must be complied with. |
Guaranteed Delivery |
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• | the tender is made by or through an eligible institution; | |
• | the eligible institution delivers a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided, to the exchange agent by hand, facsimile, mail or overnight delivery service on or prior to the expiration date: |
• | stating that the tender is being made; | |
• | setting forth the name and address of the holder of the old notes being tendered and the amount of the old notes being tendered; and | |
• | guaranteeing that, within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, the certificates for all physically tendered old notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal, or an agent’s message in lieu thereof, with any required signature guarantees and any other documents required by the letter of transmittal, will be deposited by the eligible institution with the exchange agent; and |
• | the exchange agent receives the certificates for the old notes, or a book-entry confirmation, and a properly completed and duly executed letter of transmittal, or an agent’s message in lieu thereof, with any required signature guarantees and any other documents required by the letter of transmittal within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery. |
Determination of Validity |
• | to reject any tenders determined to be in improper form or unlawful; | |
• | to waive any of the conditions of the exchange offer; or | |
• | to waive any condition or irregularity in the tender of old notes by any holder, whether or not the issuer waives similar conditions or irregularities in the case of other holders. |
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Acceptance of Old Notes for Exchange; Delivery of New Notes |
• | certificates for those old notes or a timely book-entry confirmation of the transfer of those old notes into the exchange agent’s account at DTC; | |
• | a properly completed and duly executed letter of transmittal or an agent’s message; and | |
• | all other required documents, such as endorsements, bond powers, opinions of counsel, certifications and powers of attorney, if applicable. |
Resales of New Notes |
• | acquired the new notes in its ordinary course of business; | |
• | is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a “distribution,” as defined under the Securities Act, of the new notes; and | |
• | is not an “affiliate,” as defined under the Securities Act, of the issuer or any guarantor. |
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• | is acquiring the new notes in its ordinary course of business; | |
• | is not engaged in, does not intend to engage in and has no arrangement or understanding with any person to participate in a distribution of the new notes; | |
• | is not an affiliate of the issuer or any guarantor; and | |
• | is not acting on behalf of any person who could not truthfully make the foregoing representations. |
• | specify the name of the person that tendered the old notes to be withdrawn; | |
• | identify the old notes to be withdrawn, including the principal amount of those old notes; and | |
• | where certificates for old notes are transmitted, the name of the registered holder of the old notes, if different from that of the person withdrawing the old notes. |
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• | applicable interpretations of the staff of the SEC do not permit the issuer and the guarantors to effect an exchange offer; | |
• | for any reason the exchange offer is not declared effective on or prior to June 13, 2006 or the exchange offer is not consummated within 30 business days (or longer if required by applicable law) after the exchange offer registration statement is declared effective; | |
• | the initial purchasers so request with respect to old notes that are not eligible to be exchanged for new notes in the exchange offer; or | |
• | any holder of old notes (other than an initial purchaser) is not eligible to participate in the exchange offer or does not receive freely tradeable new notes in exchange for old notes constituting any portion of an unsold allotment other than by reason of such holder being an affiliate of the issuer, |
• | as promptly as practicable, file a shelf registration statement with the SEC covering resales of the old notes or the new notes; | |
• | use commercially reasonable efforts to cause the shelf registration statement to declared effective under the Securities Act; and | |
• | use commercially reasonable efforts to keep the shelf registration statement effective until the earliest of (x) the second anniversary of the date of original issuance of the notes, (y) the date on which all of the notes or exchange notes, as applicable, covered by the shelf registration statement have been sold pursuant to the shelf registration statement. and (z) the expiration of the time period referred to in Rule 144(k) under the Securities Act. |
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• | neither the exchange offer registration statement nor the shelf registration statement has been filed on or prior to April 4, 2006; | |
• | neither the exchange offer registration statement nor the shelf registration statement has been declared effective on or prior to June 13, 2006; | |
• | notwithstanding that the issuer and the guarantors have consummated the exchange offer, the issuer and the guarantors are required to file a shelf registration statement and such shelf registration statement is not filed or has not been declared effective within the time period provided for in the registration rights agreement; or | |
• | after either the exchange offer registration statement or the shelf registration statement has been declared effective, such registration statement thereafter ceases to be effective or usable (subject to certain exceptions) in connection with resales of old notes or new notes in accordance with and during the periods specified in the registration rights agreement, |
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• | will have been registered under the Securities Act; | |
• | will not bear restrictive legends restricting their transfer under the Securities Act; | |
• | will not entitle holders to the registration rights that apply to the old notes; and | |
• | will not contain provisions relating to additional interest in connection with the old notes under circumstances related to the timing of the exchange offer. |
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Period | Redemption Price | |||
2010 | 103.813 | % | ||
2011 | 102.542 | % | ||
2012 | 101.271 | % | ||
2013 and thereafter | 100.000 | % |
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• | the issuer and its subsidiaries would have had $957.2 million principal amount of indebtedness on a consolidated basis, of which: |
• | $607.2 million principal amount, including $607.2 million of borrowings and guarantees under our senior secured credit facilities, would have been contractually senior to the notes and the guarantees, and | |
• | $607.2 million principal amount would have been secured debt; | |
• | none consist of Pari Passu Indebtedness (other than the notes and the Guarantees) or Subordinated Indebtedness; |
• | an additional $132 million is available for borrowing on a secured basis under our senior secured credit facilities (giving effect to $0 million in revolving credit facility borrowings and $18 million of outstanding letters of credit immediately after the completion of the merger), which borrowings would have been contractually senior to the notes and the guarantees and would be secured; and | |
• | subsidiaries of the issuer that are not guarantors of the notes would have had $277.1 million principal amount of indebtedness and other borrowings, including trade payables but excluding intercompany liabilities. |
(1) any Obligation of the issuer to any Subsidiary of the issuer, or of such Guarantor to the issuer or any Subsidiary of the issuer, in each case other than any Receivables Repurchase Obligation to the extent that such Receivables Repurchase Obligation constitutes an Obligation, | |
(2) any liability for Federal, state, local or other taxes owed or owing by the issuer or such Guarantor, | |
(3) any accounts payable or other liability to trade creditors, | |
(4) any obligations with respect to any Capital Stock, or |
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(5) the portion of any Indebtedness Incurred in violation of the indenture but, as to any such Indebtedness Incurred under the Credit Agreement, no such violation shall be deemed to exist for purposes of this clause (5) if the holders of such Indebtedness or their Representative shall have received an Officers’ Certificate to the effect that the Incurrence of such Indebtedness does not (or, in the case of a revolving credit facility thereunder, the Incurrence of the entire committed amount thereof at the date on which the initial borrowing thereunder is made would not) violate the indenture. |
(1) a default in the payment of the principal of, premium, if any, or interest or any other amount on any Designated Senior Indebtedness occurs and is continuing beyond any applicable grace period, or | |
(2) any other default on Designated Senior Indebtedness occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms, |
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(1) remain in full force and effect until payment in full of all the Guaranteed Obligations; | |
(2) be binding upon each such Guarantor and its successors; and | |
(3) inure to the benefit of and be enforceable by the Trustee, the holders and their successors, transferees and assigns. |
(1) the sale, disposition or other transfer (including through merger or consolidation) of the Capital Stock (including any sale, disposition or other transfer following which the applicable Guarantor is no longer a Subsidiary of the issuer), or all or substantially all the assets, of the applicable Guarantor, if such sale, disposition or other transfer is made in compliance with the indenture; | |
(2) the issuer designating such Guarantor to be an Unrestricted Subsidiary in accordance with the provisions of the indenture described under “Certain Covenants — Limitation on Restricted Payments” and the definition of “Unrestricted Subsidiary”; | |
(3) in the case of any Restricted Subsidiary which after the Assumption Date is required to guarantee the notes pursuant to the covenant of the indenture described under “Certain Covenants — Future Guarantors,” the release or discharge of the guarantee by such Restricted Subsidiary of Indebtedness of the issuer or any Restricted Subsidiary of the issuer which resulted in the obligation to guarantee the notes; or | |
(4) any legal defeasance or covenant defeasance as described under “— Defeasance.” |
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(1) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of ACCO and its Subsidiaries, taken as a whole, to any Person; or | |
(2) ACCO becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions by way of merger, consolidation or other business combination or purchase, of ultimate beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50% of the total voting power of the Voting Stock of ACCO or any direct or indirect parent of ACCO; or | |
(3) individuals who on the Assumption Date constituted the Board of Directors of ACCO (together with any new directors whose election by such Board of Directors of ACCO or whose nomination for election by the shareholders of ACCO, as the case may be, was approved by a vote of a majority of the directors of ACCO, as the case may be, then still in office who were either directors on the Assumption Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of ACCO then in office. |
(1) repay in full all Bank Indebtedness and such Senior Indebtedness; or | |
(2) obtain the requisite consent, if required, under the agreements governing the Bank Indebtedness and such Senior Indebtedness to permit the repurchase of the notes as provided for in the immediately following paragraph. |
(1) that a Change of Control has occurred and that such holder has the right to require the issuer to purchase such holder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the date of purchase (subject to the right of holders of record on a record date to receive interest on the relevant interest payment date); | |
(2) the circumstances and relevant facts (including, if applicable, financial information) regarding such Change of Control; | |
(3) the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and | |
(4) the instructions determined by the issuer, consistent with this covenant, that a holder must follow in order to have its notes purchased. |
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Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock. The indenture provides that: |
(1) the issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Indebtedness, including Acquired Indebtedness or issue any shares of Disqualified Stock; and |
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(2) the issuer will not permit any of its Restricted Subsidiaries to issue any shares of Preferred Stock; |
(a) the Incurrence by the issuer or any of its Restricted Subsidiaries that are Guarantors of Indebtedness under the Credit Agreement and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) in an aggregate principal amount not to exceed $750.0 million outstanding at any one time,lessthe amount of any such Indebtedness permanently retired with the Net Proceeds from any Asset Sale applied from and after the Issue Date to reduce the outstanding amounts pursuant to the covenant described under “— Asset Sales”; | |
(b) the Incurrence by the issuer and the Guarantors of Indebtedness represented by the notes (not including any additional notes) and the Guarantees, and the exchange notes and guarantees to be issued pursuant to the registration rights agreement, as applicable; | |
(c) Indebtedness under the Existing GBC Subordinated Notes and the Existing GBC Subordinated Notes Indenture;provided, that, within one (1) Business Day following the Assumption Date, either an irrevocable notice of redemption related to the Existing GBC Subordinated Notes shall have been delivered to the holders thereof under the Existing GBC Subordinated Notes Indenture or the Existing GBC Subordinated Notes Indenture shall have been discharged; | |
(d) the Existing Indebtedness of the issuer and its Restricted Subsidiaries; | |
(e) Indebtedness Incurred by the issuer or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including without limitation letters of credit in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims;provided, however, that upon the drawing of such letters of credit (other than letters of credit issued under the Credit Agreement), such obligations are reimbursed within 30 days following such drawing; | |
(f) Indebtedness arising from agreements of the issuer or one of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred in connection with the disposition of any business, assets or a Subsidiary of the issuer in accordance with the terms of the indenture; | |
(g) Indebtedness of the issuer to a Restricted Subsidiaryprovidedthat (i) any such Indebtedness is made pursuant to an intercompany note and (ii) any such Indebtedness is subordinated in right of payment to the obligations of the issuer under the notes;provided, further, that any subsequent issuance or transfer of any Equity Interest or other event that results in any such Indebtedness being held by a Person other than the issuer or a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness; |
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(h) shares of Preferred Stock of a Restricted Subsidiary issued to the issuer or another Restricted Subsidiary;providedthat any subsequent issuance or transfer of any Capital Stock or any other event which results in any Restricted Subsidiary that holds such shares of Preferred Stock of another Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of Preferred Stock (except to the issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an issuance of shares of Preferred Stock; | |
(i) Indebtedness of a Restricted Subsidiary to the issuer or another Restricted Subsidiary;providedthat (i) any such Indebtedness is made pursuant to an intercompany note and (ii) if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the notes or Guarantee of such Guarantor, as applicable;provided, further, that any subsequent issuance or transfer of Equity Interests or other event that results in any such Indebtedness being held by a Person other than the issuer or a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to the issuer or another Restricted Subsidiary) shall be deemed, in each case, to be an Incurrence of such Indebtedness; | |
(j) Hedging Obligations that are Incurred in the ordinary course of business or in connection with the Transactions and not for speculative purposes; | |
(k) obligations in respect of performance, bid, appeal, surety and similar bonds and completion guarantees provided by the issuer or any Restricted Subsidiary in the ordinary course of business; | |
(l) any guarantee by the issuer or a Guarantor of Indebtedness or other obligations of the issuer or any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness is permitted under the terms of the indenture (other than pursuant to clause (t) below);providedthat if such Indebtedness is by its express terms subordinated in right of payment to the notes or the Guarantee of such Restricted Subsidiary, as applicable, any such guarantee shall be subordinated in right of payment to the notes or such Guarantor’s Guarantee to the same extent as such Indebtedness is subordinated to the notes or the Guarantee of such Restricted Subsidiary, as applicable; | |
(m) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business,providedthat such Indebtedness is extinguished within two (2) Business Days of its Incurrence; | |
(n) the Incurrence by the issuer or any of its Restricted Subsidiaries of Indebtedness or the issuance of Disqualified Stock or Preferred Stock which serves to extend, refund, refinance, renew, replace or defease any Indebtedness, Disqualified Stock or Preferred Stock of the issuer or any of its Restricted Subsidiaries permitted under the first paragraph of this covenant and clauses (b), (d), (o) and (r) of this paragraph or any Indebtedness issued to so refund or refinance such Indebtedness (subject to the following proviso, “Refinancing Indebtedness”) prior to its respective maturity;provided, however, that such Refinancing Indebtedness: |
(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is Incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded, refinanced, renewed, replaced or defeased; | |
(2) has a Stated Maturity which is no earlier than the Stated Maturity of the Indebtedness, Disqualified Stock or Preferred Stock being refunded, refinanced, renewed, replaced or defeased; | |
(3) to the extent such Refinancing Indebtedness refinances Indebtedness, Disqualified Stock or Preferred Stockpari passuwith, or subordinated to, right of payment of the notes or the Guarantee of such Restricted Subsidiary, as applicable, such Refinancing Indebtedness ispari passuwith, or subordinated, at least to the same extent as the Indebtedness, Disqualified Stock or Preferred Stock being refinanced, refunded, refinanced, renewed, replaced or defeased, to right of payment of the notes or the Guarantee of such Restricted Subsidiary, as applicable; |
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(4) is Incurred or issued in an aggregate principal amount or face or liquidation amount (or if issued with original issue discount, an aggregate accreted value) that is equal to or less than the aggregate principal amount or face or liquidation amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness, Disqualified Stock or Preferred Stock being refunded, refinanced, renewed, replaced or defeased plus all accrued interest and premiums, fees, expenses and prepayment penalties Incurred in connection with such refinancing, refunding, renewing, replacement or defeasance; and | |
(5) is Incurred either by the issuer or by the Restricted Subsidiary that is the obligor on the Indebtedness, Disqualified Stock or Preferred Stock being extended, refinanced, renewed, replaced, defeased or refunded; |
(o) the incurrence by the issuer or any of its Restricted Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the issuer or such Restricted Subsidiary (where, in the case of a purchase, such purchase may be effected either directly or through the purchase of the Capital Stock of the Person owning such property, plant or equipment), in an aggregate principal amount including all Refinancing Indebtedness permitted to be incurred under the indenture to refund, refinance, renew or defease or replace any Indebtedness incurred pursuant to the provision of the indenture described in this clause (o), not to exceed 5% of Total Assets; | |
(p) the incurrence by a Restricted Subsidiary of the issuer of Indebtedness in connection with, and in contemplation of, the concurrent disposition of such Restricted Subsidiary to the stockholders of the issuer;provided, that such disposition occurs concurrently with such incurrence and, following such disposition, neither the issuer nor any of its Restricted Subsidiaries has any liability with respect to such Indebtedness; | |
(q) Indebtedness of the issuer or any Restricted Subsidiary, to the extent the net proceeds thereof are promptly (x) used to purchase notes tendered pursuant to a Change of Control Offer made as a result of a Change in Control or (y) deposited to defease the notes; | |
(r) the incurrence of Acquired Indebtedness;providedthat, after giving effect to the transactions that result in the incurrence or issuance thereof, the Fixed Charge Coverage Ratio would be greater than immediately prior to such transactions; | |
(s) the incurrence by a Receivables Subsidiary of Indebtedness in a Qualified Receivables Transaction that is without recourse (other than pursuant to representations, warranties, covenants and indemnities entered into in the ordinary course of business in connection with a Qualified Receivables Transaction) to the issuer or to any Restricted Subsidiary of the issuer or their assets (other than such Receivables Subsidiary and its assets), and is not guaranteed by any such Person; | |
(t) Indebtedness or Disqualified Stock or Preferred Stock of the issuer or any of its Restricted Subsidiaries in an aggregate principal amount, accreted value or face amount and with an aggregate liquidation preference not to exceed $100.0 million at any one time outstanding; and | |
(u) Indebtedness or Disqualified Stock or Preferred Stock of any Foreign Subsidiary of the issuer that is not a Guarantor in an aggregate principal amount, accreted value or face amount and with an aggregate liquidation preference not to exceed the U.S. dollar equivalent of $100.0 million at any one time outstanding. |
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(1) declare or pay any dividend or make any distribution on account of the issuer’s or any of its Restricted Subsidiaries’ Equity Interests, including any payment made in connection with any merger or consolidation involving the issuer, other than (A) dividends or distributions by the issuer payable solely in Equity Interests (other than Disqualified Stock) of the issuer; or (B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Restricted Subsidiary other than a Wholly Owned Restricted Subsidiary, the issuer or a Restricted Subsidiary receives at least itspro ratashare of such dividend or distribution in accordance with its Equity Interests in such class or series of securities; | |
(2) purchase or otherwise acquire or retire for value any Equity Interests of the issuer or any direct or indirect parent company of the issuer or any Restricted Subsidiary held by Persons other than the issuer or any Restricted Subsidiary of the issuer; | |
(3) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value, in each case prior to any scheduled repayment or scheduled maturity, any Subordinated Indebtedness, other than the payment, redemption, repurchase, defeasance, acquisition or retirement of (A) Subordinated Indebtedness in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such payment, redemption, repurchase, defeasance, acquisition or retirement and (B) Indebtedness permitted under clauses (g) and (i) of the second paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; or | |
(4) make any Restricted Investment, |
(a) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; | |
(b) immediately after giving effect to such transaction on apro forma basis, the issuer could Incur $1.00 of additional Indebtedness under the provisions of the first paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; and | |
(c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the issuer and its Restricted Subsidiaries after the Issue Date (including Restricted Payments permitted by clauses (1), (8), (13) and (15) of the next succeeding paragraph, |
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but excluding all other Restricted Payments permitted by the next succeeding paragraph), is less than the sum of, without duplication, |
(1) 50% of the Consolidated Net Income of the issuer for the period, taken as one accounting period, from the beginning of the first fiscal quarter commencing July 1, 2005 to the end of the issuer’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment, or, in the case such Consolidated Net Income for such period is a deficit, minus 100% of such deficit, plus | |
(2) 100% of the aggregate net proceeds, including cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash, received by the issuer since the Issue Date from the issue or sale of Equity Interests of the issuer or any direct or indirect parent company of the issuer (excluding Refunding Capital Stock, Disqualified Stock and Equity Interests, the proceeds of which are used in the manner described in clauses (10) and (11) of the next succeeding paragraph), including Equity Interests issued upon conversion of Disqualified Stock or Indebtedness or upon exercise of warrants or options (other than an issuance or sale to a Restricted Subsidiary of the issuer), plus | |
(3) 100% of the aggregate amount of contributions to the capital of the issuer received in cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash since the Issue Date, excluding Refunding Capital Stock and Disqualified Stock, plus | |
(4) 100% of the aggregate amount received by the issuer or any of its Restricted Subsidiaries in cash and the Fair Market Value (as determined in accordance with the next succeeding sentence) of property other than cash received by the issuer or any of its Restricted Subsidiaries from: |
(A) the sale or other disposition (other than to the issuer or one of its Restricted Subsidiaries) of Restricted Investments made by the issuer and its Restricted Subsidiaries and from repurchases and redemptions of such Restricted Investments from the issuer and its Restricted Subsidiaries by any Person (other than the issuer or any of its Subsidiaries) and from repayments of loans or advances which constituted Restricted Investments, | |
(B) the sale (other than to the issuer or one of its Restricted Subsidiaries) of the Capital Stock of an Unrestricted Subsidiary, and | |
(C) a distribution or dividend from an Unrestricted Subsidiary, plus |
(5) in the event any Unrestricted Subsidiary of the issuer has been redesignated as a Restricted Subsidiary or has been merged, consolidated or amalgamated with or into, or transfers or conveys its assets to, or is liquidated into, the issuer or one of its Restricted Subsidiaries, the Fair Market Value (as determined in accordance with the next succeeding sentence) of the Investment of the issuer in such Unrestricted Subsidiary at the time of such redesignation, combination or transfer (or of the assets transferred or conveyed, as applicable), after deducting any Indebtedness of the Unrestricted Subsidiary so designated or combined or any Indebtedness to which the assets so transferred or conveyed. |
(A) in the event of property with a Fair Market Value in excess of $5.0 million, shall be set forth in an Officers’ Certificate or | |
(B) in the event of property with a Fair Market Value in excess of $30.0 million, shall be set forth in a resolution approved by at least a majority of the Board of Directors of the issuer. |
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(1) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the indenture; | |
(2) (a) the payment, repurchase, retirement, redemption, defeasance or other acquisition of any Equity Interests (“Retired Capital Stock”) of the issuer or any direct or indirect parent company of the issuer or any Subordinated Indebtedness of the issuer or any Restricted Subsidiary of the issuer in exchange for, or out of the proceeds of the substantially concurrent sale of, Equity Interests of the issuer or any direct or indirect parent company of the issuer or contributions to the equity capital of the issuer, other than any Disqualified Stock or any Equity Interests sold to a Restricted Subsidiary of the issuer (collectively, including any such contributions, “Refunding Capital Stock”) and | |
(b) the declaration and payment of accrued dividends on the Retired Capital Stock out of the proceeds of the substantially concurrent sale, other than to a Restricted Subsidiary of the issuer, of Refunding Capital Stock; | |
(3) the payment, redemption, repurchase, defeasance or other acquisition or retirement of any Subordinated Indebtedness of the issuer or any Restricted Subsidiary of the issuer or Disqualified Stock made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of the issuer which is Incurred in accordance with the provisions of the indenture described in clause (n) of the second paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” or Disqualified Stock; | |
(4) the payment of cash in lieu of the issuance of fractional shares of Capital Stock upon exercise or conversion of securities exercisable or convertible into Capital Stock of the issuer; | |
(5) any purchase or acquisition from, or withholding on issuances to, any employee of the issuer or any Restricted Subsidiary of the issuer of Equity Interests of the issuer, or Equity Interests of any direct or indirect parent of the issuer, in order to satisfy any applicable Federal, state or local tax payments in respect of the receipt of the such Equity Interests; | |
(6) any withholding on issuances to any employee of the issuer or any Restricted Subsidiary of the issuer of Equity Interests of the issuer, or Equity Interests of any direct or indirect parent of the issuer, in order to pay the purchase price of such Equity Interests or similar instruments pursuant to a stock option, equity incentive or other employee benefit plan or agreement of the issuer or any of its Restricted Subsidiaries; | |
(7) the repurchase of Equity Interests deemed to occur upon the exercise of options or warrants if such Equity Interests represents all or a portion of the exercise price thereof; | |
(8) any other repurchase, retirement, redemption or other acquisition (or dividends to any direct or indirect parent company of the issuer to finance any such repurchase, retirement or other acquisition) for value of Equity Interests of the issuer or any direct or indirect parent company of the issuer held by any future, present or former employee, director or consultant of the issuer or any direct or indirect parent company of the issuer or any other Subsidiary of the issuer pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or other agreement or arrangement;provided, however, that the aggregate amounts paid under this clause (8) do not exceed $3.0 million in any calendar year;provided, further, that the issuer or any of its Restricted Subsidiaries may carry over and make in any subsequent calendar year, in addition to the amounts otherwise permitted for such calendar year, the amount of purchases, retirements, redemptions, other acquisitions for value and dividends permitted to have been made but not made in any preceding calendar year, and any of this amount not paid in any calendar year may be carried forward to a subsequent calendar year; |
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(9) declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of the issuer or any of its Restricted Subsidiaries issued or incurred in accordance with the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(10) Restricted Investments acquired in exchange for, or out of the proceeds of a substantially concurrent issuance of Equity Interests, other than Disqualified Stock, of the issuer; | |
(11) the redemption, repurchase, retirement, defeasance or other acquisition of any Disqualified Stock of the issuer in exchange for, or out of the net cash proceeds of the substantially concurrent sale of, Disqualified Stock that is permitted by the terms of the indenture to be issued; | |
(12) the payment of any dividend by a Restricted Subsidiary of the issuer to the holders of its Equity Interests on apro ratabasis; | |
(13) any purchase, redemption, retirement, defeasance or other acquisition for value of Subordinated Indebtedness pursuant to the provisions of such Indebtedness upon a Change of Control or an Asset Sale after the issuer shall have complied with the provisions of the indenture described under the caption “— Optional Redemption” or “— Limitation on Asset Sales,” as the case may be; | |
(14) any payments made in connection with the Transactions, including the repurchase, redemption or other acquisition or retirement for value of the Existing GBC Subordinated Notes pursuant to the Existing GBC Subordinated Notes Indenture; | |
(15) payments or distributions, in the nature of satisfaction of dissenters’ rights, pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions hereof applicable to mergers, consolidations and transfers of all or substantially all the assets of the issuer in an aggregate amount not to exceed $10.0 million; | |
(16) purchases of receivables pursuant to a Receivables Repurchase Obligation in connection with a Qualified Receivables Financing; and | |
(17) other Restricted Payments in an aggregate amount not to exceed $50.0 million;provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under this clause (17), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof. |
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(a) (i) pay dividends or make any other distributions to the issuer or any of its Restricted Subsidiaries (1) on its Capital Stock or (2) with respect to any other interest or participation in, or by, its profits or (ii) pay any Indebtedness owed to the issuer or any of its Restricted Subsidiaries; | |
(b) make loans or advances to the issuer or any of its Restricted Subsidiaries; or | |
(c) sell, lease or transfer any of its properties or assets to the issuer or any of its Restricted Subsidiaries; |
(1) encumbrances or restrictions in effect on the Assumption Date, including pursuant to the Credit Agreement and the other Senior Credit Documents and any amendments, modifications, restatements, renewals, increases, extensions, supplements, refundings, replacements or refinancings thereof,providedthat the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are not materially more restrictive, taken as a whole, than those existing under, by reason of or with respect to the Credit Agreement, the other Senior Credit Documents or other agreement, as applicable, as in effect on the Assumption Date; | |
(2) (A) the indenture governing the notes or the Existing GBC Subordinated Notes Indenture, (B) the notes or the Existing GBC Subordinated Notes, and (C) guarantees of the notes or the Existing GBC Subordinated Notes; | |
(3) applicable law or any applicable rule, regulation or order; | |
(4) any agreement or other instrument relating to Indebtedness of a Person acquired by the issuer or any of its Restricted Subsidiaries which was in existence at the time of such acquisition, and not incurred in contemplation thereof or to provide all or any portion of the funds or credit support utilized to consummate such acquisition, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; | |
(5) any restriction with respect to a Restricted Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Subsidiary pending the closing of such sale or disposition; | |
(6) Secured Indebtedness otherwise permitted to be Incurred pursuant to the indenture that limits the right of the debtor to dispose of the assets securing such Indebtedness; | |
(7) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business; | |
(8) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, asset sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; | |
(9) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired; | |
(10) customary provisions contained in leases and other similar agreements entered into in the ordinary course of business that impose restrictions of the type described in clause (c) above on the property subject to such lease; | |
(11) other Indebtedness Incurred after the Assumption Date by any Restricted Subsidiary of the issuer (i) that is a Guarantor and such Indebtedness is permitted under the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred |
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Stock” or (ii) that is a Foreign Subsidiary of issuer and is incurred pursuant to clauses (o), (t) or (u) of the second paragraph of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(12) Refinancing Indebtedness permitted under the terms of the indenture;provided, that the restrictions contained in the agreements governing such Refinancing Indebtedness are not materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; | |
(13) any instrument or agreement governing any other Indebtedness the incurrence of which is permitted by the indenture;providedthat the encumbrances and restrictions under that instrument or agreement are not materially more restrictive, taken as a whole, than the encumbrances and restrictions contained in the indenture at the time of incurrence of such other Indebtedness; | |
(14) Indebtedness or other contractual requirements of a Receivables Subsidiary governing a Qualified Receivables Transaction;providedthat such restrictions apply only to such Receivables Subsidiary; and | |
(15) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any extensions, amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (14) above;providedthat such extensions, amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the issuer, not materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such extension, amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing. |
(a) any liabilities, as shown on the issuer’s or such Restricted Subsidiary’s most recent consolidated balance sheet or in the notes thereto, of the issuer or any of its Restricted Subsidiaries (other than liabilities that are by their terms subordinated to the notes) that are assumed by the transferee of any such assets, and | |
(b) any notes or other obligations or other securities or assets received by the issuer or such Restricted Subsidiary from such transferee that are converted by the issuer or such Restricted Subsidiary into cash within 180 days of the receipt thereof (to the extent of the cash received in that conversion) |
(1) to permanently reduce Obligations under the Credit Agreement (and, in the case of revolving Obligations, to correspondingly reduce commitments with respect thereto) or other Senior Indebtedness or Pari Passu Indebtedness (providedthat if the issuer or any Guarantor shall so reduce Obligations under Pari Passu Indebtedness, the issuer will equally and ratably reduce Obligations under the notes by making an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all holders to purchase at a purchase price equal to 100% of the principal amount |
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thereof, plus accrued and unpaid interest and additional interest, if any, thepro rataprincipal amount of notes) or Indebtedness of a Restricted Subsidiary that is not a Guarantor, in each case other than Indebtedness owed to the issuer or an Affiliate of the issuer; | |
(2) to acquire all or substantially all of the assets of, or any Capital Stock of, Similar Businesses;provided, that in the case of any such acquisition of Capital Stock, the Similar Business is or becomes a Restricted Subsidiary of the issuer; | |
(3) to make capital expenditures; or | |
(4) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in a Similar Business; |
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(a) such Affiliate Transaction is on terms that are not, taken as a whole, materially less favorable to the issuer or the relevant Restricted Subsidiary than those that could reasonably have been obtained in a comparable transaction by the issuer or such Restricted Subsidiary with a Person that is not an Affiliate; and | |
(b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $30.0 million, the issuer delivers to the Trustee a resolution adopted in good faith by the majority of the disinterested members of the Board of Directors of the issuer, approving such Affiliate Transaction and set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with the provisions described in clause (a) above. |
(1) (a) transactions between or among the issuer and/or any of its Restricted Subsidiaries and (b) any merger of the issuer and any direct parent company of the issuer,providedthat such parent company shall have no material liabilities and no material assets other than cash, Cash Equivalents and the Capital Stock of the issuer and such merger is otherwise in compliance with the terms of the indenture and effected for a bona fide business purpose; | |
(2) Restricted Payments permitted by the provisions of the indenture described above under the covenant “— Limitation on Restricted Payments” and Permitted Investments; | |
(3) reasonable fees, expenses and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the issuer or any Restricted Subsidiary or any direct or indirect parent company of the issuer or the issuer as determined by the Board of Directors of the issuer; | |
(4) any agreement or arrangement as in effect as of the Assumption Date or any amendment, modification or supplement thereto or any replacement thereof so long as any such agreement or arrangement as so amended, modified, supplemented or replaced, taken as a whole, is not more disadvantageous to the issuer and its Restricted Subsidiaries in any material respect than the original agreement as in effect on the Issue Date or any transaction contemplated by any of the foregoing agreements or arrangements; | |
(5) the existence of, or the performance by the issuer or any of its Restricted Subsidiaries of its obligations under the terms of, the Spin-off Documents, Merger Documents, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) or any tax sharing agreement to which it is a party as of the Assumption Date and any amendment, modification or supplement thereto, any replacement thereof or similar agreements which it may enter into thereafter;provided, however, that the existence of, or the performance by the issuer or any of its Restricted Subsidiaries of its obligations under, any future amendment to any such existing agreement or under any similar agreement entered into after the Issue Date shall only be permitted by this clause (5) to the extent that the terms of any such existing agreement together with all amendments, modifications, supplements or replacements thereto, taken as a whole, or new agreement are not |
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otherwise more disadvantageous to the issuer and its Restricted Subsidiaries in any material respect than the original agreement as in effect on the Issue Date; | |
(6) the payment of all fees and expenses related to the Transactions which are described in this prospectus; | |
(7) (a) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of the indenture, which are fair to the issuer and its Restricted Subsidiaries in the reasonable determination of the Board of Directors or the senior management of the issuer, and are on terms that, taken as a whole, are not materially less favorable to the issuer or the relevant Restricted Subsidiary than those that might reasonably have been obtained at such time from a Person that is not an Affiliate or (b) transactions with joint ventures or Unrestricted Subsidiaries for the purchase or sale of chemicals, equipment and services entered into in the ordinary course of business and in a manner consistent with past practice; | |
(8) the issuance or sale of Equity Interests, other than Disqualified Stock, of the issuer to any Affiliate or to any director, officer, employee or consultant of the issuer, any direct or indirect parent company of the issuer or any Subsidiary of the issuer; | |
(9) fees and compensation paid to members of the Board of Directors of the issuer and its Restricted Subsidiaries in their capacity as such; | |
(10) advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business; | |
(11) transactions pursuant to agreements in effect as of the date of the indenture disclosed in or contemplated by “Certain Relationships and Related Transactions” or elsewhere in this prospectus; | |
(12) the grant of stock options or similar rights to officers, employees, consultants and directors of the issuer and, to the extent otherwise permitted under the indenture, any Restricted Subsidiary, pursuant to plans approved by the Board of Directors of the issuer and the issuance of securities pursuant thereto; | |
(13) any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the issuer or any of its Restricted Subsidiaries with officers and employees of the issuer or any of its Restricted Subsidiaries and the payment of compensation to officers and employees of the issuer or any of its Restricted Subsidiaries including amounts paid pursuant to employee benefit plans, employee stock option or similar plans, in each case in the ordinary course of business and approved by the Board of Directors of the issuer; | |
(14) transactions effected as part of a Qualified Receivables Transaction; and | |
(15) transactions with a Person that is an Affiliate of the issuer solely because the issuer directly or indirectly owns Equity Interests in, or controls, such Person. |
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(1) pari passuin right of payment with the notes or such Guarantor’s Guarantee, as the case may be, or | |
(2) contractually subordinated by its terms in right of payment to the notes or such Guarantor’s Guarantee, as the case may be; |
(1) within 90 days after the end of each fiscal year (or such shorter period as may be required by the SEC), annual reports on Form 10-K (or any successor or comparable form) containing the information required to be contained therein (or required in such successor or comparable form), | |
(2) within 45 days after the end of each of the first three fiscal quarters of each fiscal year (or such shorter period as may be required by the SEC), reports on Form 10-Q (or any successor or comparable form), | |
(3) promptly from time to time after the occurrence of an event required to be therein reported (and in any event within the time period specified for filing current reports on Form 8-K by the SEC), such other reports on Form 8-K (or any successor or comparable form), and | |
(4) any other information, documents and other reports which the issuer would be required to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act; |
(a) the rules and regulations of the SEC permit the issuer and any direct or indirect parent company of the issuer to report at such parent entity’s level on a consolidated basis and | |
(b) such parent entity of the issuer is not engaged in any business in any material respect other than incidental to its ownership, directly or indirectly, of the capital stock of the issuer, |
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• | guarantees any Indebtedness of the issuer or a Restricted Subsidiary of the issuer; or | |
• | Incurs any Indebtedness or Disqualified Stock (1) permitted to be Incurred pursuant to the provisions of the indenture described in clauses (a) or (t) of the second paragraph under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” or (2) not permitted to be Incurred by the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” |
(1) the issuer is the surviving corporation or the Person formed by or surviving any such consolidation or merger, if other than the issuer, or to which such sale, assignment, transfer, lease, conveyance or other disposition has been made is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (the issuer or such Person, as the case may be, being herein called the “Successor Company”); | |
(2) the Successor Company, if other than the issuer, expressly assumes all the obligations of the issuer under the indenture and the notes pursuant to supplemental indentures or other documents or instruments in form reasonably satisfactory to the Trustee; | |
(3) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any of its Restricted Subsidiaries as a result of such transaction as having been Incurred by the Successor Company or such Restricted Subsidiary at the time of such transaction) no Default or Event of Default shall have occurred and be continuing; | |
(4) immediately after givingpro formaeffect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, either (a) the Successor Company would be permitted to Incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first sentence of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” or (b) the Fixed Charge Coverage Ratio for the Successor Company will be greater than the Fixed Charge Coverage Ratio for the Successor Company immediately prior to such transaction; | |
(5) each Guarantor, unless it is the other party to the transactions described above, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under the indenture and the notes; and |
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(6) the issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures (if any) comply with the indenture. |
(1) such Guarantor is the surviving corporation or the Person formed by or surviving any such consolidation or merger, if other than such Guarantor, or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation, partnership or limited liability company organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof (such Guarantor or such Person, as the case may be, being herein called the “Successor Guarantor”); | |
(2) Successor Guarantor (if other than such Guarantor) expressly assumes all the obligations of such Guarantor under the indenture and such Guarantors’ Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Trustee; | |
(3) immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Guarantor or any of its Subsidiaries as a result of such transaction as having been Incurred by the Successor Guarantor or such Subsidiary at the time of such transaction) no Default or Event of Default shall have occurred and be continuing; and | |
(4) the Successor Guarantor (if other than such Guarantor) shall have delivered or caused to be delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with the indenture. |
(1) a default in any payment of interest on any note when due, whether or not prohibited by the provisions described under “— Ranking” above, continued for 30 consecutive days, | |
(2) a default in the payment of principal or premium, if any, of any note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise, whether or not prohibited by the provisions described under “— Ranking” above, |
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(3) the failure by the issuer to comply with its obligations under the covenant described under “— Merger, Consolidation or Sale of All or Substantially All Assets” above, | |
(4) the failure by the issuer or any of its Restricted Subsidiaries to comply for 30 days after notice with any of its obligations under the covenants described under “— Change of Control,” “— Certain Covenants — Restricted Payments” or “— Certain Covenants — Limitation on the Incurrence of Indebtedness and the Issuance of Disqualified Stock and Preferred Stock” above (in each case, other than a failure to purchase notes), | |
(5) the failure by the issuer or any of its Restricted Subsidiaries to comply for 60 days after notice with its other agreements contained in the notes or the indenture, | |
(6) the failure by the issuer or any Significant Subsidiary to pay any Indebtedness, other than Indebtedness owing to the issuer or one of its Subsidiaries, within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default, in each case, if the total amount of such Indebtedness unpaid or accelerated exceeds $25.0 million or its foreign currency equivalent (the “cross-acceleration provision”), | |
(7) specified events of bankruptcy, insolvency or reorganization of the issuer or a Significant Subsidiary (the “bankruptcy provisions”), | |
(8) failure by the issuer or any Significant Subsidiary to pay final judgments aggregating in excess of $25.0 million or its foreign currency equivalent, net of any amounts which are covered by enforceable insurance policies issued by solvent carriers, which judgments are not discharged, waived or stayed for a period of 60 consecutive days (the “judgment default provision”), or | |
(9) the Guarantee of a Guarantor ceases to be in full force and effect, except as contemplated or permitted by the terms of the Guarantee or the indenture, or any Guarantor denies or disaffirms its obligations under the indenture or any Guarantee and such Default continues for 10 days. |
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(1) such holder has previously given the Trustee notice that an Event of Default is continuing, | |
(2) holders of at least 25% in principal amount of the outstanding notes have requested in writing that the Trustee pursue the remedy, | |
(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense, | |
(4) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity, and | |
(5) the holders of a majority in principal amount of the outstanding notes have not given the Trustee a direction inconsistent with such request within such 60-day period. |
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(1) reduce the amount of notes whose holders must consent to an amendment, supplement or waiver, | |
(2) reduce the rate of or extend the time for payment of interest on any note, | |
(3) reduce the principal of or change the Stated Maturity of any note, | |
(4) reduce the premium payable upon the redemption of any note or change the time at which any note may be redeemed as described under “Optional Redemption” above, | |
(5) make any note payable in money other than that stated in such note, | |
(6) make any change to the subordination provisions of the indenture that adversely affects the rights of any holder, | |
(7) impair or waive the right of any holder to receive payment of principal of, premium, if any, and interest on such holder’s notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s notes, | |
(8) make any change in the amendment and waiver provisions which require each holder’s consent, | |
(9) modify the Guarantees in any manner adverse to the holders, or | |
(10) make any changes in the issuer’s obligations to redeem the notes in a Special Mandatory Redemption. |
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(1) either (a) all the notes theretofore authenticated, except lost, stolen or destroyed notes which have been replaced or paid and notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the issuer and thereafter repaid to the issuer or discharged from such trust, have been delivered to the Trustee for cancellation or (b) all of the notes that have not been delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their stated maturity within one year or (iii) if redeemable at the option of the issuer, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the issuer, and the issuer has irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the notes to the date of deposit together with irrevocable instructions from the issuer directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; | |
(2) the issuer and/or the Guarantors have paid all other sums payable under the indenture; and | |
(3) the issuer has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel stating that all conditions precedent under the indenture relating to the satisfaction and discharge of the indenture have been complied with. |
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(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Restricted Subsidiary of such specified Person, and | |
(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person, |
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(1) 1.0% of the then outstanding principal amount of the note; and | |
(2) the excess of: |
(a) the present value at such redemption date of (i) the redemption price of the note, as applicable, at August 15, 2010 (such redemption price being set forth in the applicable table appearing above under the caption “— Optional Redemption”) plus (ii) all required remaining scheduled interest payments due on such note through August 15, 2010 excluding accrued but unpaid interest, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 75 basis points; over | |
(b) the then outstanding principal amount of the note. |
(1) the sale, conveyance, transfer or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/ Leaseback Transaction) of the issuer or any of its Restricted Subsidiaries (each referred to in this definition as a “disposition”) or | |
(2) the issuance or sale of Equity Interests of any Restricted Subsidiary (other than to the issuer or another Restricted Subsidiary of the issuer) (whether in a single transaction or a series of related transactions), |
(a) a disposition of Cash Equivalents or Investment Grade Securities or obsolete uneconomical, surplus or worn out property or equipment in the ordinary course of business; | |
(b) the sale, conveyance, transfer or other disposition of all or substantially all of the assets of the issuer and its Restricted Subsidiaries in a manner permitted pursuant to the provisions of the indenture described above under “Merger, Consolidation or Sale of All or Substantially All Assets” or any disposition that constitutes a Change of Control; | |
(c) any Restricted Payment that is permitted to be made, is made under the covenant of the indenture described above under “Certain Covenants — Limitation on Restricted Payments” or any Permitted Investment; | |
(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary with an aggregate Fair Market Value of less than $5.0 million; | |
(e) any disposition of property or assets by a Restricted Subsidiary of the issuer to the issuer or by the issuer or one of its Restricted Subsidiaries to another Restricted Subsidiary; | |
(f) sales of assets received by the issuer or any of its Restricted Subsidiaries upon the foreclosure on a Lien; | |
(g) sales or leases of inventory, equipment, accounts receivable or other current assets in the ordinary course of business; | |
(h) an issuance or sale of Equity Interests by a Restricted Subsidiary to the issuer or to another Restricted Subsidiary of the issuer; | |
(i) the surrender or waiver of contract rights or settlement, release or surrender of a contract, tort or other litigation claim in the ordinary course of business; | |
(j) any issuance of employee stock options or stock awards pursuant to benefit plans of the issuer or any of its Restricted Subsidiaries; |
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(k) any sale, lease, conveyance or other disposition deemed to occur with creating or granting a Lien not otherwise prohibited by the indenture; | |
(l) sales, conveyances or other transfers of accounts receivable and related assets and grants of security interests or creation of Liens of the type specified in the definition of Qualified Receivables Transaction, or a fractional undivided interest therein, by a Receivables Subsidiary in connection with a Qualified Receivables Transaction; | |
(o) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business; and | |
(p) the disposition of assets since the Issue Date in connection with or related to the reorganization of the issuer and its Subsidiaries in connection with the ongoing reorganization plans or the Transactions with an Aggregate Fair Market Value of not more than $50.0 million. |
(1) in the case of a corporation, corporate stock; | |
(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; | |
(3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and | |
(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person. |
(1) U.S. dollars, pounds sterling, euros, or, in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by it from time to time in the ordinary course of business; | |
(2) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof in each case with maturities not exceeding two years from the date of acquisition; | |
(3) certificates of deposit, time deposits, money market deposits, demand deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances, in |
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each case with maturities not exceeding one year from the date of acquisition and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500.0 million and whose long-term debt is rated at least “A” or the equivalent thereof by Moody’s or S&P; | |
(4) repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above; | |
(5) commercial paper issued by a corporation (other than an Affiliate of the issuer) rated at least “A-1” or the equivalent thereof by Moody’s or S&P and in each case maturing within one year after the date of acquisition; | |
(6) investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (5) above; | |
(7) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P in each case with maturities not exceeding two years from the date of acquisition; | |
(8) Indebtedness issued by Persons with a rating of “A” or higher from S&P or “A-2” or higher from Moody’s in each case with maturities not exceeding two years from the date of acquisition; and | |
(9) in the case of any Foreign Subsidiary: |
(a) direct obligations of the sovereign nation, or any agency thereof, in which such Foreign Subsidiary is organized and is conducting business or in obligations fully and unconditionally guaranteed by such sovereign nation, or any agency thereof; | |
(b) investments of the type and maturity described in clauses (1) through (8) above of foreign obligors, which investments or obligors, or the direct or indirect parents of such obligors, have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies; or | |
(c) investments of the type and maturity described in clauses (1) through (8) above of foreign obligors, or the direct or indirect parents of such obligors, which investments or obligors, or the direct or indirect parents of such obligors, are not rated as provided in such clauses or in clause (b) above but which are, in the reasonable judgment of the issuer, comparable in investment quality to such investments and obligors, or the direct or indirect parent of such obligors. |
(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of deferred financing fees); and | |
(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; |
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(1) the Net Income of any Person (other than the issuer) that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash (or to the extent converted into cash) to the specified Person or a Restricted Subsidiary of the Person; | |
(2) solely for the purpose of determining the amount available for Restricted Payments under clause (c)(1) of the first paragraph of “— Certain Covenants — Limitation on Restricted Payments,” the Net Income of any Restricted Subsidiary (other than a Guarantor) will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders, unless such restrictions with respect to the payment of dividends or similar distributions have been legally waived at the date of determination; | |
(3) the cumulative effect of a change in accounting principles will be excluded; | |
(4) any net after-tax extraordinary or nonrecurring gains or losses or income or expenses (less all fees and expenses relating thereto), including, without limitation, any severance expenses, transition expenses incurred as a direct result of the transition of the issuer to an independent public company in connection with the Transactions and fees, expenses or charges related to any Equity Offering, Permitted Investment, acquisition or Indebtedness permitted to be Incurred under the indenture (in each case, whether or not successful), including any such fees, expenses, charges or change in control payments related to the Transactions, in each case, will be excluded; | |
(5) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business shall be excluded; | |
(6) any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness will be excluded; | |
(7) other non-cash items which would otherwise increase or decrease Consolidated Net Income for such period (excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior or period or an accrual of, or cash reserve for, anticipated cash charges in a future period) will be excluded; and | |
(8) restructuring charges and other one-time expenses associated with the issuer’s integration plan as described in the Offering Memorandum will be excluded. |
(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor, |
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(2) to advance or supply funds: |
(a) for the purchase or payment of any such primary obligation; or | |
(b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or |
(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof. |
(1) the Bank Indebtedness and | |
(2) other Senior Indebtedness of the issuer or such Guarantor which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof, are committed to lend up to, at least $20.0 million and is specifically designated by the issuer or such Guarantor in the instrument evidencing or governing such Senior Indebtedness as “Designated Senior Indebtedness” for purposes of the indenture. |
(1) matures, excluding any maturity as the result of the redemption thereof at the option of the issuer thereof, or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, | |
(2) is convertible or exchangeable for Indebtedness or Disqualified Stock, or | |
(3) is redeemable at the option of the holder thereof, in whole or in part, |
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(1) Consolidated Taxes; plus | |
(2) Consolidated Interest Expense. |
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(1) Consolidated Interest Expense of such Person for such period, and | |
(2) all cash dividend payments (excluding items eliminated in consolidation) on any series of Preferred Stock or Disqualified Stock of such Person and its Restricted Subsidiaries. |
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(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or | |
(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, |
(1) currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and | |
(2) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices. |
(1) any indebtedness of such Person, without duplication, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or, without duplication, reimbursement agreements in respect thereof), excluding letters of credit securing obligations other than obligations described in subclauses (a), (b), (e) and (f) of this clause (1) and entered into in the ordinary course of business of such Person, to the extent such letters of credit are not drawn upon, or, if drawn upon, to the extent such drawing is reimbursed no later than the fifth (5th) Business Day following receipt by such Person of a demand for reimbursement), (c) in respect of bankers’ acceptances, (d) representing the deferred balance and unpaid purchase price of any property, except any such balance that constitutes an accrued expense or |
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trade payable or similar obligation to a trade creditor and excluding any such balance or unpaid purchase price to the extent that it is either required to be or at the option of such Person may be satisfied solely through the issuance of Equity Interests of the issuer that are not Disqualified Stock, (e) in respect of Capitalized Lease Obligations, or (f) representing any Hedging Obligations, other than Hedging Obligations that are incurred in the normal course of business and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP; | |
(2) to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and | |
(3) to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person);provided, however, that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value of such asset at such date of determination, and (b) the amount of such Indebtedness of such other Person; |
(1) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents) and in each case with maturities not exceeding two years from the date of acquisition, | |
(2) investments in any fund that invests exclusively in investments of the type described in clause (1) which fund may also hold immaterial amounts of cash pending investment and/or distribution, and | |
(3) corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition. |
(1) “Investments” shall include the portion (proportionate to such Person’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of a Restricted Subsidiary of such Person |
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at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary;providedthat the portion (proportionate to such Person’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary will be considered a reduction in outstanding Investments; and | |
(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer, in each case as determined in good faith by the Board of Directors of the issuer. |
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(1) with respect to the issuer, the notes and any Indebtedness which rankspari passuin right of payment to the notes; and | |
(2) with respect to any Guarantor, its Guarantee and any Indebtedness which rankspari passuin right of payment to such Guarantor’s Guarantee. |
(1) any Investment in the issuer or any Restricted Subsidiary of the issuer; | |
(2) any Investment in Cash Equivalents or Investment Grade Securities; | |
(3) any Investment by the issuer or any of its Restricted Subsidiaries in a Person if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of the issuer, or (b) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the issuer or a Restricted Subsidiary of the issuer; | |
(4) any Investment in securities or other assets not constituting Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of the indenture described under “Certain Covenants — Asset Sales” or any other disposition of assets not constituting an Asset Sale; | |
(5) any Investment existing on the Assumption Date and any amendment, modification, restatement, supplement, extension, renewal, refunding, replacement or refinancing, in whole or in part thereof;providedthat such amendment does not increase the aggregate principal amount thereof; | |
(6) advances to employees not in excess of $30.0 million outstanding at any one time in the aggregate; |
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(7) any Investment acquired by the issuer or any of its Restricted Subsidiaries in satisfaction of judgments, settlements of debt or compromises of obligations incurred in the ordinary course of business; | |
(8) any Investment acquired by the issuer or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable, or (b) as a result of a foreclosure by the issuer or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default; | |
(9) Hedging Obligations permitted under clause (i) of the covenant described under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(10) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses, commission and payroll advances and other similar expenses or advances, in each case Incurred in the ordinary course of business; | |
(11) Investments the payment for which consists of Equity Interests of the issuer, other than Disqualified Stock, or any direct or indirect parent company of the issuer, as applicable;provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under clause (c) of the first paragraph of the covenant described under “Certain Covenants — Limitation on Restricted Payments”; | |
(12) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with the provisions of the second paragraph of the covenant described under “Certain Covenants — Transactions with Affiliates” (except transactions described in clauses (2), (7), (10), (14) and (15) of such paragraph); | |
(13) guarantees issued in accordance with the covenants described under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and “— Future Guarantors”; | |
(14) any Investment by Restricted Subsidiaries of the issuer in other Restricted Subsidiaries of the issuer and Investments by Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are not Restricted Subsidiaries of the issuer; | |
(15) Investments consisting of purchases and acquisitions of inventory, supplies, materials and equipment or purchases of contract rights or licenses or leases of intellectual property, in each case in the ordinary course of business; | |
(16) Investments resulting from the receipt of non-cash consideration in an Asset Sale received in compliance with the covenant described under “Certain Covenants — Asset Sales” or any other disposition of assets not constituting an Asset Sale; | |
(17) additional Investments in joint ventures and other Investments in any Person having an aggregate fair market value, measured on the date each such Investment was made, when taken together with all other Investments made pursuant to this clause (17) since the Issuer Date not to exceed the greater of (x) 5% of Total Assets and (y) $100.0 million; | |
(18) Investments deemed to have been made as a result of the acquisition of a Person that at the time of such acquisition held instruments constituting Investments that were not acquired in contemplation of the acquisition of such Person; | |
(19) Investments in prepaid expenses and lease, utility and workers’ compensation performance and other similar deposits; |
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(20) Investments consisting of intercompany indebtedness between the issuer and the Guarantors or between Guarantors and permitted under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(21) Investments consisting of guarantees of Indebtedness of the Issuer and its Restricted Subsidiaries permitted under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(22) Investments in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person, in each case, in connection with a Qualified Receivables Transaction; and | |
(23) endorsements of negotiable instruments and other similar negotiable documents. |
(1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent or deposits as security for payment of insurance related obligations (including, but not limited to, in respect of deductibles, self-insured retention amounts and premiums and adjustments thereto), in each case Incurred in the ordinary course of business; | |
(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, and deposits made to obtain the release of such Liens in each case for sums not overdue for a period in excess of 30 days or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review; | |
(3) Liens for taxes, assessments or other governmental charges not yet due or payable or subject to penalties for nonpayment or which are being contested in good faith by appropriate proceedings; | |
(4) Liens in favor of issuers of judgment, appeal, performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; | |
(5) minor survey exceptions, encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; | |
(6) Liens securing Indebtedness or other Obligations under the Credit Agreement or other Senior Indebtedness permitted to be Incurred pursuant to the covenant described under “Certain |
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Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(7) Liens securing Indebtedness permitted to be Incurred pursuant to the provisions of the indenture described in clauses (o), (t) and (u) of the second paragraph under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;providedthat in the case of such clause (u), such Liens do not extend to the property or assets of any Restricted Subsidiary of the issuer other than a Foreign Subsidiary; | |
(8) Liens existing on the Assumption Date; | |
(9) Liens on property, assets or shares of stock of a Person at the time such Person becomes a Subsidiary;provided, however, such Liens are not created or Incurred in connection with, or in contemplation of, such other Person becoming such a Subsidiary;provided, further, however, that such Liens may not extend to any other assets or shares owned by the issuer or any Restricted Subsidiary; | |
(10) Liens on property or assets at the time the issuer or a Restricted Subsidiary of the issuer acquired the property or assets, including any acquisition by means of a merger, consolidation, combination or amalgamation with or into the issuer or any of its Restricted Subsidiaries;provided, however, that such Liens are not created or Incurred in connection with, or in contemplation of, such acquisition;provided, further, however, that the Liens may not extend to any other property or assets owned by the issuer or any of its Restricted Subsidiaries; | |
(11) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to the issuer or another of its Restricted Subsidiaries permitted to be Incurred in accordance with the covenant described under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; | |
(12) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under the indenture, secured by a Lien on the same property securing such Hedging Obligations; | |
(13) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods; | |
(14) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of the issuer and its Restricted Subsidiaries, taken as a whole; | |
(15) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the issuer and its Restricted Subsidiaries in the ordinary course of business; | |
(16) Liens in favor of the issuer or any Guarantor; | |
(17) Liens on equipment of the issuer or any of its Restricted Subsidiaries granted in the ordinary course of business to the issuer’s client at which such equipment is located; | |
(18) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8), (9), (10), (11), (12) and (15);provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8), (9), (10), (11), (12) and (15) at the time the original Lien became a Permitted Lien under the indenture, and (B) an amount necessary to pay any fees and |
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expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement; | |
(19) Liens in favor of customs and revenue authorities to secure payment of customs duties in connection with the importation of goods in the ordinary course of business and other similar Liens arising in the ordinary course of business;providedthat such amounts are not more than 30 days overdue; | |
(20) any attachment or judgment Lien not constituting an Event of Default under clause (8) of the first paragraph under the caption “Defaults” and Liens arising from the rendering of a judgment that is not a final judgment or order against the issuer or any Restricted Subsidiary with respect to which the issuer or such Restricted Subsidiary is then proceeding with an appeal or other proceeding for review or in connection with surety or appeal bonds in connection with such attachment or judgment; | |
(21) Liens under licensing agreements for use of intellectual property entered into in the ordinary course of business and consistent with past practices, including, without limitation, the licensing of any intellectual property that the issuer or any of its subsidiaries determined to no longer utilize; | |
(22) any interest or title of a lessor or sublessor under any operating lease or capital lease; | |
(23) rights of set-off; | |
(24) Liens incurred or deposits made in connection with account netting and other similar treasury management functions; | |
(25) Liens arising out of consignment or similar arrangements for the sale of goods entered into by the issuer or any of its Restricted Subsidiaries in the ordinary course of business; | |
(25) Liens on assets of a Receivables Subsidiary incurred in connection with a Qualified Receivables Transaction; and | |
(26) other Liens securing obligations incurred in the ordinary course of business which obligations do not exceed $10.0 million at any one time outstanding. |
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(1) any officer within the corporate trust department of a Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of that Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject, and | |
(2) who shall have direct responsibility for the administration of the indenture. |
(1) any Subsidiary of the issuer that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors of the issuer in the manner provided below; and | |
(2) any Subsidiary of an Unrestricted Subsidiary. |
(a) the Subsidiary to be so designated has total consolidated assets of $1,000 or less; or | |
(b) if such Subsidiary has consolidated assets greater than $1,000, then such designation would be permitted under the covenant described under “Certain Covenants — Limitation on Restricted Payments.” |
(x) (1) the issuer could Incur $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test described under “Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” or (2) the Fixed Charge Coverage Ratio for the issuer and its Restricted Subsidiaries would be greater than such ratio for the issuer and its Restricted Subsidiaries immediately prior to such designation, in each case on apro formabasis taking into account such designation, and | |
(y) no Event of Default shall have occurred and be continuing. |
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(1) upon deposit of the Global Note, DTC will credit the accounts of Participants pursuant to the corresponding letters of transmittal with portions of the principal amount of the Global Note; and |
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(2) ownership of these interests in the Global Note will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Note). |
(1) any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Note or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Note; or | |
(2) any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. |
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(1) DTC (a) notifies the issuer that it is unwilling or unable to continue as depositary for the Global Note and the issuer fails to appoint a successor depository within 90 days after receiving such notice or (b) has ceased to be a clearing agency registered under the Exchange Act, and in each case the issuer fails to appoint a successor depositary within 90 days after becoming aware of this condition; | |
(2) the issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or | |
(3) there shall have occurred and be continuing a Default or Event of Default with respect to the Notes. |
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• | an individual who is a citizen or resident of the United States; | |
• | a corporation created or organized in the United States or under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust that (i) is subject to the primary supervision of a U.S. court and that has one or more U.S. fiduciaries who have the authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
Exchange Offer |
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Interest |
Sale or Other Disposition of New Notes |
Information Reporting and Backup Withholding |
Exchange Offer |
Interest |
• | the interest is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder; | |
• | the Non-U.S. Holder actually or constructively owns 10% or more of the total combined voting power of all classes of our stock entitled to vote; | |
• | the Non-U.S. Holder is a controlled foreign corporation to which we are a related person for U.S. federal income tax purposes; or |
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• | the Non-U.S. Holder fails to certify, under penalties of perjury, on a properly completed IRS Form W-8BEN (or a permissible substitute) that it is a Non-U.S. Holder and provides its name and address. |
• | IRS Form W-8BEN claiming an exemption from (or reduction in) withholding under the benefit of an applicable income tax treaty; or | |
• | IRS Form W-8ECI stating that the interest paid on the note is not subject to withholding tax because it is effectively connected with the Non-U.S. Holder’s conduct of a trade or business in the United States. If, however, the interest is effectively connected with the conduct of a trade or business in the United States by the Non-U.S. Holder, the interest will be subject to U.S. federal income tax imposed on a net income basis generally in the same manner as applicable to U.S. persons and, in the case of a corporate Non-U.S. Holder, potentially also a 30% branch profits tax. |
Sale or Other Disposition of New Notes |
Information Reporting and Backup Withholding |
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Treatment of the New Notes for U.S. Federal Estate Tax Purposes |
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• | an “affiliate” of the issuer (as defined under the Securities Act); or | |
• | a broker-dealer. |
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Page | |||||
Consolidated Financial Statements of ACCO Brands Corporation and Subsidiaries | |||||
F-2 | |||||
Consolidated Financial Statements as of December 27, 2004, 2003 and 2002 and for the years ended December 27, 2004, 2003 and 2002 | |||||
F-3 | |||||
F-4 | |||||
F-5 | |||||
F-6 | |||||
F-7 | |||||
Unaudited Condensed Consolidated Financial Statements as of June 25, 2005 and December 27, 2004 and for the three and six months ended June 25, 2005 and 2004 | |||||
F-37 | |||||
F-38 | |||||
F-39 | |||||
F-40 | |||||
F-58 | |||||
Consolidated Financial Statements of General Binding Corporation and Subsidiaries | |||||
F-59 | |||||
F-60 | |||||
F-61 | |||||
F-62 | |||||
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F-64 | |||||
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Unaudited Condensed Consolidated Financial Statements as of June 30, 2005 and December 31, 2004 and for the three and six months ended June 30, 2005 and 2004 | |||||
F-96 | |||||
F-98 | |||||
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2004 | 2003 | 2002 | |||||||||||||
(in millions of dollars) | |||||||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | 79.8 | $ | 60.5 | $ | 43.3 | |||||||||
Accounts receivable less allowances for discounts, doubtful accounts and returns; $18.5, $19.3 and $24.4 for 2004, 2003 and 2002 | 320.1 | 258.2 | 249.4 | ||||||||||||
Inventories, net | |||||||||||||||
Raw materials and supplies | 24.7 | 25.7 | 26.2 | ||||||||||||
Work in process | 5.8 | 7.4 | 8.1 | ||||||||||||
Finished products | 142.0 | 123.1 | 101.8 | ||||||||||||
172.5 | 156.2 | 136.1 | |||||||||||||
Deferred income taxes | 4.2 | 3.9 | 6.5 | ||||||||||||
Income taxes receivable | — | — | 2.0 | ||||||||||||
Other current assets | 19.9 | 21.4 | 19.5 | ||||||||||||
Total current assets | 596.5 | 500.2 | 456.8 | ||||||||||||
Property, plant and equipment | |||||||||||||||
Land and improvements | 13.2 | 14.4 | 20.5 | ||||||||||||
Buildings and improvements to leaseholds | 117.8 | 132.7 | 135.6 | ||||||||||||
Machinery and equipment | 346.5 | 399.5 | 398.6 | ||||||||||||
Construction in progress | 15.0 | 4.4 | 4.7 | ||||||||||||
492.5 | 551.0 | 559.4 | |||||||||||||
Less accumulated depreciation | 334.8 | 381.0 | 364.1 | ||||||||||||
Property, plant and equipment, net | 157.7 | 170.0 | 195.3 | ||||||||||||
Deferred income taxes | 21.7 | 25.2 | 18.9 | ||||||||||||
Intangibles resulting from business acquisitions, net of accumulated amortization; $63.3, $61.0 and $59.6 for 2004, 2003 and 2002 | 117.6 | 117.3 | 128.8 | ||||||||||||
Property, plant and equipment held for sale | — | 7.0 | 13.9 | ||||||||||||
Prepaid pension expense | 87.1 | 60.1 | 40.0 | ||||||||||||
Other assets | 3.9 | 6.9 | 6.8 | ||||||||||||
Total assets | $ | 984.5 | $ | 886.7 | $ | 860.5 | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current liabilities | |||||||||||||||
Notes payable to banks | $ | 0.1 | $ | 2.8 | $ | 4.3 | |||||||||
Current portion of long-term debt | — | — | 0.4 | ||||||||||||
Accounts payable | 120.6 | 96.4 | 87.2 | ||||||||||||
Accrued income taxes due to Parent | 14.3 | 6.6 | — | ||||||||||||
Accrued customer programs | 81.6 | 54.8 | 62.1 | ||||||||||||
Accrued compensation, restructuring and other liabilities | 108.2 | 105.2 | 97.1 | ||||||||||||
Total current liabilities | 324.8 | 265.8 | 251.1 | ||||||||||||
Postretirement and other liabilities | 42.9 | 87.8 | 80.6 | ||||||||||||
Total liabilities | 367.7 | 353.6 | 331.7 | ||||||||||||
Stockholders’ equity | |||||||||||||||
Common stock, par value $1 per share and 53,476 shares authorized, issued and outstanding at December 27, 2004, 2003 and 2002 | 0.1 | 0.1 | 0.1 | ||||||||||||
Parent company investment | (269.5 | ) | (225.1 | ) | (167.6 | ) | |||||||||
Paid-in capital | 1,835.1 | 1,832.6 | 1,829.8 | ||||||||||||
Accumulated other comprehensive income (loss) | 15.9 | (41.2 | ) | (73.5 | ) | ||||||||||
Accumulated deficit | (964.8 | ) | (1,033.3 | ) | (1,060.0 | ) | |||||||||
Total stockholders’ equity | 616.8 | 533.1 | 528.8 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 984.5 | $ | 886.7 | $ | 860.5 | |||||||||
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2004 | 2003 | 2002 | |||||||||||
(in millions of dollars, except per share data) | |||||||||||||
Net sales | $ | 1,175.7 | $ | 1,101.9 | $ | 1,105.4 | |||||||
Cost of products sold | 714.3 | 686.8 | 698.9 | ||||||||||
Advertising, selling, general and administrative expenses | 347.8 | 337.8 | 351.5 | ||||||||||
Amortization of intangibles | 1.3 | 1.7 | 2.1 | ||||||||||
Write-down of intangibles | — | 12.0 | — | ||||||||||
Restructuring charges | 19.4 | 17.3 | 34.3 | ||||||||||
Interest expense, including allocation from Parent | 8.5 | 8.0 | 12.3 | ||||||||||
Other (income) expense, net | (5.2 | ) | (1.6 | ) | 0.8 | ||||||||
Income before income taxes | 89.6 | 39.9 | 5.5 | ||||||||||
Income taxes | 21.1 | 13.2 | 1.3 | ||||||||||
Net income | $ | 68.5 | $ | 26.7 | $ | 4.2 | |||||||
Basic earnings per common share | $ | 1.96 | $ | 0.76 | $ | 0.12 | |||||||
Unaudited pro forma earnings per share (see Note 15) | |||||||||||||
Basic | $ | 1.29 | |||||||||||
Diluted | $ | 1.28 | |||||||||||
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2004 | 2003 | 2002 | |||||||||||
(in millions of dollars) | |||||||||||||
Operating activities | |||||||||||||
Net income | $ | 68.5 | $ | 26.7 | $ | 4.2 | |||||||
Write-down of intangibles | — | 12.0 | — | ||||||||||
Restructuring non-cash charges | 6.4 | 9.7 | 12.1 | ||||||||||
Loss on disposal of fixed assets | 1.5 | 9.2 | 0.1 | ||||||||||
Depreciation | 28.2 | 33.3 | 37.0 | ||||||||||
Amortization | 1.3 | 1.7 | 2.1 | ||||||||||
Decrease in deferred income taxes | (13.7 | ) | (3.9 | ) | (9.7 | ) | |||||||
(Increase) decrease in accounts receivable | (51.1 | ) | 6.7 | 7.1 | |||||||||
(Increase) decrease in inventories | (9.6 | ) | (10.6 | ) | 38.2 | ||||||||
Increase (decrease) in accounts payable, accrued expense and other liabilities | 35.8 | (11.6 | ) | 16.2 | |||||||||
Increase in accrued taxes | 12.0 | 9.4 | 26.5 | ||||||||||
Other operating activities, net | (15.6 | ) | (15.4 | ) | 28.1 | ||||||||
Net cash provided from operating activities | 63.7 | 67.2 | 161.9 | ||||||||||
Investing activities | |||||||||||||
Additions to property, plant and equipment | (27.6 | ) | (16.3 | ) | (22.0 | ) | |||||||
Proceeds from the disposition of property, plant and equipment | 21.5 | 14.6 | 4.8 | ||||||||||
Net cash used by investing activities | (6.1 | ) | (1.7 | ) | (17.2 | ) | |||||||
Financing activities | |||||||||||||
Decrease in parent company investment | (42.6 | ) | (54.8 | ) | (128.3 | ) | |||||||
Repayments on long-term debt | — | (0.4 | ) | (0.9 | ) | ||||||||
Repayments of short-term debt | (2.7 | ) | (1.6 | ) | — | ||||||||
Borrowings of short-term debt | — | — | 0.5 | ||||||||||
Net cash used by financing activities | (45.3 | ) | (56.8 | ) | (128.7 | ) | |||||||
Effect of foreign exchange rate changes on cash | 7.0 | 8.5 | 2.4 | ||||||||||
Net increase in cash and cash equivalents | 19.3 | 17.2 | 18.4 | ||||||||||
Cash and cash equivalents | |||||||||||||
Beginning of year | 60.5 | 43.3 | 24.9 | ||||||||||
End of year | $ | 79.8 | $ | 60.5 | $ | 43.3 | |||||||
Cash paid during the year for | |||||||||||||
Interest | $ | 0.3 | $ | 0.4 | $ | 0.5 | |||||||
Income taxes | $ | 16.9 | $ | 14.1 | $ | 11.4 | |||||||
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Accumulated | ||||||||||||||||||||||||||
Parent | Other | Accumulated | ||||||||||||||||||||||||
Common | Company | Paid-in | Comprehensive | Earnings | ||||||||||||||||||||||
Stock | Investment | Capital | Income (Loss) | Deficit | Total | |||||||||||||||||||||
(in millions of dollars) | ||||||||||||||||||||||||||
Balance at December 27, 2001 | $ | 0.1 | $ | (42.7 | ) | $ | 1,826.9 | $ | (55.7 | ) | $ | (1,064.2 | ) | $ | 664.4 | |||||||||||
Comprehensive income | ||||||||||||||||||||||||||
Net income | — | — | — | — | 4.2 | 4.2 | ||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | (29.8 | ) | — | (29.8 | ) | ||||||||||||||||||
Changes in currency translation adjustment and other | — | — | 0.4 | 12.0 | — | 12.4 | ||||||||||||||||||||
Total comprehensive income (loss) | — | — | 0.4 | (17.8 | ) | 4.2 | (13.2 | ) | ||||||||||||||||||
Net transfers to Parent | — | (124.9 | ) | — | — | — | (124.9 | ) | ||||||||||||||||||
Tax benefit from stock options | — | — | 2.5 | — | — | 2.5 | ||||||||||||||||||||
Balance at December 27, 2002 | 0.1 | (167.6 | ) | 1,829.8 | (73.5 | ) | (1,060.0 | ) | 528.8 | |||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||
Net income | — | — | — | — | 26.7 | 26.7 | ||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | (3.0 | ) | — | (3.0 | ) | ||||||||||||||||||
Changes in currency translation adjustment | — | — | — | 35.3 | — | 35.3 | ||||||||||||||||||||
Total comprehensive income | — | — | — | 32.3 | 26.7 | 59.0 | ||||||||||||||||||||
Net transfers to Parent | — | (57.5 | ) | — | — | — | (57.5 | ) | ||||||||||||||||||
Tax benefit from stock options | — | — | 2.8 | — | — | 2.8 | ||||||||||||||||||||
Balance at December 27, 2003 | 0.1 | (225.1 | ) | 1,832.6 | (41.2 | ) | (1,033.3 | ) | 533.1 | |||||||||||||||||
Comprehensive income | ||||||||||||||||||||||||||
Net income | — | — | — | — | 68.5 | 68.5 | ||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | 32.8 | — | 32.8 | ||||||||||||||||||||
Changes in currency translation adjustment | — | — | — | 24.3 | — | 24.3 | ||||||||||||||||||||
Total comprehensive income (loss) | — | — | — | 57.1 | 68.5 | 125.6 | ||||||||||||||||||||
Net transfers to Parent | — | (44.4 | ) | (0.4 | ) | — | — | (44.8 | ) | |||||||||||||||||
Tax benefit from stock options | — | — | 2.9 | — | — | 2.9 | ||||||||||||||||||||
Balance at December 27, 2004 | $ | 0.1 | $ | (269.5 | ) | $ | 1,835.1 | $ | 15.9 | $ | (964.8 | ) | $ | 616.8 | ||||||||||||
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Buildings | 40 to 50 years | |||
Leasehold improvements | 1 to 10 years | |||
Machinery, equipment and furniture | 3 to 10 years | |||
Computer hardware and software | 3 to 7 years | |||
Automobiles | 2 to 4 years |
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2004 | 2003 | 2002 | ||||||||||
(in millions of dollars) | ||||||||||||
Reserve balance at the beginning of the year | $ | (1.2 | ) | $ | (0.7 | ) | $ | (0.9 | ) | |||
Provision for warranties issued | (3.4 | ) | (1.6 | ) | (1.7 | ) | ||||||
Settlements made (in cash or in kind) | 1.9 | 1.1 | 1.9 | |||||||||
Reserve balance at the end of year | $ | (2.7 | ) | $ | (1.2 | ) | $ | (0.7 | ) | |||
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F-10
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F-11
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F-12
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F-13
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F-14
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Pension Benefits | Postretirement Benefits | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||||||
Change in projected benefit obligation (PBO) | |||||||||||||||||||||||||
Projected benefit obligation at beginning of year | $ | 294.0 | $ | 244.3 | $ | 217.5 | $ | 10.8 | $ | 12.6 | $ | 10.8 | |||||||||||||
Service cost | 7.2 | 6.3 | 7.1 | 0.2 | 0.2 | 0.3 | |||||||||||||||||||
Interest cost | 17.4 | 15.0 | 14.4 | 0.7 | 0.7 | 0.7 | |||||||||||||||||||
Actuarial loss (gain) | 7.9 | 24.7 | 6.7 | — | (3.0 | ) | 0.7 | ||||||||||||||||||
Participants’ contributions | 1.3 | 1.2 | 1.0 | — | 0.1 | 0.1 | |||||||||||||||||||
Foreign exchange rate changes | 19.2 | 16.7 | 9.9 | 0.7 | 0.8 | 0.6 | |||||||||||||||||||
Benefits paid | (16.9 | ) | (14.2 | ) | (12.3 | ) | (0.7 | ) | (0.6 | ) | (0.6 | ) | |||||||||||||
Curtailments | — | — | — | (0.6 | ) | — | — | ||||||||||||||||||
Projected benefit obligation at end of year | 330.1 | 294.0 | 244.3 | 11.1 | 10.8 | 12.6 | |||||||||||||||||||
Change in plan assets | |||||||||||||||||||||||||
Fair value of plan assets at beginning of year | 264.4 | 214.6 | 240.4 | — | — | — | |||||||||||||||||||
Actual return on plan assets | 18.9 | 26.9 | (25.1 | ) | — | — | — | ||||||||||||||||||
Employer contributions | 30.9 | 22.8 | 2.2 | 0.6 | 0.5 | 0.5 | |||||||||||||||||||
Participants’ contributions | 1.3 | 1.2 | 1.0 | 0.1 | 0.1 | 0.1 | |||||||||||||||||||
Foreign exchange rate changes | 16.9 | 13.6 | 8.8 | — | — | — | |||||||||||||||||||
Benefits paid | (16.9 | ) | (14.2 | ) | (12.3 | ) | (0.7 | ) | (0.6 | ) | (0.6 | ) | |||||||||||||
Other Items | 0.5 | (0.5 | ) | (0.4 | ) | — | — | — | |||||||||||||||||
Fair value of plan assets at end of year | 316.0 | 264.4 | 214.6 | — | — | — | |||||||||||||||||||
Funded status (Fair value of plan assets less PBO) | (14.1 | ) | (29.6 | ) | (29.7 | ) | (11.2 | ) | (10.8 | ) | (12.6 | ) | |||||||||||||
Unrecognized actuarial loss (gain) | 94.1 | 83.6 | 67.1 | (6.1 | ) | (6.5 | ) | (3.9 | ) | ||||||||||||||||
Unrecognized prior service cost (benefit) | 4.4 | 3.0 | 1.0 | (0.2 | ) | (0.2 | ) | (0.2 | ) | ||||||||||||||||
Net amount recognized | $ | 84.4 | $ | 57.0 | $ | 38.4 | $ | (17.5 | ) | $ | (17.5 | ) | $ | (16.7 | ) | ||||||||||
Pension Benefits | Postretirement Benefits | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||||||
Prepaid pension benefit | $ | 87.1 | $ | 60.1 | $ | 11.9 | $ | — | $ | — | $ | — | |||||||||||||
Accrued benefit liability | (2.7 | ) | (53.9 | ) | (19.7 | ) | (17.5 | ) | (17.5 | ) | (16.7 | ) | |||||||||||||
Intangible assets | — | 3.8 | 2.0 | — | — | — | |||||||||||||||||||
Accumulated other comprehensive income | — | 47.0 | 44.2 | — | — | — | |||||||||||||||||||
Net amount recognized | $ | 84.4 | $ | 57.0 | $ | 38.4 | $ | (17.5 | ) | $ | (17.5 | ) | $ | (16.7 | ) | ||||||||||
F-15
Table of Contents
2004 | 2003 | 2002 | ||||||||||
(in millions of dollars) | ||||||||||||
Projected benefit obligation | $ | 2.3 | $ | 174.9 | $ | 231.7 | ||||||
Accumulated benefit obligation | 1.6 | 163.0 | 212.2 | |||||||||
Fair value of plan assets | — | 140.8 | 192.9 |
Pension Benefits | Postretirement Benefits | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
(in millions of dollars) | ||||||||||||||||||||||||
Service cost | $ | 7.2 | $ | 6.3 | $ | 7.1 | $ | 0.2 | $ | 0.2 | $ | 0.3 | ||||||||||||
Interest cost | 17.4 | 15.0 | 14.4 | 0.7 | 0.7 | 0.7 | ||||||||||||||||||
Expected return on plan assets | (21.9 | ) | (19.7 | ) | (21.0 | ) | (0.6 | ) | (0.2 | ) | — | |||||||||||||
Amortization of prior service cost | 0.9 | 1.3 | 0.2 | — | — | — | ||||||||||||||||||
Amortization of net loss (gain) | 4.3 | 2.0 | — | (1.0 | ) | (0.6 | ) | (0.4 | ) | |||||||||||||||
Net periodic benefit cost (income) | $ | 7.9 | $ | 4.9 | $ | 0.7 | $ | (0.7 | ) | $ | 0.1 | $ | 0.6 | |||||||||||
2004 | 2003 | 2002 | ||||||||||
(in millions of dollars) | ||||||||||||
(Decrease) increase in minimum liability included in intangible assets, liabilities and other comprehensive income | $ | (32.8 | ) | $ | 3.0 | $ | 44.2 |
Postretirement | ||||||||||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
Discount rate | 5.7 | % | 5.9 | % | 6.3 | % | 5.7 | % | 5.9 | % | 6.2 | % | ||||||||||||
Rate of compensation increase | 4.0 | % | 3.5 | % | 3.5 | % | — | — | — |
Postretirement | ||||||||||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
Discount rate | 5.9 | % | 6.3 | % | 6.7 | % | 5.9 | % | 6.2 | % | 6.7 | % | ||||||||||||
Expected long-term rate of return on plan assets | 7.9 | % | 8.0 | % | 8.0 | % | — | — | — | |||||||||||||||
Rate of compensation increase | 3.8 | % | 3.5 | % | 4.0 | % | — | — | — |
F-16
Table of Contents
Postretirement Benefits | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Health care cost trend rate assumed for next year | 10 | % | 10 | % | 10 | % | ||||||
Rate that the cost trend rate is assumed to decline (the ultimate trend rate) | 5 | % | 5 | % | 5 | % | ||||||
Year that the rate reaches the ultimate trend rate | 2015 | 2014 | 2008 |
1-Percentage- | 1-Percentage- | 1-Percentage- | ||||||||||
Point Increase | Point Decrease | Point Decrease | ||||||||||
(in millions of dollars) | ||||||||||||
Effect on total of service and interest cost | $ | 0.1 | $ | (0.1 | ) | $ | (0.1 | ) | ||||
Effect on postretirement benefit obligation | 1.0 | (1.0 | ) | (1.0 | ) |
Pension Plan Assets | |||||||||||||
at December 27 | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Asset category | |||||||||||||
Cash | 4 | % | 1 | % | 1 | % | |||||||
Equity securities | 70 | 73 | 61 | ||||||||||
Fixed income | 26 | 26 | 38 | ||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||
F-17
Table of Contents
Pension | Postretirement | |||||||
Benefits | Benefits | |||||||
(in millions of dollars) | ||||||||
2005 | $ | 13.9 | $ | 0.7 | ||||
2006 | 14.1 | 0.7 | ||||||
2007 | 14.2 | 0.7 | ||||||
2008 | 20.3 | 0.8 | ||||||
2009 | 15.1 | 0.8 | ||||||
Years 2010 — 2013 | 90.9 | 4.6 |
(in millions of dollars) | ||||
2005 | $ | 16.8 | ||
2006 | 14.8 | |||
2007 | 14.0 | |||
2008 | 12.2 | |||
2009 | 11.6 | |||
Remainder | 53.3 | |||
Total minimum rental payments | 122.7 | |||
Less minimum rentals to be received under noncancelable subleases | (2.5 | ) | ||
$ | 120.2 | |||
2004 | 2003 | 2002 | ||||||||||
(in millions of dollars) | ||||||||||||
Domestic operations | $ | 30.0 | $ | (10.1 | ) | $ | (24.7 | ) | ||||
Foreign operations | 59.6 | 50.0 | 30.2 | |||||||||
$ | 89.6 | $ | 39.9 | $ | 5.5 | |||||||
F-18
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2004 | 2003 | 2002 | |||||||||||
(in millions of dollars) | |||||||||||||
Income taxes computed at federal statutory income tax rate | $ | 31.2 | $ | 13.9 | $ | 1.8 | |||||||
Other income taxes, net of federal tax benefit | 1.3 | 0.3 | (0.6 | ) | |||||||||
Intangible write-down and amortization not deductible for income tax purposes | 0.4 | 0.9 | 0.7 | ||||||||||
Foreign income taxed at lower effective tax rate | (3.4 | ) | (3.2 | ) | (0.5 | ) | |||||||
Release of valuation allowance | (3.7 | ) | — | — | |||||||||
Reversal of reserves for items resolved more favorably than anticipated | (3.7 | ) | — | — | |||||||||
Effect of foreign earnings repatriation under the American Jobs Creation Act of 2004 | 1.2 | — | — | ||||||||||
Miscellaneous | (2.2 | ) | 1.3 | (0.1 | ) | ||||||||
Income taxes as reported | $ | 21.1 | $ | 13.2 | $ | 1.3 | |||||||
2004 | 2003 | 2002 | ||||||||||
(in millions of dollars) | ||||||||||||
Currently payable | ||||||||||||
Federal | $ | 17.8 | $ | 2.7 | $ | .2 | ||||||
Foreign | 15.3 | 13.9 | 11.7 | |||||||||
Other | 1.7 | 0.5 | (0.9 | ) | ||||||||
Deferred | ||||||||||||
Federal and other | (10.3 | ) | (4.2 | ) | (9.2 | ) | ||||||
Foreign | (3.4 | ) | 0.3 | (0.5 | ) | |||||||
$ | 21.1 | $ | 13.2 | $ | 1.3 | |||||||
F-19
Table of Contents
2004 | 2003 | 2002 | |||||||||||
(in millions of dollars) | |||||||||||||
Current assets | |||||||||||||
Compensation and benefits | $ | 0.9 | $ | 0.1 | $ | 0.6 | |||||||
Other reserves | 4.8 | 3.7 | 3.8 | ||||||||||
Restructuring | 1.2 | 0.8 | 2.7 | ||||||||||
Accounts receivable | 3.6 | 5.3 | 6.0 | ||||||||||
Miscellaneous | 4.2 | 3.9 | 4.4 | ||||||||||
14.7 | 13.8 | 17.5 | |||||||||||
Current liabilities | |||||||||||||
Dividends receivable | (2.0 | ) | — | — | |||||||||
Pensions | (8.1 | ) | (8.6 | ) | (8.6 | ) | |||||||
Miscellaneous | (0.4 | ) | (0.3 | ) | (1.4 | ) | |||||||
Current deferred income taxes | 4.2 | 4.9 | 7.5 | ||||||||||
Noncurrent assets | |||||||||||||
Net operating loss carryforwards | 12.4 | 12.7 | 10.8 | ||||||||||
Compensation and benefits | 11.5 | 8.1 | 4.5 | ||||||||||
Pension | — | 9.9 | 14.4 | ||||||||||
Goodwill basis | 18.0 | 19.6 | 21.1 | ||||||||||
Miscellaneous | 3.1 | 2.5 | 3.0 | ||||||||||
45.0 | 52.8 | 53.8 | |||||||||||
Noncurrent liabilities | |||||||||||||
Depreciation | (1.0 | ) | (7.6 | ) | (10.0 | ) | |||||||
Pensions | (6.6 | ) | — | (2.5 | ) | ||||||||
Identifiable intangibles | (4.0 | ) | (3.6 | ) | (7.2 | ) | |||||||
Miscellaneous | (2.0 | ) | (3.7 | ) | (4.4 | ) | |||||||
Noncurrent deferred income taxes | 31.4 | 37.9 | 29.7 | ||||||||||
Valuation allowance | (9.7 | ) | (13.7 | ) | (11.8 | ) | |||||||
Net deferred tax asset | $ | 25.9 | $ | 29.1 | $ | 25.4 | |||||||
F-20
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F-21
Table of Contents
Balance at | Balance at | ||||||||||||||||||||
December 27, | 2004 | Cash | Non-Cash | December 27, | |||||||||||||||||
(in millions of dollars) | 2003 | Provision | Expenditures | Write-Offs | 2004 | ||||||||||||||||
Rationalization of operations | |||||||||||||||||||||
Employee termination costs | $ | 1.3 | $ | 12.9 | $ | (14.1 | ) | $ | — | $ | 0.1 | ||||||||||
Other | 0.2 | (0.1 | ) | (0.4 | ) | 0.4 | 0.1 | ||||||||||||||
International distribution and | |||||||||||||||||||||
lease agreements | 1.1 | (0.5 | ) | (0.3 | ) | — | 0.3 | ||||||||||||||
Loss on disposal of assets | — | 7.6 | 1.1 | (8.7 | ) | — | |||||||||||||||
$ | 2.6 | $ | 19.9 | $ | (13.7 | ) | $ | (8.3 | ) | $ | 0.5 | ||||||||||
Balance at | Balance at | ||||||||||||||||||||
December 27, | 2003 | Cash | Non-Cash | December 27, | |||||||||||||||||
(in millions of dollars) | 2002 | Provision | Expenditures | Write-Offs | 2003 | ||||||||||||||||
Rationalization of operations | |||||||||||||||||||||
Employee termination costs | $ | — | $ | 8.8 | $ | (7.5 | ) | $ | — | $ | 1.3 | ||||||||||
Other | — | 0.5 | (0.3 | ) | — | 0.2 | |||||||||||||||
International distribution and | |||||||||||||||||||||
lease agreements | — | 1.2 | (0.2 | ) | 0.1 | 1.1 | |||||||||||||||
Loss on disposal of assets | — | 8.8 | 5.1 | (13.9 | ) | 0.0 | |||||||||||||||
$ | — | $ | 19.3 | $ | (2.9 | ) | $ | (13.8 | ) | $ | 2.6 | ||||||||||
Balance at | Balance at | |||||||||||||||||||||
December 27, | Total | Cash | Noncash | December 27, | ||||||||||||||||||
(in millions of dollars) | 2003 | Provision | Expenditures | Write-Offs | 2004 | |||||||||||||||||
Rationalization of operations | ||||||||||||||||||||||
Employee termination costs | $ | 2.6 | $ | 12.5 | $ | (15.0 | ) | $ | 0.1 | $ | 0.2 | |||||||||||
Other | 0.8 | — | (0.8 | ) | — | — | ||||||||||||||||
International distribution and | ||||||||||||||||||||||
lease agreements | 4.3 | (0.7 | ) | (1.1 | ) | 0.2 | 2.7 | |||||||||||||||
Loss on disposal of assets | 0.2 | 7.6 | 1.0 | (8.8 | ) | — | ||||||||||||||||
$ | 7.9 | $ | 19.4 | $ | (15.9 | ) | $ | (8.5 | ) | $ | 2.9 | |||||||||||
F-22
Table of Contents
Balance at | Balance at | ||||||||||||||||||||
December 27, | Total | Cash | Noncash | December 27, | |||||||||||||||||
(in millions of dollars) | 2002 | Provision | Expenditures | Write-Offs | 2003 | ||||||||||||||||
Rationalization of operations | |||||||||||||||||||||
Employee termination costs | $ | 9.0 | $ | 6.8 | $ | (13.7 | ) | $ | 0.5 | $ | 2.6 | ||||||||||
Other | (0.2 | ) | 0.9 | (0.6 | ) | 0.7 | 0.8 | ||||||||||||||
International distribution and | |||||||||||||||||||||
lease agreements | 4.3 | 1.1 | (1.5 | ) | 0.4 | 4.3 | |||||||||||||||
Loss on disposal of assets | 0.8 | 8.5 | 11.8 | (20.9 | ) | 0.2 | |||||||||||||||
$ | 13.9 | $ | 17.3 | $ | (4.0 | ) | $ | (19.3 | ) | $ | 7.9 | ||||||||||
Balance at | Balance at | ||||||||||||||||||||
December 27, | Total | Cash | Non-Cash | December 27, | |||||||||||||||||
(in millions of dollars) | 2001 | Provision | Expenditures | Write-Offs | 2002 | ||||||||||||||||
Rationalization of operations | |||||||||||||||||||||
Employee termination costs | $ | 7.6 | $ | 19.8 | $ | (18.7 | ) | $ | 0.3 | $ | 9.0 | ||||||||||
Other | 0.4 | (0.2 | ) | (0.4 | ) | — | (0.2 | ) | |||||||||||||
International distribution and | |||||||||||||||||||||
lease agreements | 5.2 | 1.5 | (2.7 | ) | 0.3 | 4.3 | |||||||||||||||
Loss on disposal of assets | 2.1 | 13.2 | — | (14.5 | ) | 0.8 | |||||||||||||||
$ | 15.3 | $ | 34.3 | $ | (21.8 | ) | $ | (13.9 | ) | $ | 13.9 | ||||||||||
F-23
Table of Contents
(in millions of dollars, except per share data) | 2004 | 2003 | 2002 | |||||||||
Net income — as reported | $ | 68.5 | $ | 26.7 | $ | 4.2 | ||||||
Add: Stock based employee compensation (performance awards) included in reported net income, net of tax | 0.5 | 0.5 | 0.3 | |||||||||
Deduct: Total stock based employee compensation (stock options and performance awards) determined under the fair-value based method for all awards, net of tax | (3.7 | ) | (3.0 | ) | (2.7 | ) | ||||||
Pro forma net income | $ | 65.3 | $ | 24.2 | $ | 1.8 | ||||||
Pro forma net earnings per basic share | $ | 1,221 | $ | 453 | $ | 34 | ||||||
Weighted- | ||||||||
Average | ||||||||
Exercise | ||||||||
Options | Price | |||||||
Outstanding at December 31, 2001 | 1,920,726 | $ | 30.31 | |||||
Granted | 395,200 | 49.00 | ||||||
Exercised | (687,324 | ) | 30.29 | |||||
Lapsed | (152,321 | ) | 32.71 | |||||
Outstanding at December 31, 2002 | 1,476,281 | 35.07 | ||||||
Granted | 393,100 | 57.30 | ||||||
Exercised | (374,055 | ) | 31.03 | |||||
Lapsed | (45,458 | ) | 40.50 | |||||
Outstanding at December 31, 2003 | 1,449,868 | 41.97 | ||||||
Granted | 392,100 | 72.87 | ||||||
Exercised | (259,718 | ) | 32.78 | |||||
Lapsed | (22,509 | ) | 50.19 | |||||
Outstanding at December 31, 2004 | 1,559,741 | $ | 51.15 | |||||
F-24
Table of Contents
2004 | 2003 | 2002 | ||||||||||
Expected dividend yield | 1.8 | % | 2.1 | % | 2.3 | % | ||||||
Expected volatility | 26.7 | % | 29.4 | % | 30.6 | % | ||||||
Risk-free interest rate | 3.2 | % | 2.8 | % | 2.7 | % | ||||||
Expected term | 4.5 years | 4.5 years | 4.5 years |
Weighted- | ||||||||||||
Average | Weighted- | |||||||||||
Remaining | Average | |||||||||||
Number | Contractual | Exercise | ||||||||||
Range of Exercise Prices | Outstanding | Life | Price | |||||||||
$22.78 to $32.05 | 343,642 | 6.1 | $ | 29.24 | ||||||||
34.18 to 49.10 | 464,246 | 6.5 | 44.13 | |||||||||
57.46 to 78.09 | 751,853 | 9.3 | 65.49 | |||||||||
$22.78 to $78.09 | 1,559,741 | 7.8 | $ | 51.15 | ||||||||
Weighted- | ||||||||
Average | ||||||||
Options | Exercise | |||||||
Exercisable | Price | |||||||
December 31, 2004 | 802,939 | $ | 38.92 | |||||
December 31, 2003 | 717,659 | $ | 32.74 | |||||
December 31, 2002 | 735,212 | $ | 30.47 |
Weighted- | ||||||
Average | ||||||
Number | Exercise | |||||
Exercisable | Price | |||||
343,642 | $ | 29.24 | ||||
348,207 | 42.56 | |||||
111,090 | 57.46 | |||||
802,939 | $ | 38.92 | ||||
F-25
Table of Contents
Minimum | Accumulated | |||||||||||
Foreign | Pension | Other | ||||||||||
Currency | Liability | Comprehensive | ||||||||||
(in millions of dollars) | Adjustments | Adjustment | Income (Loss) | |||||||||
Balance at December 27, 2001 | $ | (55.7 | ) | $ | — | $ | (55.7 | ) | ||||
Changes during the year (net of taxes of $1.3) | 12.0 | (29.8 | ) | (17.8 | ) | |||||||
Balance at December 27, 2002 | (43.7 | ) | (29.8 | ) | (73.5 | ) | ||||||
Changes during the year (net of taxes of $1.3) | 35.3 | (3.0 | ) | 32.3 | ||||||||
Balance at December 27, 2003 | (8.4 | ) | (32.8 | ) | (41.2 | ) | ||||||
Changed during the year (net of taxes of $14.5) | 24.3 | 32.8 | 57.1 | |||||||||
Balance at December 27, 2004 | $ | 15.9 | $ | — | $ | 15.9 | ||||||
ACCO U.S. — ACCO U.S. sells to U.S. customers and serves as one of two primary product ‘hubs’ for the business, driving much of the new product development and innovation opportunities for the North American region. The two ‘hubs’ coordinate product development activities to avoid duplication of effort while maintaining both global and local consumer focus. |
F-26
Table of Contents
ACCO Europe — In Europe, ACCO U.K. sells to customers in the United Kingdom, and serves as the primary product ‘hub’ for the European offerings. ACCO Europe businesses in France, Germany, Italy, Holland, Ireland, Spain, Poland, the Czech Republic, Sweden, Belgium, Austria, Switzerland and Hungary are principally engaged in selling products that are global or products that have been localized for their geographic market. These products are sourced from ACCO Brands’ U.K. product ‘hub’ (manufactured product), supplied by third party vendors, or manufactured regionally. | |
Trading companies — The Company’s businesses in Australia, New Zealand, Canada, Mexico, and Chile, referred to as our “Trading Companies”, are principally engaged in selling product which is either global or products that have been localized for their geographic market. These products are sourced from ACCO Brands’ business ’hubs’ in the U.S. and Europe (manufactured product), supplied by third party vendors, or manufactured locally. | |
Day-Timers — The Company’s Day-Timers business is based in the U.S. and includes subsidiaries in Australia, New Zealand and the United Kingdom. They manufacture a significant amount of their paper-based product in the United States, and source the remaining materials and finished goods from third parties. |
(in millions of dollars) | 2004 | 2003 | 2002 | |||||||||
ACCO U.S. | $ | 549.0 | $ | 532.8 | $ | 554.4 | ||||||
ACCO Europe | 365.1 | 318.0 | 296.1 | |||||||||
Trading Companies | 183.6 | 169.6 | 146.7 | |||||||||
Day-Timers | 78.0 | 80.1 | 103.2 | |||||||||
Other | — | 1.4 | 5.0 | |||||||||
$ | 1,175.7 | $ | 1,101.9 | $ | 1,105.4 | |||||||
(in millions of dollars) | 2004 | 2003 | 2002 | ||||||||||
ACCO U.S. | $ | 40.3 | $ | 8.0 | $ | 1.4 | |||||||
ACCO Europe | 24.0 | 18.8 | 11.0 | ||||||||||
Trading Companies | 32.8 | 24.4 | 18.8 | ||||||||||
Day-Timers | 10.9 | 11.1 | 2.0 | ||||||||||
Corporate expenses | (15.1 | ) | (16.0 | ) | (14.6 | ) | |||||||
Total income from operations | $ | 92.9 | $ | 46.3 | $ | 18.6 | |||||||
Interest expense | 8.5 | 8.0 | 12.3 | ||||||||||
Other (income) expense | (5.2 | ) | (1.6 | ) | 0.8 | ||||||||
Income before taxes | $ | 89.6 | $ | 39.9 | $ | 5.5 | |||||||
F-27
Table of Contents
(in millions of dollars) | 2004 | 2003 | 2002 | |||||||||
ACCO U.S. | $ | 367.3 | $ | 337.8 | $ | 369.4 | ||||||
ACCO Europe | 302.3 | 267.8 | 219.2 | |||||||||
Trading Companies | 152.8 | 128.1 | 106.3 | |||||||||
Day-Timers | 35.6 | 29.5 | 29.7 | |||||||||
$ | 858.0 | $ | 763.2 | $ | 724.6 | |||||||
(a) | Represents total assets excluding intangible assets, net. |
(in millions of dollars) | 2004 | 2003 | 2002 | |||||||||
Segment assets | $ | 858.0 | $ | 763.2 | $ | 723.6 | ||||||
Intangible assets | 117.6 | 117.3 | 128.8 | |||||||||
Corporate | 8.9 | 6.2 | 8.1 | |||||||||
$ | 984.5 | $ | 886.7 | $ | 860.5 | |||||||
(in millions of dollars) | 2004 | 2003 | 2002 | |||||||||
United States | $ | 79.1 | $ | 88.7 | $ | 109.0 | ||||||
United Kingdom | 40.4 | 42.2 | 48.5 | |||||||||
Australia | 15.9 | 15.4 | 11.6 | |||||||||
Canada | 4.9 | 4.8 | 4.5 | |||||||||
Other countries | 17.4 | 18.9 | 21.7 | |||||||||
$ | 157.7 | $ | 170.0 | $ | 195.3 | |||||||
(b) | Represents property, plant and equipment, net. |
(in millions of dollars) | 2004 | 2003 | 2002 | |||||||||
United States | $ | 608.8 | $ | 581.7 | $ | 631.7 | ||||||
United Kingdom | 184.5 | 186.6 | 163.3 | |||||||||
Australia | 94.2 | 82.4 | 66.0 | |||||||||
Canada | 68.1 | 80.0 | 73.8 | |||||||||
Other countries | 220.1 | 171.2 | 170.6 | |||||||||
$ | 1,175.7 | $ | 1,101.9 | $ | 1,105.4 | |||||||
F-28
Table of Contents
(in millions of dollars) | 2004 | 2003 | 2002 | |||||||||
ACCO U.S. | $ | 15.9 | $ | 6.1 | $ | 9.3 | ||||||
ACCO Europe | 6.1 | 6.6 | 10.9 | |||||||||
Trading Companies | 5.0 | 3.1 | 1.6 | |||||||||
Day-Timers | 0.6 | 0.5 | 0.2 | |||||||||
$ | 27.6 | $ | 16.3 | $ | 22.0 | |||||||
(in millions of dollars, except per share amounts) | 2004 | 2003 | 2002 | |||||||||
Net income | $ | 68.5 | $ | 26.7 | $ | 4.2 | ||||||
Weighted average number of common shares outstanding | 35.0 | 35.0 | 35.0 | |||||||||
Basic earnings per common share | $ | 1.96 | $ | 0.76 | $ | 0.12 | ||||||
F-29
Table of Contents
(in millions, except per share data) | 2004 | |||
Net Income, as reported | $ | 68.5 | ||
Less: Pro-forma interest expense(1) | (23.3 | ) | ||
Pro-forma net income | $ | 45.2 | ||
Pro-forma common shares outstanding — basic | 35.0 | |||
Exercise of stock options(2) | 0.4 | |||
Pro-forma common shares outstanding — diluted | 35.4 | |||
Basic pro-forma earnings per share | $ | 1.29 | ||
Diluted pro-forma earnings per share | $ | 1.28 |
(1) | Pro-forma interest expense ($35.9 million) is calculated based upon assumed financing of the company of $625 million to fund the dividend payable to the shareholders at an interest rate of 5.75%, net of tax of $12.6 million. |
(2) | Assumes that pro-forma outstanding common shares were increased by shares of those unvested stock options in the Parent company stock, for which market price of the Parent exceeds exercise price of the option, less shares which could have been purchased by the Company with related proceeds. This amount is then multiplied by the estimated 4.255 ratio of Parent company shares to ACCO Brands shares upon spin-off to arrive at the pro-forma dilutive impact of unvested stock options at year-end. |
F-30
Table of Contents
December 27, 2004 | |||||||||||||||||||||||
ACCO | |||||||||||||||||||||||
Brands | |||||||||||||||||||||||
(Parent) | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | (13.4 | ) | $ | 93.2 | $ | — | $ | 79.8 | ||||||||||||
Accounts receivable, net | — | 175.6 | 144.5 | — | 320.1 | ||||||||||||||||||
Inventory, net | — | 88.4 | 84.1 | — | 172.5 | ||||||||||||||||||
Receivables from affiliates | 8.6 | 25.5 | 22.2 | (56.3 | ) | — | |||||||||||||||||
Deferred taxes receivable | 0.2 | 5.6 | (1.6 | ) | — | 4.2 | |||||||||||||||||
Other current assets | 0.1 | 5.8 | 14.0 | — | 19.9 | ||||||||||||||||||
Total current assets | 8.9 | 287.5 | 356.4 | (56.3 | ) | 596.5 | |||||||||||||||||
Property, plant and equipment, net | 0.1 | 53.2 | 104.4 | — | 157.7 | ||||||||||||||||||
Deferred income taxes | 5.2 | 23.9 | (7.4 | ) | — | 21.7 | |||||||||||||||||
Intangibles, net of accumulated amortization | 70.4 | 30.3 | 16.9 | — | 117.6 | ||||||||||||||||||
Prepaid pension expense | — | 30.0 | 57.1 | — | 87.1 | ||||||||||||||||||
Other assets | 1.9 | 2.0 | — | — | 3.9 | ||||||||||||||||||
Investment in/ L-T receivable from affiliates | 617.6 | 43.1 | — | (660.7 | ) | — | |||||||||||||||||
Total assets | $ | 704.1 | $ | 470.0 | $ | 527.4 | $ | (717.0 | ) | $ | 984.5 | ||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||
Notes payable to banks | $ | — | $ | — | $ | 0.1 | $ | — | $ | 0.1 | |||||||||||||
Accounts payable | — | 60.1 | 60.5 | — | 120.6 | ||||||||||||||||||
Accrued current income taxes | 4.9 | 4.8 | 4.6 | — | 14.3 | ||||||||||||||||||
Accrued customer programs | — | 47.5 | 34.1 | — | 81.6 | ||||||||||||||||||
Accrued compensation, restructuring and other liabilities | 9.0 | 52.1 | 47.1 | — | 108.2 | ||||||||||||||||||
Payables to affiliates | 67.2 | 34.0 | 14.4 | (115.6 | ) | — | |||||||||||||||||
Total current liabilities | 81.1 | 198.5 | 160.8 | (115.6 | ) | 324.8 | |||||||||||||||||
Long-term notes payable to affiliates | — | 348.0 | 3.4 | (351.4 | ) | — | |||||||||||||||||
Postretirement and other liabilities | 6.2 | 10.9 | 25.8 | — | 42.9 | ||||||||||||||||||
Total liabilities | 87.3 | 557.4 | 190.0 | (467.0 | ) | 367.7 | |||||||||||||||||
Stockholder’s equity | |||||||||||||||||||||||
Common stock | 0.1 | 0.9 | 9.6 | (10.5 | ) | 0.1 | |||||||||||||||||
Parent company investment | (269.5 | ) | (53.4 | ) | (13.8 | ) | 67.2 | (269.5 | ) | ||||||||||||||
Paid-in capital | 1,835.1 | 619.3 | 114.9 | (734.2 | ) | 1,835.1 | |||||||||||||||||
Accumulated other comprehensive income (loss) | 15.9 | (1.3 | ) | 19.4 | (18.1 | ) | 15.9 | ||||||||||||||||
Accumulated deficit | (964.8 | ) | (652.9 | ) | 207.3 | 445.6 | (964.8 | ) | |||||||||||||||
Total stockholders’ equity | 616.8 | (87.4 | ) | 337.4 | (250.0 | ) | 616.8 | ||||||||||||||||
Total liability and stockholders equity | $ | 704.1 | $ | 470.0 | $ | 527.4 | $ | (717.0 | ) | $ | 984.5 | ||||||||||||
F-31
Table of Contents
December 27, 2003 | ||||||||||||||||||||||
ACCO | ||||||||||||||||||||||
Brands | ||||||||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Assets | ||||||||||||||||||||||
Current assets | ||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | (6.9 | ) | $ | 67.4 | $ | — | $ | 60.5 | |||||||||||
Accounts receivable, net | — | 130.0 | 128.2 | — | 258.2 | |||||||||||||||||
Inventory, net | — | 74.5 | 81.7 | — | 156.2 | |||||||||||||||||
Receivables from affiliates | 7.5 | 9.3 | 4.5 | (21.3 | ) | — | ||||||||||||||||
Deferred taxes | 0.3 | 3.7 | (0.1 | ) | — | 3.9 | ||||||||||||||||
Other current assets | — | 8.1 | 13.3 | — | 21.4 | |||||||||||||||||
Total current assets | 7.8 | 218.7 | 295.0 | (21.3 | ) | 500.2 | ||||||||||||||||
Property, plant and equipment, net | 0.1 | 63.8 | 106.1 | — | 170.0 | |||||||||||||||||
Deferred income taxes | 0.4 | 27.2 | (2.4 | ) | — | 25.2 | ||||||||||||||||
Intangibles, net of accumulated amortization | 70.5 | 30.5 | 16.3 | — | 117.3 | |||||||||||||||||
Prepaid pension expense | — | 29.5 | 30.6 | — | 60.1 | |||||||||||||||||
Other assets | 1.6 | 7.8 | 4.5 | — | 13.9 | |||||||||||||||||
Investment in/long term receivable from affiliates | 504.1 | 46.1 | — | (550.2 | ) | — | ||||||||||||||||
Total assets | $ | 584.5 | $ | 423.6 | $ | 450.1 | $ | (571.5 | ) | $ | 886.7 | |||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||
Notes payable to banks | $ | — | $ | — | $ | 2.8 | $ | — | $ | 2.8 | ||||||||||||
Accounts payable | — | 39.7 | 56.7 | — | 96.4 | |||||||||||||||||
Accrued current income taxes | 7.0 | (1.9 | ) | 1.5 | — | 6.6 | ||||||||||||||||
Accrued customer programs | — | 29.3 | 25.5 | — | 54.8 | |||||||||||||||||
Accrued compensation, restructuring and other liabilities | 6.1 | 47.8 | 51.3 | — | 105.2 | |||||||||||||||||
Payables to affiliates | 32.7 | 13.1 | 9.4 | (55.2 | ) | — | ||||||||||||||||
Total current liabilities | 45.8 | 128.0 | 147.2 | (55.2 | ) | 265.8 | ||||||||||||||||
Long-term notes payable to affiliates | — | 348.0 | 0.5 | (348.5 | ) | — | ||||||||||||||||
Postretirement and other liabilities | 5.6 | 25.8 | 56.4 | — | 87.8 | |||||||||||||||||
Total liabilities | 51.4 | 501.8 | 204.1 | (403.7 | ) | 353.6 | ||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||
Common stock | 0.1 | 0.9 | 9.6 | (10.5 | ) | 0.1 | ||||||||||||||||
Parent company investment | (225.1 | ) | (0.4 | ) | (32.3 | ) | 32.7 | (225.1 | ) | |||||||||||||
Paid-in capital | 1,832.6 | 617.1 | 121.1 | (738.2 | ) | 1,832.6 | ||||||||||||||||
Accumulated other comprehensive income (loss) | (41.2 | ) | (12.7 | ) | (26.4 | ) | 39.1 | (41.2 | ) | |||||||||||||
Accumulated deficit | (1,033.3 | ) | (683.1 | ) | 174.0 | 509.1 | (1,033.3 | ) | ||||||||||||||
Total stockholders’ equity | 533.1 | (78.2 | ) | 246.0 | (167.8 | ) | 533.1 | |||||||||||||||
Total liability and stockholders’ equity | $ | 584.5 | $ | 423.6 | $ | 450.1 | $ | (571.5 | ) | $ | 886.7 | |||||||||||
F-32
Table of Contents
December 27, 2002 | ||||||||||||||||||||||
ACCO | ||||||||||||||||||||||
Brands | ||||||||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Assets | ||||||||||||||||||||||
Current assets | ||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | (5.4 | ) | $ | 48.7 | $ | — | $ | 43.3 | |||||||||||
Accounts receivable, net | — | 135.6 | 113.8 | — | 249.4 | |||||||||||||||||
Inventory, net | — | 67.8 | 68.3 | — | 136.1 | |||||||||||||||||
Receivables from affiliates | 17.6 | 3.2 | 6.5 | (27.3 | ) | — | ||||||||||||||||
Deferred taxes | — | — | 6.5 | — | 6.5 | |||||||||||||||||
Income taxes receivable | (6.9 | ) | 9.8 | (0.9 | ) | — | 2.0 | |||||||||||||||
Other current assets | — | 8.7 | 10.8 | — | 19.5 | |||||||||||||||||
Total current assets | 10.7 | 219.7 | 253.7 | (27.3 | ) | 456.8 | ||||||||||||||||
Property, plant and equipment, net | 5.9 | 71.2 | 118.2 | — | 195.3 | |||||||||||||||||
Deferred income taxes | 0.6 | (3.0 | ) | 21.3 | — | 18.9 | ||||||||||||||||
Intangibles, net of accumulated amortization | 70.6 | 41.8 | 16.4 | — | 128.8 | |||||||||||||||||
Prepaid pension expense | — | 27.7 | 12.3 | — | 40.0 | |||||||||||||||||
Other assets | 2.5 | 15.3 | 2.9 | — | 20.7 | |||||||||||||||||
Investment in/long term receivable from affiliates | 458.0 | 43.3 | — | (501.3 | ) | — | ||||||||||||||||
Total assets | $ | 548.3 | $ | 416.0 | $ | 424.8 | $ | (528.6 | ) | $ | 860.5 | |||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||
Notes payable to banks | $ | — | $ | — | $ | 4.3 | $ | — | $ | 4.3 | ||||||||||||
Current portion of long-term debt | — | 0.2 | 0.2 | — | 0.4 | |||||||||||||||||
Accounts payable | — | 38.6 | 48.6 | — | 87.2 | |||||||||||||||||
Accrued current income taxes | — | 2.9 | (2.9 | ) | — | — | ||||||||||||||||
Current deferred tax liability | (0.2 | ) | (6.2 | ) | 6.4 | — | — | |||||||||||||||
Accrued customer programs | — | 39.5 | 22.6 | — | 62.1 | |||||||||||||||||
Accrued compensation, restructuring and other liabilities | 3.7 | 53.6 | 39.8 | — | 97.1 | |||||||||||||||||
Payables to affiliates | 7.8 | 13.5 | 6.6 | (27.9 | ) | — | ||||||||||||||||
Total current liabilities | 11.3 | 142.1 | 125.6 | (27.9 | ) | 251.1 | ||||||||||||||||
Deferred income taxes | 1.1 | (17.9 | ) | 16.8 | — | — | ||||||||||||||||
Long-term notes payable to affiliates | — | 348.0 | 0.5 | (348.5 | ) | — | ||||||||||||||||
Postretirement and other liabilities | 7.1 | 7.1 | 66.4 | — | 80.6 | |||||||||||||||||
Total liabilities | 19.5 | 479.3 | 209.3 | (376.4 | ) | 331.7 | ||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||
Common stock | 0.1 | 0.9 | 10.3 | (11.2 | ) | 0.1 | ||||||||||||||||
Parent company investment | (167.6 | ) | 8.3 | (7.8 | ) | (0.5 | ) | (167.6 | ) | |||||||||||||
Paid-in capital | 1,829.8 | 614.3 | 119.5 | (733.8 | ) | 1,829.8 | ||||||||||||||||
Accumulated other comprehensive income (loss) | (73.5 | ) | (1.2 | ) | (70.5 | ) | 71.7 | (73.5 | ) | |||||||||||||
Accumulated deficit | (1,060.0 | ) | (685.6 | ) | 164.0 | 521.6 | (1,060.0 | ) | ||||||||||||||
Total stockholders’ equity | 528.8 | (63.3 | ) | 215.5 | (152.2 | ) | 528.8 | |||||||||||||||
Total liability and stockholders’ equity | $ | 548.3 | $ | 416.0 | $ | 424.8 | $ | (528.6 | ) | $ | 860.5 | |||||||||||
F-33
Table of Contents
Year ended December 27, 2004 | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Unaffiliated sales | $ | — | $ | 621.8 | $ | 553.9 | $ | — | $ | 1,175.7 | |||||||||||
Affiliated sales | — | 17.6 | 24.6 | (42.2 | ) | — | |||||||||||||||
Net sales | — | 639.4 | 578.5 | (42.2 | ) | 1,175.7 | |||||||||||||||
Cost of products sold | — | 401.8 | 354.7 | (42.2 | ) | 714.3 | |||||||||||||||
Advertising, selling, general and administrative expenses | 13.0 | 191.5 | 143.3 | — | 347.8 | ||||||||||||||||
Amortization of intangibles | 0.1 | 0.1 | 1.1 | — | 1.3 | ||||||||||||||||
Restructuring charges | — | 3.2 | 16.2 | — | 19.4 | ||||||||||||||||
Interest (income)/expense from affiliates | (17.4 | ) | 17.4 | — | — | — | |||||||||||||||
Interest (income), expense, including allocation from Parent | 11.1 | (0.2 | ) | (2.4 | ) | — | 8.5 | ||||||||||||||
Other (income) expense, net | (0.4 | ) | (9.2 | ) | 4.4 | — | (5.2 | ) | |||||||||||||
Income (loss) before taxes and earnings/(losses) of wholly owned subsidiaries | (6.4 | ) | 34.8 | 61.2 | — | 89.6 | |||||||||||||||
Income taxes | (4.9 | ) | 12.0 | 14.0 | — | 21.1 | |||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | (1.5 | ) | 22.8 | 47.2 | — | 68.5 | |||||||||||||||
Earnings/(losses) of wholly owned subsidiaries | 70.0 | 6.5 | — | (76.5 | ) | — | |||||||||||||||
Net income (loss) | $ | 68.5 | $ | 29.3 | $ | 47.2 | $ | (76.5 | ) | $ | 68.5 | ||||||||||
Year ended December 27, 2003 | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Unaffiliated sales | $ | — | $ | 606.9 | $ | 495.0 | $ | — | $ | 1,101.9 | |||||||||||
Affiliated sales | — | 18.2 | 26.6 | (44.8 | ) | — | |||||||||||||||
Net sales | — | 625.1 | 521.6 | (44.8 | ) | 1,101.9 | |||||||||||||||
Cost of products sold | 4.0 | 396.8 | 330.8 | (44.8 | ) | 686.8 | |||||||||||||||
Advertising, selling, general and administrative expenses | 9.8 | 194.9 | 133.1 | — | 337.8 | ||||||||||||||||
Amortization of intangibles | 0.1 | 0.5 | 1.1 | — | 1.7 | ||||||||||||||||
Write-down of intangibles | — | 11.2 | 0.8 | — | 12.0 | ||||||||||||||||
Restructuring charges | 1.6 | 6.1 | 9.6 | — | 17.3 | ||||||||||||||||
Interest (income)/expense from affiliates | (17.1 | ) | 17.1 | — | — | — | |||||||||||||||
Interest (income)/expense, including allocation from Parent | 9.7 | 0.3 | (2.0 | ) | — | 8.0 | |||||||||||||||
Other (income) expense, net | 3.8 | (5.4 | ) | — | — | (1.6 | ) | ||||||||||||||
Income (loss) before taxes and earnings/(losses) of wholly owned subsidiaries | (11.9 | ) | 3.6 | 48.2 | — | 39.9 | |||||||||||||||
Income taxes | (3.6 | ) | 1.7 | 15.1 | — | 13.2 | |||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | (8.3 | ) | 1.9 | 33.1 | — | 26.7 | |||||||||||||||
Earnings/(losses) of wholly owned subsidiaries | 36.1 | 1.1 | — | (37.2 | ) | — | |||||||||||||||
Net income (loss) | $ | 27.8 | $ | 3.0 | $ | 33.1 | $ | (37.2 | ) | $ | 26.7 | ||||||||||
F-34
Table of Contents
Year ended December 27, 2002 | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||
Unaffiliated sales | $ | — | $ | 649.6 | $ | 455.8 | $ | — | $ | 1,105.4 | |||||||||||
Affiliated sales | — | 17.8 | 50.2 | (68.0 | ) | — | |||||||||||||||
Net sales | — | 667.4 | 506.0 | (68.0 | ) | 1,105.4 | |||||||||||||||
Cost of products sold | — | 424.2 | 342.7 | (68.0 | ) | 698.9 | |||||||||||||||
Advertising, selling, general and administrative expenses | 9.4 | 216.2 | 125.9 | — | 351.5 | ||||||||||||||||
Amortization of intangibles | 0.1 | 0.9 | 1.1 | — | 2.1 | ||||||||||||||||
Restructuring charges | 2.0 | 14.4 | 17.9 | — | 34.3 | ||||||||||||||||
Interest (income)/expense from affiliates | (18.7 | ) | 18.7 | — | — | — | |||||||||||||||
Interest (income)/expense, including allocation from Parent | 11.0 | 1.4 | (0.1 | ) | — | 12.3 | |||||||||||||||
Other (income) expense, net | — | 1.0 | (0.2 | ) | — | 0.8 | |||||||||||||||
Income (loss) before taxes and earnings/(losses) of wholly owned subsidiaries | (3.8 | ) | (9.4 | ) | 18.7 | — | 5.5 | ||||||||||||||
Income taxes | (1.8 | ) | (3.9 | ) | 7.0 | — | 1.3 | ||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | (2.0 | ) | (5.5 | ) | 11.7 | — | 4.2 | ||||||||||||||
Earnings/(losses) of wholly owned subsidiaries | 0.7 | (5.5 | ) | — | 4.8 | — | |||||||||||||||
Net income (loss) | $ | (1.3 | ) | $ | (11.0 | ) | $ | 11.7 | $ | 4.8 | $ | 4.2 | |||||||||
Year ended December 27, 2004 | |||||||||||||||||
ACCO | |||||||||||||||||
Brands | |||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Consolidated | |||||||||||||
Net cash (used in)/provided by operating activities: | $ | (5.1 | ) | $ | 31.5 | $ | 37.3 | $ | 63.7 | ||||||||
Investing activities: | |||||||||||||||||
Additions to property, plant and equipment | — | (16.5 | ) | (11.1 | ) | (27.6 | ) | ||||||||||
Proceeds from the sale of property, plant and equipment | — | 18.8 | 2.7 | 21.5 | |||||||||||||
Net cash (used)/provided by investing activities | — | 2.3 | (8.4 | ) | (6.1 | ) | |||||||||||
Financing activities: | |||||||||||||||||
Decrease in parent company investment | (42.6 | ) | — | — | (42.6 | ) | |||||||||||
Intercompany financing | 28.7 | (47.9 | ) | 19.2 | — | ||||||||||||
Intercompany dividends | 19.0 | 7.6 | (26.6 | ) | — | ||||||||||||
Repayments on short-term debt | — | — | (2.7 | ) | (2.7 | ) | |||||||||||
Net cash (used)/provided by financing activities | 5.1 | (40.3 | ) | (10.1 | ) | (45.3 | ) | ||||||||||
Effect of foreign exchange rate changes on cash | — | — | 7.0 | 7.0 | |||||||||||||
Net increase/(decrease) in cash and cash equivalents | — | (6.5 | ) | 25.8 | 19.3 | ||||||||||||
Cash and cash equivalents at the beginning of the period | — | (6.9 | ) | 67.4 | 60.5 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | — | $ | (13.4 | ) | $ | 93.2 | $ | 79.8 | ||||||||
F-35
Table of Contents
Year ended December 27, 2003 | |||||||||||||||||
ACCO | |||||||||||||||||
Brands | |||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Consolidated | |||||||||||||
Net cash (used)/provided by operating activities: | $ | 57.3 | $ | 19.0 | $ | (9.1 | ) | $ | 67.2 | ||||||||
Investing activities: | |||||||||||||||||
Additions to property, plant and equipment | — | (5.3 | ) | (11.0 | ) | (16.3 | ) | ||||||||||
Proceeds from the sale of property, plant and equipment | — | 0.2 | 14.4 | 14.6 | |||||||||||||
Net cash (used)/provided by investing activities | — | (5.1 | ) | 3.4 | (1.7 | ) | |||||||||||
Financing activities: | |||||||||||||||||
Decrease in parent company investment | (54.8 | ) | — | — | (54.8 | ) | |||||||||||
Intercompany financing | (22.5 | ) | (15.2 | ) | 37.7 | — | |||||||||||
Intercompany dividends | 20.0 | — | (20.0 | ) | — | ||||||||||||
Repayments on long-term debt | — | (0.2 | ) | (0.2 | ) | (0.4 | ) | ||||||||||
Repayments on short-term debt | — | (1.6 | ) | (1.6 | ) | ||||||||||||
Net cash (used)/provided by financing activities | (57.3 | ) | (15.4 | ) | 15.9 | (56.8 | ) | ||||||||||
Effect of foreign exchange rate changes on cash | — | — | 8.5 | 8.5 | |||||||||||||
Net increase/(decrease) in cash and cash equivalents | — | (1.5 | ) | 18.7 | 17.2 | ||||||||||||
Cash and cash equivalents at the beginning of the period | — | (5.4 | ) | 48.7 | 43.3 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | — | $ | (6.9 | ) | $ | 67.4 | $ | 60.5 | ||||||||
Year ended December 27, 2002 | |||||||||||||||||
ACCO | |||||||||||||||||
Brands | |||||||||||||||||
(in millions of dollars) | (Parent) | Guarantors | Non-Guarantors | Consolidated | |||||||||||||
Net cash (used)/provided by operating activities: | $ | 127.8 | $ | 114.2 | $ | (80.1 | ) | $ | 161.9 | ||||||||
Investing activities: | |||||||||||||||||
Additions to property, plant and equipment | — | (9.3 | ) | (12.7 | ) | (22.0 | ) | ||||||||||
Proceeds from the sale of property, plant and equipment | — | 1.1 | 3.7 | 4.8 | |||||||||||||
Net cash (used)/provided by investing activities | — | (8.2 | ) | (9.0 | ) | (17.2 | ) | ||||||||||
Financing activities: | |||||||||||||||||
Decrease in parent company investment | (128.3 | ) | — | — | (128.3 | ) | |||||||||||
Intercompany financing | 0.5 | (105.2 | ) | 104.7 | — | ||||||||||||
Intercompany dividends | — | 0.3 | (0.3 | ) | — | ||||||||||||
Repayments on long-term debt | — | (0.2 | ) | (0.7 | ) | (0.9 | ) | ||||||||||
Repayments on short-term debt | — | 0.5 | 0.5 | ||||||||||||||
Net cash (used)/provided by financing activities | (127.8 | ) | (105.1 | ) | 104.2 | (128.7 | ) | ||||||||||
Effect of foreign exchange rate changes on cash | — | — | 2.4 | 2.4 | |||||||||||||
Net increase/(decrease) in cash and cash equivalents | — | 0.9 | 17.5 | 18.4 | |||||||||||||
Cash and cash equivalents at the beginning of the period | — | (6.3 | ) | 31.2 | 24.9 | ||||||||||||
Cash and cash equivalents at the end of the period | $ | — | $ | (5.4 | ) | $ | 48.7 | $ | 43.3 | ||||||||
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Pro forma | |||||||||||||||
June 25, | |||||||||||||||
2005 | June 25, | December 27, | |||||||||||||
(Note 3) | 2005 | 2004 | |||||||||||||
(in millions of dollars) | |||||||||||||||
(Unaudited) | |||||||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | 18.2 | $ | 18.2 | $ | 79.8 | |||||||||
Accounts receivable, net | 267.0 | 267.0 | 320.1 | ||||||||||||
Inventories, net | |||||||||||||||
Raw materials and supplies | 23.7 | 23.7 | 24.7 | ||||||||||||
Work in process | 6.4 | 6.4 | 5.8 | ||||||||||||
Finished products | 157.7 | 157.7 | 142.0 | ||||||||||||
187.8 | 187.8 | 172.5 | |||||||||||||
Deferred income taxes | 7.6 | 7.6 | 4.2 | ||||||||||||
Other current assets | 24.1 | 24.1 | 19.9 | ||||||||||||
Total current assets | 504.7 | 504.7 | 596.5 | ||||||||||||
Property, plant and equipment | |||||||||||||||
Land and improvements | 12.8 | 12.8 | 13.2 | ||||||||||||
Buildings and improvements to leaseholds | 116.7 | 116.7 | 117.8 | ||||||||||||
Machinery and equipment | 347.4 | 347.4 | 346.5 | ||||||||||||
Construction in progress | 9.8 | 9.8 | 15.0 | ||||||||||||
486.7 | 486.7 | 492.5 | |||||||||||||
Less accumulated depreciation | (332.0 | ) | (332.0 | ) | (334.8 | ) | |||||||||
Property, plant and equipment, net | 154.7 | 154.7 | 157.7 | ||||||||||||
Deferred income taxes | 12.2 | 12.2 | 21.7 | ||||||||||||
Intangibles resulting from business acquisitions, net | 115.9 | 115.9 | 117.6 | ||||||||||||
Prepaid pension expense | 84.9 | 84.9 | 87.1 | ||||||||||||
Other assets | 5.1 | 5.1 | 3.9 | ||||||||||||
Total assets | $ | 877.5 | $ | 877.5 | $ | 984.5 | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||
Current liabilities | |||||||||||||||
Notes payable to banks | $ | 0.9 | $ | 0.9 | $ | 0.1 | |||||||||
Accounts payable | 101.6 | 101.6 | 120.6 | ||||||||||||
Accrued income taxes due to Parent | 3.6 | 3.6 | 14.3 | ||||||||||||
Accrued customer programs | 76.3 | 76.3 | 81.6 | ||||||||||||
Accrued compensation, restructuring and other liabilities | 61.0 | 61.0 | 108.2 | ||||||||||||
Dividend payable to shareholders | 625.0 | — | — | ||||||||||||
Total current liabilities | 868.4 | 243.4 | 324.8 | ||||||||||||
Postretirement and other liabilities | 37.4 | 37.4 | 42.9 | ||||||||||||
Total liabilities | 905.8 | 280.8 | 367.7 | ||||||||||||
Stockholders’ equity | |||||||||||||||
Common stock, par value $1 per share, 53,476 shares authorized, issued and outstanding at June 25, 2005 and December 27, 2004 | 0.1 | 0.1 | 0.1 | ||||||||||||
Parent company investment | (309.3 | ) | (309.3 | ) | (269.5 | ) | |||||||||
Paid-in capital | 1,213.0 | 1,838.0 | 1,835.1 | ||||||||||||
Accumulated other comprehensive income | 6.1 | 6.1 | 15.9 | ||||||||||||
Accumulated deficit | (938.2 | ) | (938.2 | ) | (964.8 | ) | |||||||||
Total stockholders’ equity | (28.3 | ) | 596.7 | 616.8 | |||||||||||
Total liabilities and stockholders’ equity | $ | 877.5 | $ | 877.5 | $ | 984.5 | |||||||||
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Three Months Ended | |||||||||||||||||
June 25, | Six Months Ended June 25, | ||||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||
(in millions of dollars, except per share data) | 2005 | 2004 | 2005 | ||||||||||||||
2004 | |||||||||||||||||
Net sales | $ | 279.5 | $ | 268.7 | $ | 551.9 | $ | 539.6 | |||||||||
Cost of products sold | 170.6 | 170.6 | 337.2 | 340.4 | |||||||||||||
Advertising, selling, general and administrative expenses | 84.0 | 85.8 | 166.0 | 170.4 | |||||||||||||
Amortization of intangibles | 0.4 | 0.3 | 1.0 | 0.6 | |||||||||||||
Restructuring charges | — | 16.8 | — | 19.4 | |||||||||||||
Interest expense, including allocation from parent | 2.0 | 1.7 | 4.1 | 3.9 | |||||||||||||
Other expense (income), net | 0.5 | (3.8 | ) | 1.6 | (3.5 | ) | |||||||||||
Income (loss) before income taxes | 22.0 | (2.7 | ) | 42.0 | 8.4 | ||||||||||||
Income taxes | 7.3 | 3.8 | 17.0 | 6.3 | |||||||||||||
Income (loss) before change in accounting principle | 14.7 | (6.5 | ) | 25.0 | 2.1 | ||||||||||||
Change in accounting principle | — | — | 1.6 | — | |||||||||||||
Net income (loss) | $ | 14.7 | $ | (6.5 | ) | $ | 26.6 | $ | 2.1 | ||||||||
Basic earnings (loss) per common share: | |||||||||||||||||
Income (loss) before change in accounting principle | $ | 0.42 | $ | (0.19 | ) | $ | 0.71 | $ | 0.06 | ||||||||
Change in accounting principle | $ | — | $ | — | $ | 0.05 | $ | — | |||||||||
Net income (loss) | $ | 0.42 | $ | (0.19 | ) | $ | 0.76 | $ | 0.06 | ||||||||
Unaudited pro-forma basic earnings per common share: | |||||||||||||||||
Income before change in accounting principle | $ | 0.26 | $ | 0.39 | |||||||||||||
Change in accounting principle | $ | — | $ | 0.05 | |||||||||||||
Net income | $ | 0.26 | $ | 0.44 | |||||||||||||
Unaudited pro-forma diluted earnings per common share: | |||||||||||||||||
Income before change in accounting principle | $ | 0.26 | $ | 0.39 | |||||||||||||
Change in accounting principle | $ | — | $ | 0.05 | |||||||||||||
Net income | $ | 0.26 | $ | 0.44 | |||||||||||||
Average number of common shares outstanding (in millions) | |||||||||||||||||
Basic | 35.0 | 35.0 | 35.0 | 35.0 | |||||||||||||
Average number of pro-forma common shares outstanding (in millions) | |||||||||||||||||
Basic | 35.0 | 35.0 | |||||||||||||||
Diluted | 35.4 | 35.4 |
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Six months ended | |||||||||
June 25, | |||||||||
(Unaudited) | |||||||||
2005 | 2004 | ||||||||
(in millions of dollars) | |||||||||
Net cash (used in)/ provided by operating activities | $ | (7.5 | ) | $ | 29.4 | ||||
Investing activities | |||||||||
Additions to property, plant and equipment | (12.8 | ) | (11.7 | ) | |||||
Proceeds from the sale of property, plant and equipment | 0.2 | 16.1 | |||||||
Other investing activities | (0.4 | ) | — | ||||||
Net cash (used in)/ provided by investing activities | (13.0 | ) | 4.4 | ||||||
Financing activities | |||||||||
Decrease in parent company investment | (39.0 | ) | (17.9 | ) | |||||
Other financing activities | 0.8 | 0.2 | |||||||
Net cash used by financing activities | (38.2 | ) | (17.7 | ) | |||||
Effect of foreign exchange rate changes on cash | (2.9 | ) | 2.1 | ||||||
Net (decrease)/ increase in cash and cash equivalents | (61.6 | ) | 18.2 | ||||||
Cash and cash equivalents at the beginning of year | 79.8 | 60.5 | |||||||
Cash and cash equivalents at the end of period | $ | 18.2 | $ | 78.7 | |||||
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1. | Basis of Presentation |
F-40
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Three months ended March 25, 2005 | |||||||||||||
Restated for Effect | |||||||||||||
Effect of Change in | of Change in | ||||||||||||
As Reported | Accounting Principle | Accounting Principle | |||||||||||
(in millions of dollars) | |||||||||||||
Net sales | $ | 275.2 | $ | (2.8 | ) | $ | 272.4 | ||||||
Cost of products sold | 168.5 | (1.9 | ) | 166.6 | |||||||||
Advertising, selling, general and administrative expenses | 82.5 | (0.5 | ) | 82.0 | |||||||||
Amortization of intangibles | 0.6 | — | 0.6 | ||||||||||
Interest expense, including allocation from parent | 2.1 | — | 2.1 | ||||||||||
Other expense (income), net | 1.2 | (0.1 | ) | 1.1 | |||||||||
Income (loss) before income taxes | 20.3 | (0.3 | ) | 20.0 | |||||||||
Income taxes | 9.8 | (0.1 | ) | 9.7 | |||||||||
Income (loss) before change in accounting principle | 10.5 | (0.2 | ) | 10.3 | |||||||||
Change in accounting principle | — | 1.6 | 1.6 | ||||||||||
Net income | $ | 10.5 | $ | 1.4 | $ | 11.9 |
2. | Stock Based Compensation |
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Table of Contents
Three months | ||||||||
ended | ||||||||
June 25, | ||||||||
2005 | 2004 | |||||||
(in millions of dollars, except share data) | ||||||||
Net income (loss) — as reported | $ | 14.7 | $ | (6.5 | ) | |||
Add: Stock based employee compensation (performance awards) included in reported net income, net of tax | 0.1 | 0.1 | ||||||
Deduct: Total stock based employee compensation (stock options and performance awards) determined under the fair-value based method for all awards, net of tax | (1.1 | ) | (0.8 | ) | ||||
Pro-forma net income (loss) | $ | 13.7 | $ | (7.2 | ) | |||
Pro-forma net earnings (loss) per common share | $ | 0.39 | $ | (0.21 | ) | |||
Six months | ||||||||
ended | ||||||||
June 25, | ||||||||
2005 | 2004 | |||||||
(in millions of dollars, except share data) | ||||||||
Net income — as reported | $ | 26.6 | $ | 2.1 | ||||
Add: Stock based employee compensation (performance awards) included in reported net income, net of tax | 0.2 | 0.2 | ||||||
Deduct: Total stock based employee compensation (stock options and performance awards) determined under the fair-value based method for all awards, net of tax | (2.1 | ) | (1.7 | ) | ||||
Pro-forma net income | $ | 24.7 | $ | 0.6 | ||||
Pro-forma net earnings per common share | $ | 0.71 | $ | 0.02 | ||||
3. | Spin-off of the Company and Acquisition |
4. | Parent Company Investment |
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Table of Contents
5. | Pension and Other Retiree Benefits |
Three months ended June 25, | ||||||||||||||||
Pension | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
(in millions of dollars) | ||||||||||||||||
Service cost | $ | 2.1 | $ | 1.8 | $ | — | $ | — | ||||||||
Interest cost | 4.6 | 4.3 | 0.1 | 0.1 | ||||||||||||
Deferred asset loss | — | 0.1 | — | — | ||||||||||||
Expected return on plan assets | (6.1 | ) | (5.7 | ) | — | — | ||||||||||
Amortization of prior service cost | 0.3 | 0.3 | — | — | ||||||||||||
Amortization of net (gain)/loss | 1.2 | 1.1 | (0.3 | ) | (0.3 | ) | ||||||||||
Curtailment (gain)/loss | — | 0.1 | — | (0.2 | ) | |||||||||||
Net periodic benefit cost | $ | 2.1 | $ | 2.0 | $ | (0.2 | ) | $ | (0.4 | ) | ||||||
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Table of Contents
Pension | Postretirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
(in millions of dollars) | ||||||||||||||||
Service cost | $ | 4.1 | $ | 3.6 | $ | 0.1 | $ | 0.1 | ||||||||
Interest cost | 9.2 | 8.7 | 0.3 | 0.3 | ||||||||||||
Deferred asset loss | — | 0.1 | — | — | ||||||||||||
Expected return on plan assets | (12.2 | ) | (11.3 | ) | — | — | ||||||||||
Amortization of prior service cost | 0.6 | 0.5 | — | — | ||||||||||||
Amortization of net (gain)/loss | 2.4 | 2.2 | (0.5 | ) | (0.5 | ) | ||||||||||
Curtailment (gain)/loss | — | 0.2 | — | (0.3 | ) | |||||||||||
Net periodic benefit cost | $ | 4.1 | $ | 4.0 | $ | (0.1 | ) | $ | (0.4 | ) | ||||||
6. | Product Warranties |
Three months | ||||||||
ended | ||||||||
June 25, | ||||||||
2005 | 2004 | |||||||
(in millions of dollars) | ||||||||
Reserve balance as of March | $ | (2.7 | ) | $ | (1.2 | ) | ||
Provision for warranties issued | (0.2 | ) | (0.2 | ) | ||||
Settlements made (in cash or kind) | 0.5 | 0.2 | ||||||
Reserve balance as of June | $ | (2.4 | ) | $ | (1.2 | ) | ||
Six months | ||||||||
ended | ||||||||
June 25, | ||||||||
2005 | 2004 | |||||||
(in millions of dollars) | ||||||||
Reserve balance as of year end | $ | (2.7 | ) | $ | (1.2 | ) | ||
Provision for warranties issued | (1.1 | ) | (0.6 | ) | ||||
Settlements made (in cash or kind) | 1.4 | 0.6 | ||||||
Reserve balance as of June | $ | (2.4 | ) | $ | (1.2 | ) | ||
7. | Income Taxes |
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Table of Contents
8. | Restructuring Charges |
Balance at | Balance at | |||||||||||||||||||
December 27, | 2005 | Cash | Non-Cash | June 25, | ||||||||||||||||
2004 | Provision | Expenditures | Write-Offs | 2005 | ||||||||||||||||
(in millions of dollars) | ||||||||||||||||||||
Employee termination costs | $ | 0.2 | $ | — | $ | (0.1 | ) | $ | — | $ | 0.1 | |||||||||
International distribution and lease agreements | 2.7 | — | (0.3 | ) | (0.1 | ) | 2.3 | |||||||||||||
$ | 2.9 | $ | — | $ | (0.4 | ) | $ | (0.1 | ) | $ | 2.4 | |||||||||
9. | Information on Business Segments |
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Table of Contents
Three months | Six months | ||||||||||||||||
ended | ended | ||||||||||||||||
June 25, | June 25, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
(in millions of dollars) | |||||||||||||||||
ACCO U.S. | $ | 129.7 | $ | 126.1 | $ | 253.2 | $ | 246.1 | |||||||||
ACCO Europe | 93.2 | 86.9 | 186.0 | 179.8 | |||||||||||||
Trading Companies | 45.0 | 42.4 | 86.9 | 86.3 | |||||||||||||
Day-Timers | 11.6 | 13.3 | 25.8 | 27.4 | |||||||||||||
Total | $ | 279.5 | $ | 268.7 | $ | 551.9 | $ | 539.6 | |||||||||
Three months | Six months | ||||||||||||||||
ended | ended | ||||||||||||||||
June 25, | June 25, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
(in millions of dollars) | |||||||||||||||||
ACCO U.S. | $ | 6.6 | $ | 5.7 | $ | 15.4 | $ | 7.1 | |||||||||
ACCO Europe | 12.1 | (12.1 | ) | 22.6 | (2.9 | ) | |||||||||||
Trading Companies | 9.0 | 6.6 | 15.2 | 13.1 | |||||||||||||
Day-Timers | (0.3 | ) | (0.4 | ) | — | (0.5 | ) | ||||||||||
Corporate expenses | (2.9 | ) | (4.6 | ) | (5.5 | ) | (8.0 | ) | |||||||||
$ | 24.5 | $ | (4.8 | ) | $ | 47.7 | $ | 8.8 | |||||||||
Interest expense | 2.0 | 1.7 | 4.1 | 3.9 | |||||||||||||
Other expense (income) | 0.5 | (3.8 | ) | 1.6 | (3.5 | ) | |||||||||||
Income (loss) before taxes | 22.0 | (2.7 | ) | 42.0 | 8.4 | ||||||||||||
Income taxes | 7.3 | 3.8 | 17.0 | 6.3 | |||||||||||||
Net income before change in accounting principle | $ | 14.7 | $ | (6.5 | ) | $ | 25.0 | $ | 2.1 | ||||||||
10. | Earnings per Share |
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Table of Contents
Three months | Six months | |||||||||||||||
ended | ended | |||||||||||||||
June 25, | June 25, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
(in millions, except per share amounts) | ||||||||||||||||
Net income (loss) | $ | 14.7 | $ | (6.5 | ) | $ | 26.6 | $ | 2.1 | |||||||
Weighted average number of common shares outstanding | 35.0 | 35.0 | 35.0 | 35.0 | ||||||||||||
Basic earnings (loss) per common share | $ | 0.42 | $ | (0.19 | ) | $ | 0.76 | $ | 0.06 |
11. | Unaudited Pro-forma Earnings per Share |
Three months | Six months | |||||||
ended | ended | |||||||
June 25, | June 25, | |||||||
2005 | 2005 | |||||||
(in millions, except per share amounts) | ||||||||
Net income before change in accounting principle | $ | 14.7 | $ | 25.0 | ||||
Less: Pro-forma interest expense(1) | (5.6 | ) | (11.3 | ) | ||||
Pro-forma net income before change in accounting principle | 9.1 | 13.7 | ||||||
Change in accounting principle | — | 1.6 | ||||||
Pro-forma net income | $ | 9.1 | $ | 15.3 | ||||
Common shares outstanding — basic(2) | 35.0 | 35.0 | ||||||
Exercise of stock options(3) | 0.4 | 0.4 | ||||||
Pro-forma common shares outstanding — diluted | 35.4 | 35.4 | ||||||
Basic pro-forma earnings per common share before change in accounting principle | $ | 0.26 | $ | 0.39 | ||||
Change in accounting principle | $ | — | $ | 0.05 | ||||
Basic pro-forma earnings per common share | $ | 0.26 | $ | 0.44 | ||||
Diluted pro-forma earnings per common share before change in accounting principle | $ | 0.26 | $ | 0.39 | ||||
Change in accounting principle | $ | — | $ | 0.05 | ||||
Diluted pro-forma earnings per common share | $ | 0.26 | $ | 0.44 |
(1) | Pro-forma interest expense for the six months ended June 25, 2005 ($17.4 million) is calculated based upon assumed financing of the Company of $625.0 million to fund the dividend payable to the shareholders at an interest rate of 5.56%, net of tax of $6.1 million. Pro-forma interest expense for the three months ended June 25, 2005 was ($8.7 million), net of tax of $3.1 million. |
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Table of Contents
(2) | Shares of stock outstanding are the number of ACCO Brands shares issued in conjunction with the spin-off from Fortune Brands completed on August 16, 2005. |
(3) | Assumes that pro-forma outstanding common shares were increased by shares of those unvested stock options in the Parent company stock, for which the market price of the Parent company stock exceeds the exercise price of the option, less shares which could have been purchased by the Company with related proceeds. The total number of options exchanged as a result of the spin-off from Fortune Brands were 0.7 million, with an exercise price range of $5.35 to $19.18 per share. |
12. | Comprehensive Income (Loss) |
13. | Subsequent Event |
• | a $400.0 million U.S. term loan facility, with quarterly amortization, maturing on August 17, 2012, with interest based on either LIBOR or a base rate; |
• | a $130.0 million dollar revolving credit facility (including a $40.0 million letter of credit sublimit) maturing on August 17, 2010, with interest based on either LIBOR or a base rate; |
• | a £63.6 million sterling term loan facility, with quarterly amortization, maturing on August 17, 2010, with interest based on LIBOR; |
• | a€68.2 million euro term loan facility, with quarterly amortization, maturing on August 17, 2010, with interest based on EURIBOR; and |
• | a $20.0 million dollar equivalent euro revolving credit facility maturing on August 17, 2010 with interest based on EURIBOR. |
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Table of Contents
14. | Condensed Consolidated Financial Information |
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Table of Contents
June 25, 2005 (unaudited) | ||||||||||||||||||||||
ACCO Brands | ||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions of dollars) | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||
Current assets | ||||||||||||||||||||||
Cash and cash equivalents | $ | 1.0 | $ | (6.7 | ) | $ | 23.9 | $ | — | $ | 18.2 | |||||||||||
Accounts receivable, net | — | 136.3 | 130.7 | — | 267.0 | |||||||||||||||||
Inventory, net | — | 105.0 | 82.8 | — | 187.8 | |||||||||||||||||
Receivables from affiliates | 13.5 | 15.3 | (5.6 | ) | (23.2 | ) | — | |||||||||||||||
Deferred taxes | (1.7 | ) | 6.7 | 2.6 | — | 7.6 | ||||||||||||||||
Income taxes receivable | 0.1 | 1.0 | (1.1 | ) | — | — | ||||||||||||||||
Other current assets | 0.2 | 11.4 | 12.5 | — | 24.1 | |||||||||||||||||
Total current assets | 13.1 | 269.0 | 245.8 | (23.2 | ) | 504.7 | ||||||||||||||||
Property, plant and equipment, net | 0.1 | 53.0 | 101.6 | — | 154.7 | |||||||||||||||||
Deferred income taxes | 2.7 | 19.7 | (10.2 | ) | — | 12.2 | ||||||||||||||||
Intangibles, net of accumulated amortization | 70.3 | 30.3 | 15.3 | — | 115.9 | |||||||||||||||||
Prepaid pension expense | — | 29.3 | 55.6 | — | 84.9 | |||||||||||||||||
Other assets | 2.0 | 3.1 | — | — | 5.1 | |||||||||||||||||
Investment in /long term receivable from affiliates | 519.6 | 25.7 | — | (545.3 | ) | — | ||||||||||||||||
Total assets | $ | 607.8 | $ | 430.1 | $ | 408.1 | $ | (568.5 | ) | $ | 877.5 | |||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||
Notes payable to banks | $ | — | $ | — | $ | 0.9 | $ | — | $ | 0.9 | ||||||||||||
Accounts payable | — | 50.8 | 50.8 | — | 101.6 | |||||||||||||||||
Accrued current income taxes | 2.2 | (3.1 | ) | 4.5 | — | 3.6 | ||||||||||||||||
Accrued customer programs | — | 39.3 | 37.0 | — | 76.3 | |||||||||||||||||
Accrued compensation, restructuring and other liabilities | 2.2 | 27.2 | 31.6 | — | 61.0 | |||||||||||||||||
Payables to affiliates | 1.3 | 11.2 | 7.9 | (20.4 | ) | — | ||||||||||||||||
Total current liabilities | 5.7 | 125.4 | 132.7 | (20.4 | ) | 243.4 | ||||||||||||||||
Long-term notes payable to affiliates | — | 348.0 | 6.5 | (354.5 | ) | — | ||||||||||||||||
Postretirement and other liabilities | 5.4 | 8.8 | 23.2 | — | 37.4 | |||||||||||||||||
Total liabilities | 11.1 | 482.2 | 162.4 | (374.9 | ) | 280.8 | ||||||||||||||||
Stockholder’s equity | ||||||||||||||||||||||
Common stock | 0.1 | 0.9 | 9.6 | (10.5 | ) | 0.1 | ||||||||||||||||
Parent company investment | (309.3 | ) | (21.3 | ) | 25.3 | (4.0 | ) | (309.3 | ) | |||||||||||||
Paid-in capital | 1,838.0 | 620.2 | 101.4 | (721.6 | ) | 1,838.0 | ||||||||||||||||
Accumulated other comprehensive income (loss) | 6.1 | (1.2 | ) | 9.3 | (8.1 | ) | 6.1 | |||||||||||||||
Accumulated deficit | (938.2 | ) | (650.8 | ) | 100.1 | 550.7 | (938.2 | ) | ||||||||||||||
Total stockholders’ equity | 596.7 | (52.2 | ) | 245.7 | (193.5 | ) | 596.7 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 607.8 | $ | 430.1 | $ | 408.1 | $ | (568.5 | ) | $ | 877.5 | |||||||||||
F-50
Table of Contents
December 27, 2004 | ||||||||||||||||||||||
ACCO | ||||||||||||||||||||||
Brands | ||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions of dollars) | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||
Current assets | ||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | (13.4 | ) | $ | 93.2 | $ | — | $ | 79.8 | |||||||||||
Accounts receivable, net | — | 175.6 | 144.5 | — | 320.1 | |||||||||||||||||
Inventory, net | — | 88.4 | 84.1 | — | 172.5 | |||||||||||||||||
Receivables from affiliates | 8.6 | 25.5 | 22.2 | (56.3 | ) | — | ||||||||||||||||
Deferred taxes receivable | 0.2 | 5.6 | (1.6 | ) | — | 4.2 | ||||||||||||||||
Other current assets | 0.1 | 5.8 | 14.0 | — | 19.9 | |||||||||||||||||
Total current assets | 8.9 | 287.5 | 356.4 | (56.3 | ) | 596.5 | ||||||||||||||||
Property, plant and equipment, net | 0.1 | 53.2 | 104.4 | — | 157.7 | |||||||||||||||||
Deferred income taxes | 5.2 | 23.9 | (7.4 | ) | — | 21.7 | ||||||||||||||||
Intangibles, net of accumulated amortization | 70.4 | 30.3 | 16.9 | — | 117.6 | |||||||||||||||||
Prepaid pension expense | — | 30.0 | 57.1 | — | 87.1 | |||||||||||||||||
Other assets | 1.9 | 2.0 | — | — | 3.9 | |||||||||||||||||
Investment in /long term receivable from affiliates | 617.6 | 43.1 | — | (660.7 | ) | — | ||||||||||||||||
Total assets | $ | 704.1 | $ | 470.0 | $ | 527.4 | $ | (717.0 | ) | $ | 984.5 | |||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||||||||
Current liabilities | ||||||||||||||||||||||
Notes payable to banks | $ | — | $ | — | $ | 0.1 | $ | — | $ | 0.1 | ||||||||||||
Accounts payable | — | 60.1 | 60.5 | — | 120.6 | |||||||||||||||||
Accrued current income taxes | 4.9 | 4.8 | 4.6 | — | 14.3 | |||||||||||||||||
Accrued customer programs | — | 47.5 | 34.1 | — | 81.6 | |||||||||||||||||
Accrued compensation, restructuring and other liabilities | 9.0 | 52.1 | 47.1 | — | 108.2 | |||||||||||||||||
Payables to affiliates | 67.2 | 34.0 | 14.4 | (115.6 | ) | — | ||||||||||||||||
Total current liabilities | 81.1 | 198.5 | 160.8 | (115.6 | ) | 324.8 | ||||||||||||||||
Long-term notes payable to affiliates | — | 348.0 | 3.4 | (351.4 | ) | — | ||||||||||||||||
Postretirement and other liabilities | 6.2 | 10.9 | 25.8 | — | 42.9 | |||||||||||||||||
Total liabilities | 87.3 | 557.4 | 190.0 | (467.0 | ) | 367.7 | ||||||||||||||||
Stockholder’s equity | ||||||||||||||||||||||
Common stock | 0.1 | 0.9 | 9.6 | (10.5 | ) | 0.1 | ||||||||||||||||
Parent company investment | (269.5 | ) | (53.4 | ) | (13.8 | ) | 67.2 | (269.5 | ) | |||||||||||||
Paid-in capital | 1,835.1 | 619.3 | 114.9 | (734.2 | ) | 1,835.1 | ||||||||||||||||
Accumulated other comprehensive income (loss) | 15.9 | (1.3 | ) | 19.4 | (18.1 | ) | 15.9 | |||||||||||||||
Accumulated deficit | (964.8 | ) | (652.9 | ) | 207.3 | 445.6 | (964.8 | ) | ||||||||||||||
Total stockholders’ equity | 616.8 | (87.4 | ) | 337.4 | (250.0 | ) | 616.8 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 704.1 | $ | 470.0 | $ | 527.4 | $ | (717.0 | ) | $ | 984.5 | |||||||||||
F-51
Table of Contents
Three months ended June 25, 2005 (unaudited) | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||
Unaffiliated sales | $ | — | $ | 140.6 | $ | 138.9 | $ | — | $ | 279.5 | |||||||||||
Affiliated sales | — | 4.7 | 4.4 | (9.1 | ) | — | |||||||||||||||
Net sales | — | 145.3 | 143.3 | (9.1 | ) | 279.5 | |||||||||||||||
Cost of products sold | — | 96.0 | 83.7 | (9.1 | ) | 170.6 | |||||||||||||||
Advertising, selling, general and administrative expenses | 3.0 | 43.1 | 37.9 | — | 84.0 | ||||||||||||||||
Amortization of intangibles | 0.1 | — | 0.3 | — | 0.4 | ||||||||||||||||
Interest (income)/expense from affiliates | (5.4 | ) | 5.4 | — | — | — | |||||||||||||||
Interest (income)/expense, including allocation from Parent | 2.7 | (0.3 | ) | (0.4 | ) | — | 2.0 | ||||||||||||||
Other (income)/expense, net | (1.0 | ) | 0.7 | 0.8 | — | 0.5 | |||||||||||||||
Income before taxes and earnings of wholly owned subsidiaries | 0.6 | 0.4 | 21.0 | — | 22.0 | ||||||||||||||||
Income taxes | 0.4 | 0.7 | 6.2 | — | 7.3 | ||||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | 0.2 | (0.3 | ) | 14.8 | — | 14.7 | |||||||||||||||
Earnings/(losses) of wholly owned subsidiaries | 16.2 | 0.6 | — | (16.8 | ) | — | |||||||||||||||
Net income (loss) | $ | 16.4 | $ | 0.3 | $ | 14.8 | $ | (16.8 | ) | $ | 14.7 | ||||||||||
F-52
Table of Contents
Three months ended June 25, 2004 (unaudited) | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||
Unaffiliated sales | $ | — | $ | 138.6 | $ | 130.1 | $ | — | $ | 268.7 | |||||||||||
Affiliated sales | — | (5.4 | ) | 7.9 | (2.5 | ) | — | ||||||||||||||
Net sales | — | 133.2 | 138.0 | (2.5 | ) | 268.7 | |||||||||||||||
Cost of products sold | — | 83.7 | 89.4 | (2.5 | ) | 170.6 | |||||||||||||||
Advertising, selling, general and administrative expenses | 4.1 | 45.6 | 36.1 | — | 85.8 | ||||||||||||||||
Amortization of intangibles | — | — | 0.3 | — | 0.3 | ||||||||||||||||
Restructuring charges | — | 1.6 | 15.2 | — | 16.8 | ||||||||||||||||
Interest (income)/expense from affiliates | (4.2 | ) | 4.2 | — | — | — | |||||||||||||||
Interest (income)/expense, including allocation from Parent | 2.6 | (0.1 | ) | (0.8 | ) | — | 1.7 | ||||||||||||||
Other (income)/expense, net | — | (4.0 | ) | 0.2 | — | (3.8 | ) | ||||||||||||||
Income (loss) before taxes and earnings/(losses) of wholly owned subsidiaries | (2.5 | ) | 2.2 | (2.4 | ) | — | (2.7 | ) | |||||||||||||
Income taxes | (0.9 | ) | 1.9 | 2.8 | — | 3.8 | |||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | (1.6 | ) | 0.3 | (5.2 | ) | — | (6.5 | ) | |||||||||||||
Earnings/(losses) of wholly owned subsidiaries | (2.6 | ) | 2.2 | — | 0.4 | — | |||||||||||||||
Net income (loss) | $ | (4.2 | ) | $ | 2.5 | $ | (5.2 | ) | $ | 0.4 | $ | (6.5 | ) | ||||||||
F-53
Table of Contents
Six months ended June 25, 2005 (unaudited) | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||
Unaffiliated sales | $ | — | $ | 277.4 | $ | 274.5 | $ | — | $ | 551.9 | |||||||||||
Affiliated sales | — | 7.8 | 11.1 | (18.9 | ) | — | |||||||||||||||
Net sales | — | 285.2 | 285.6 | (18.9 | ) | 551.9 | |||||||||||||||
Cost of products sold | — | 186.0 | 170.1 | (18.9 | ) | 337.2 | |||||||||||||||
Advertising, selling, general and administrative expenses | 5.1 | 85.4 | 75.5 | — | 166.0 | ||||||||||||||||
Amortization of intangibles | 0.1 | — | 0.9 | — | 1.0 | ||||||||||||||||
Interest (income)/expense from affiliates | (10.4 | ) | 10.4 | — | — | — | |||||||||||||||
Interest (income)/expense, including allocation from Parent | 5.6 | (0.4 | ) | (1.1 | ) | — | 4.1 | ||||||||||||||
Other (income)/expense, net | (5.9 | ) | 0.6 | 6.9 | — | 1.6 | |||||||||||||||
Income before taxes and earnings of wholly owned subsidiaries | 5.5 | 3.2 | 33.3 | — | 42.0 | ||||||||||||||||
Income taxes | 2.3 | 2.1 | 12.6 | — | 17.0 | ||||||||||||||||
Net income before change in accounting principle | 3.2 | 1.1 | 20.7 | — | 25.0 | ||||||||||||||||
Change in accounting principle | — | — | 1.6 | 1.6 | |||||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | 3.2 | 1.1 | 22.3 | — | 26.6 | ||||||||||||||||
Earnings/(losses) of wholly owned subsidiaries | 25.1 | 1.7 | — | (26.8 | ) | — | |||||||||||||||
Net income (loss) | $ | 28.3 | $ | 2.8 | $ | 22.3 | $ | (26.8 | ) | $ | 26.6 | ||||||||||
F-54
Table of Contents
Six months ended June 25, 2004 (unaudited) | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||
Unaffiliated sales | $ | — | $ | 271.8 | $ | 267.8 | $ | — | $ | 539.6 | |||||||||||
Affiliated sales | — | (0.9 | ) | 12.2 | (11.3 | ) | — | ||||||||||||||
Net sales | — | 270.9 | 280.0 | (11.3 | ) | 539.6 | |||||||||||||||
Cost of products sold | — | 173.7 | 178.0 | (11.3 | ) | 340.4 | |||||||||||||||
Advertising, selling, general and administrative expenses | 6.9 | 91.0 | 72.5 | — | 170.4 | ||||||||||||||||
Amortization of intangibles | — | — | 0.6 | — | 0.6 | ||||||||||||||||
Restructuring charges | — | 2.9 | 16.5 | — | 19.4 | ||||||||||||||||
Interest (income)/expense from affiliates | (8.4 | ) | 8.4 | — | — | — | |||||||||||||||
Interest (income)/expense, including allocation from Parent | 5.3 | (0.1 | ) | (1.3 | ) | — | 3.9 | ||||||||||||||
Other (income)/expense, net | — | (4.0 | ) | 0.5 | — | (3.5 | ) | ||||||||||||||
Income (loss) before taxes and earnings/(losses) of wholly owned subsidiaries | (3.8 | ) | (1.0 | ) | 13.2 | — | 8.4 | ||||||||||||||
Income taxes | (1.3 | ) | 0.8 | 6.8 | — | 6.3 | |||||||||||||||
Income (loss) before earnings/(losses) of wholly owned subsidiaries | (2.5 | ) | (1.8 | ) | 6.4 | — | 2.1 | ||||||||||||||
Earnings/(losses) of wholly owned subsidiaries | 6.9 | 2.3 | — | (9.2 | ) | — | |||||||||||||||
Net income (loss) | $ | 4.4 | $ | 0.5 | $ | 6.4 | $ | (9.2 | ) | $ | 2.1 | ||||||||||
F-55
Table of Contents
Six months ended June 25, 2005 (unaudited) | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||
Net cash (used in)/provided by operating activities: | $ | (2.7 | ) | $ | (26.9 | ) | $ | 22.1 | $ | — | $ | (7.5 | ) | ||||||||
Investing activities: | |||||||||||||||||||||
Additions to property, plant and equipment | — | (5.2 | ) | (7.6 | ) | — | (12.8 | ) | |||||||||||||
Proceeds from the sale of property, plant and equipment | — | — | 0.2 | — | 0.2 | ||||||||||||||||
Other investing activities | (0.4 | ) | — | — | — | (0.4 | ) | ||||||||||||||
Net cash (used)/provided by investing activities | (0.4 | ) | (5.2 | ) | (7.4 | ) | — | (13.0 | ) | ||||||||||||
Financing activities: | |||||||||||||||||||||
Decrease in parent company investment | (39.0 | ) | — | — | — | (39.0 | ) | ||||||||||||||
Intercompany financing | (74.7 | ) | 38.3 | 36.4 | — | — | |||||||||||||||
Intercompany dividends | 117.8 | 0.5 | (118.3 | ) | — | — | |||||||||||||||
Repayments on short-term debt | — | 0.8 | 0.8 | ||||||||||||||||||
Net cash (used)/provided by financing activities | 4.1 | 38.8 | (81.1 | ) | — | (38.2 | ) | ||||||||||||||
Effect of foreign exchange rate changes on cash | — | — | (2.9 | ) | — | (2.9 | ) | ||||||||||||||
Net increase/(decrease) in cash and cash equivalents | 1.0 | 6.7 | (69.3 | ) | — | (61.6 | ) | ||||||||||||||
Cash and cash equivalents at the beginning of the year | — | (13.4 | ) | 93.2 | — | 79.8 | |||||||||||||||
Cash and cash equivalents at the end of the period | $ | 1.0 | $ | (6.7 | ) | $ | 23.9 | $ | — | $ | 18.2 | ||||||||||
F-56
Table of Contents
Six months ended June 25, 2004 (unaudited) | |||||||||||||||||||||
ACCO | |||||||||||||||||||||
Brands | |||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
(in millions of dollars) | |||||||||||||||||||||
Net cash (used in)/provided by operating activities: | $ | (6.2 | ) | $ | 7.3 | $ | 28.3 | $ | — | $ | 29.4 | ||||||||||
Investing activities: | |||||||||||||||||||||
Additions to property, plant and equipment | — | (7.9 | ) | (3.8 | ) | — | (11.7 | ) | |||||||||||||
Proceeds from the sale of property, plant and equipment | — | 13.8 | 2.3 | — | 16.1 | ||||||||||||||||
Net cash (used)/provided by investing activities | — | 5.9 | (1.5 | ) | — | 4.4 | |||||||||||||||
Financing activities: | |||||||||||||||||||||
Decrease in parent company investment | (17.9 | ) | — | — | (17.9 | ) | |||||||||||||||
Intercompany financing | 5.1 | (19.0 | ) | 13.9 | — | — | |||||||||||||||
Intercompany dividends | 19.0 | 6.8 | (25.8 | ) | — | — | |||||||||||||||
Repayments on short-term debt | — | — | 0.2 | — | 0.2 | ||||||||||||||||
Net cash (used)/provided by financing activities | 6.2 | (12.2 | ) | (11.7 | ) | — | (17.7 | ) | |||||||||||||
Effect of foreign exchange rate changes on cash | — | — | 2.1 | — | 2.1 | ||||||||||||||||
Net increase in cash and cash equivalents | — | 1.0 | 17.2 | — | 18.2 | ||||||||||||||||
Cash and cash equivalents at the beginning of the year | — | (6.9 | ) | 67.4 | — | 60.5 | |||||||||||||||
Cash and cash equivalents at the end of the period | $ | — | $ | (5.9 | ) | $ | 84.6 | $ | — | $ | 78.7 | ||||||||||
F-57
Table of Contents
Mar-03 | Jun-03 | Sep-03 | Dec-03 | Mar-04 | Jun-04 | Sep-04 | Dec-04 | |||||||||||||||||||||||||
Qtr | Qtr | Qtr | Qtr | Qtr | Qtr | Qtr | Qtr | |||||||||||||||||||||||||
Net Sales | 249.9 | 252.7 | 286.7 | 312.6 | 270.9 | 268.7 | 303.8 | 332.3 | ||||||||||||||||||||||||
Cost of products sold | 158.5 | 167.5 | 175.1 | 185.7 | 169.8 | 170.6 | 183.2 | 190.7 | ||||||||||||||||||||||||
Operating Income/(Loss)(1) | 5.0 | (4.8 | ) | 15.4 | 30.7 | 13.6 | (4.8 | ) | 36.1 | 48.0 | ||||||||||||||||||||||
Net Income (Loss) | 4.2 | (2.5 | ) | 6.8 | 18.2 | 8.6 | (6.5 | ) | 38.5 | 27.9 |
(1) | Included in Operating Income (Loss) above were the following business repositioning costs: |
Restructuring Charges | 2.1 | 3.7 | 9.4 | 2.1 | 2.6 | 16.8 | — | — | ||||||||||||||||||||||||
Restructuring implementation costs | 7.6 | 2.8 | 3.6 | 6.2 | 4.6 | 12.8 | 1.5 | 3.3 | ||||||||||||||||||||||||
Write-down of intangibles | — | 12.0 | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | 9.7 | 18.5 | 13.0 | 8.3 | 7.2 | 29.6 | 1.5 | 3.3 | ||||||||||||||||||||||||
F-58
Table of Contents
F-59
Table of Contents
PricewaterhouseCoopers LLP | |
Chicago, Illinois | |
March 15, 2005, except for note 19, | |
for which the date is | |
September 30, 2005 |
F-60
Table of Contents
Year Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
Sales: | ||||||||||||||
Domestic sales | $ | 419,925 | $ | 440,337 | $ | 459,836 | ||||||||
International sales | 292,393 | 257,571 | 241,892 | |||||||||||
Net sales | 712,318 | 697,908 | 701,728 | |||||||||||
Costs and expenses: | ||||||||||||||
Cost of sales: | ||||||||||||||
Product cost of sales, including development and engineering | 434,908 | 418,655 | 422,517 | |||||||||||
Inventory rationalization and write-down charges | — | — | 1,049 | |||||||||||
Selling, service and administrative | 225,631 | 224,552 | 228,085 | |||||||||||
Earnings from joint ventures | (1,267 | ) | (12 | ) | (221 | ) | ||||||||
Interest expense | 25,923 | 34,408 | 39,898 | |||||||||||
Restructuring and other: | ||||||||||||||
Restructuring | 851 | 11,102 | 8,013 | |||||||||||
Other | 1,690 | 4,679 | 1,081 | |||||||||||
Other expense, net | 706 | 156 | 247 | |||||||||||
Income before taxes and cumulative effect of accounting change | 23,876 | 4,368 | 1,059 | |||||||||||
Income tax expense | 9,114 | 7,630 | 2,045 | |||||||||||
Net income (loss) before cumulative effect of accounting change | 14,762 | (3,262 | ) | (986 | ) | |||||||||
Cumulative effect of accounting change, net of taxes | — | — | 79,024 | |||||||||||
Net income (loss) | $ | 14,762 | $ | (3,262 | ) | $ | (80,010 | ) | ||||||
Other comprehensive income (loss), net of income taxes of $0.6 million in 2004 and $1.1 million in 2003: | ||||||||||||||
Foreign currency translation adjustments | 4,704 | 8,695 | 5,791 | |||||||||||
Minimum pension liabilities | 1,678 | 1,749 | (10,205 | ) | ||||||||||
Income on derivative financial instruments | 585 | 686 | (873 | ) | ||||||||||
Comprehensive income (loss) | $ | 21,729 | $ | 7,868 | $ | (85,297 | ) | |||||||
Net income (loss) per common share:(1) | ||||||||||||||
Basic | $ | 0.91 | $ | (0.20 | ) | $ | (5.04 | ) | ||||||
Diluted | $ | 0.88 | $ | (0.20 | ) | $ | (5.04 | ) | ||||||
Weighted average number of common shares outstanding(2) | ||||||||||||||
Basic | 16,171 | 15,978 | 15,883 | |||||||||||
Diluted | 16,839 | 15,978 | 15,883 |
(1) | Amounts represent per share amounts for both Common Stock and Class B Common Stock. |
(2) | Weighted average shares includes both Common Stock and Class B Common Stock. |
F-61
Table of Contents
December 31, | December 31, | |||||||||||
2004 | 2003 | |||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 6,259 | $ | 9,568 | ||||||||
Receivables, less allowances for doubtful accounts and sales returns: 2004 — $16,476 and 2003 — $16,614 | 141,445 | 128,391 | ||||||||||
Inventories, net | 97,996 | 86,240 | ||||||||||
Deferred tax assets | 12,437 | 20,096 | ||||||||||
Prepaid expenses | 7,234 | 6,915 | ||||||||||
Other | 6,809 | 6,426 | ||||||||||
Total current assets | 272,180 | 257,636 | ||||||||||
Capital assets at cost: | ||||||||||||
Land and land improvements | 5,589 | 6,136 | ||||||||||
Buildings and leasehold improvements | 52,623 | 51,634 | ||||||||||
Machinery and equipment | 142,723 | 150,587 | ||||||||||
Computer hardware and software | 71,157 | 67,503 | ||||||||||
Total capital assets at cost | 272,092 | 275,860 | ||||||||||
Less — accumulated depreciation | (187,399 | ) | (180,874 | ) | ||||||||
Net capital assets | 84,693 | 94,986 | ||||||||||
Goodwill and other intangible assets, net of accumulated amortization | 150,383 | 150,775 | ||||||||||
Other | 33,158 | 26,934 | ||||||||||
Total assets | $ | 540,414 | $ | 530,331 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 49,758 | $ | 51,253 | ||||||||
Accrued liabilities: | ||||||||||||
Salaries, wages and retirement plan contributions | 15,096 | 13,273 | ||||||||||
Deferred income on service maintenance agreements | 12,750 | 10,512 | ||||||||||
Accrued customer allowances | 28,606 | 22,180 | ||||||||||
Restructuring reserve | 1,235 | 6,327 | ||||||||||
Other | 32,518 | 34,255 | ||||||||||
Notes payable | 7,788 | 5,819 | ||||||||||
Current maturities of long-term debt | 25,925 | 14,176 | ||||||||||
Total current liabilities | 173,676 | 157,795 | ||||||||||
Long-term debt, less current maturities | 255,165 | 282,019 | ||||||||||
Other long-term liabilities | 33,727 | 36,308 | ||||||||||
Stockholders’ equity: | ||||||||||||
Common stock, $.125 par value; 40,000,000 shares authorized; 15,696,620 shares issued and outstanding at December 31, 2004 and 2003 | 1,962 | 1,962 | ||||||||||
Class B common stock, $.125 par value; 4,796,550 shares authorized; 2,398,275 shares issued and outstanding at December 31, 2004 and 2003 | 300 | 300 | ||||||||||
Additional paid-in capital | 26,445 | 26,727 | ||||||||||
Treasury stock — 1,871,047 and 2,062,641 shares at December 31, 2004 and 2003 | (21,398 | ) | (23,588 | ) | ||||||||
Retained earnings | 78,171 | 63,409 | ||||||||||
Accumulated other comprehensive income | (7,634 | ) | (14,601 | ) | ||||||||
Total stockholders’ equity | 77,846 | 54,209 | ||||||||||
Total liabilities and stockholders’ equity | $ | 540,414 | $ | 530,331 | ||||||||
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Year Ended December 31, | ||||||||||||||
2004 | 2003 | 2002 | ||||||||||||
Cash Flows From Operating Activities: | ||||||||||||||
Net income (loss) | $ | 14,762 | $ | (3,262 | ) | $ | (80,010 | ) | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
Cumulative effect of accounting change, net of tax | — | — | 79,024 | |||||||||||
Depreciation | 17,494 | 20,141 | 22,836 | |||||||||||
Amortization | 4,055 | 5,021 | 5,576 | |||||||||||
Equity earnings from joint ventures | (1,267 | ) | (12 | ) | (221 | ) | ||||||||
Restructuring and other | 1,691 | 11,102 | 9,094 | |||||||||||
Provision for doubtful accounts and sales returns | 1,974 | 3,090 | 4,095 | |||||||||||
Provision for inventory reserves | 4,266 | 5,524 | 4,561 | |||||||||||
Inventory rationalization and write-down charges | — | — | 1,049 | |||||||||||
Non-cash sale of subsidiary | — | — | 1,150 | |||||||||||
Non-cash loss on disposal or impairment of investment | 850 | 4,679 | 1,137 | |||||||||||
(Increase) decrease in non-current deferred taxes | (4,666 | ) | 5,244 | 6,428 | ||||||||||
(Increase) decrease in other long-term assets | 3,221 | 5,984 | 2,801 | |||||||||||
Other | (1,365 | ) | (731 | ) | 128 | |||||||||
Changes in current assets and liabilities: | — | — | ||||||||||||
Increase in receivables | (10,678 | ) | (1,404 | ) | (6,135 | ) | ||||||||
(Increase) decrease in inventories | (13,728 | ) | 5,400 | 3,973 | ||||||||||
(Increase) decrease in other current assets | (32 | ) | 2,669 | 577 | ||||||||||
Decrease (increase) in deferred tax assets | 7,413 | 324 | (2,482 | ) | ||||||||||
Decrease in accounts payable and accrued liabilities | (3,314 | ) | (11,194 | ) | (9,227 | ) | ||||||||
Increase (decrease) in accrued income taxes | 2,034 | (951 | ) | 2,112 | ||||||||||
Net cash provided by operating activities | 22,710 | 51,624 | 46,466 | |||||||||||
Cash Flows From Investing Activities: | ||||||||||||||
Capital expenditures | (7,347 | ) | (8,468 | ) | (9,010 | ) | ||||||||
Payments for acquisitions and investments | (3,327 | ) | (2,162 | ) | (416 | ) | ||||||||
Proceeds from sale of subsidiary | — | — | 470 | |||||||||||
Dividend from joint venture investment | 1,430 | — | — | |||||||||||
Proceeds from sale of plant and equipment | 1,001 | 102 | 1,286 | |||||||||||
Net cash used in investing activities | (8,243 | ) | (10,528 | ) | (7,670 | ) | ||||||||
Cash Flows From Financing Activities: | ||||||||||||||
Proceeds from long-term debt-maturities greater than 90 days | 227,375 | 182,640 | 344,610 | |||||||||||
Repayments of long-term debt-maturities greater than 90 days | (235,351 | ) | (122,586 | ) | (270,827 | ) | ||||||||
Net change in debt-maturities of 90 days or less | 7,000 | (91,179 | ) | (151,684 | ) | |||||||||
Decrease in current portion of long-term debt | (12,469 | ) | (9,418 | ) | (186 | ) | ||||||||
Payments of debt issuance costs | (52 | ) | (4,154 | ) | (3,438 | ) | ||||||||
(Distribution) contribution related to tax allocation agreement | (1,261 | ) | 2,537 | 1,490 | ||||||||||
Proceeds from the exercise of stock options | 1,661 | 737 | 1,164 | |||||||||||
Net cash used in financing activities | (13,097 | ) | (41,423 | ) | (78,871 | ) | ||||||||
Effect of exchange rates on cash | (4,679 | ) | (8,356 | ) | (1,610 | ) | ||||||||
Net decrease in cash and cash equivalents | (3,309 | ) | (8,683 | ) | (41,685 | ) | ||||||||
Cash and cash equivalents at the beginning of the year | 9,568 | 18,251 | 59,936 | |||||||||||
Cash and cash equivalents at the end of the period | $ | 6,259 | $ | 9,568 | $ | 18,251 | ||||||||
Supplemental disclosure of cash flow information: | ||||||||||||||
Cash paid during the period for: | ||||||||||||||
Interest paid | $ | 25,423 | $ | 30,814 | $ | 34,263 | ||||||||
Income taxes paid (recovered), net | 6,294 | 3,772 | (7,052 | ) |
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Accumulated | ||||||||||||||||||||||||||||
Class B | Additional | Other | ||||||||||||||||||||||||||
Common | Paid in | Retained | Treasury | Comprehensive | ||||||||||||||||||||||||
Stock | Stock | Capital | Earnings | Stock | Income(2) | Total | ||||||||||||||||||||||
Balance at December 31, 2001 | $ | 1,962 | $ | 300 | $ | 21,640 | $ | 146,681 | $ | (26,284 | ) | $ | (20,444 | ) | $ | 123,855 | ||||||||||||
Net loss | — | — | — | (80,010 | ) | — | — | (80,010 | ) | |||||||||||||||||||
Capital contribution(1) | — | — | 1,490 | — | — | — | 1,490 | |||||||||||||||||||||
Exercise of stock options | — | — | (488 | ) | — | 1,652 | — | 1,164 | ||||||||||||||||||||
Compensation for restricted stock units | — | — | 389 | — | — | — | 389 | |||||||||||||||||||||
Tax benefit of options exercised | — | — | 530 | — | — | — | 530 | |||||||||||||||||||||
Losses on derivative financial instruments | — | — | — | — | — | (873 | ) | (873 | ) | |||||||||||||||||||
Minimum pension liabilities | — | — | — | — | — | (10,205 | ) | (10,205 | ) | |||||||||||||||||||
Translation adjustment | — | — | — | — | — | 5,791 | 5,791 | |||||||||||||||||||||
Balance at December 31, 2002 | 1,962 | 300 | 23,561 | 66,671 | (24,632 | ) | (25,731 | ) | 42,131 | |||||||||||||||||||
Net loss | — | — | — | (3,262 | ) | — | — | (3,262 | ) | |||||||||||||||||||
Capital contribution(1) | — | — | 2,537 | — | — | — | 2,537 | |||||||||||||||||||||
Exercise of stock options | — | — | (307 | ) | — | 1,044 | — | 737 | ||||||||||||||||||||
Compensation for restricted stock units | — | — | 727 | — | — | — | 727 | |||||||||||||||||||||
Tax benefit of options exercised | — | — | 209 | — | — | — | 209 | |||||||||||||||||||||
Income on derivative financial instruments | — | — | — | — | — | 686 | 686 | |||||||||||||||||||||
Minimum pension liabilities | — | — | — | — | — | 1,749 | 1,749 | |||||||||||||||||||||
Translation adjustment | — | — | — | — | — | 8,695 | 8,695 | |||||||||||||||||||||
Balance at December 31, 2003 | 1,962 | 300 | 26,727 | 63,409 | (23,588 | ) | (14,601 | ) | 54,209 | |||||||||||||||||||
Net income | — | — | — | 14,762 | — | — | 14,762 | |||||||||||||||||||||
Capital distribution(1) | — | — | (1,261 | ) | — | — | — | (1,261 | ) | |||||||||||||||||||
Exercise of stock options | — | — | (529 | ) | — | 2,190 | — | 1,661 | ||||||||||||||||||||
Compensation for restricted stock units | — | — | 936 | — | — | — | 936 | |||||||||||||||||||||
Tax benefit of options exercised | — | — | 572 | — | — | — | 572 | |||||||||||||||||||||
Income on derivative financial instruments | — | — | — | — | — | 585 | 585 | |||||||||||||||||||||
Minimum pension liabilities | — | — | — | — | — | 1,678 | 1,678 | |||||||||||||||||||||
Translation adjustment | — | — | — | — | — | 4,704 | 4,704 | |||||||||||||||||||||
Balance at December 31, 2004 | $ | 1,962 | $ | 300 | $ | 26,445 | $ | 78,171 | $ | (21,398 | ) | $ | (7,634 | ) | $ | 77,846 | ||||||||||||
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(1) | Amount represents a capital contribution from (distribution to) GBC’s majority shareholder (Lane Industries, Inc) under Tax Allocation Agreements. See notes 1 and 13 to the consolidated financial statements for additional information. |
(2) | The net-of-tax components of Accumulated Other Comprehensive Income at December 31 were: a) 2004 — currency translation, $545, hedging activities, ($1,401), minimum pension liabilities, ($6,778); and b) 2003 — currency translation, ($4,159), hedging hedging activities, ($1,986), minimum pension liabilities, ($8,456); and c) 2002 — currency translation, ($12,854), hedging activities, ($2,672), minimum pension liabilities, ($10,205). |
Class B | ||||||||||||||||
Common | Common | Treasury | ||||||||||||||
Stock | Stock | Stock(3) | Net Shares | |||||||||||||
Shares at December 31, 2001 | 15,696,620 | 2,398,275 | (2,299,038 | ) | 15,795,857 | |||||||||||
Exercise of stock options | — | — | 145,010 | 145,010 | ||||||||||||
Shares at December 31, 2002 | 15,696,620 | 2,398,275 | (2,154,028 | ) | 15,940,867 | |||||||||||
Exercise of stock options | — | — | 91,387 | 91,387 | ||||||||||||
Shares at December 31, 2003 | 15,696,620 | 2,398,275 | (2,062,641 | ) | 16,032,254 | |||||||||||
Exercise of stock options | — | — | 191,594 | 191,594 | ||||||||||||
Shares at December 31, 2004 | 15,696,620 | 2,398,275 | (1,871,047 | ) | 16,223,848 | |||||||||||
(3) | Shares held in treasury are shares of Common Stock. |
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(1) | Summary of Significant Accounting Policies |
(a) | Consolidation |
(b) | Cash and Cash Equivalents |
(c) | Inventory Valuation |
(d) | Depreciation of Capital Assets |
Buildings | 8-50 years | |
Machinery and equipment | 3-20 years | |
Computer hardware and software | 2-7 years | |
Leasehold improvements | Lesser of lease term or useful life |
(e) | Goodwill and Other Intangible Assets |
(f) | Income Taxes |
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(g) | Revenue Recognition |
(h) | Sales Incentives |
(i) | Use of Estimates |
(j) | Financial Instruments |
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(k) | Related Parties |
(l) | New Accounting Standards |
(m) | Stock Compensation Plan |
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Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Net income (loss), as reported | $ | 14,762 | $ | (3,262 | ) | $ | (80,010 | ) | |||||
Add: Stock-based employee compensation expense included in reported net income, net of tax | 608 | 473 | 253 | ||||||||||
Deduct: Total stock-based employee compensation expense determined under the fair value method, net of tax | (3,151 | ) | (2,539 | ) | (3,004 | ) | |||||||
Pro forma net income (loss) | $ | 12,219 | $ | (5,328 | ) | $ | (82,761 | ) | |||||
Earnings per basic common share | |||||||||||||
As reported | $ | 0.91 | $ | (0.20 | ) | $ | (5.04 | ) | |||||
Pro forma | $ | 0.76 | $ | (0.33 | ) | $ | (5.21 | ) | |||||
Earnings per Diluted common share | |||||||||||||
As reported | $ | 0.88 | $ | (0.20 | ) | $ | (5.04 | ) | |||||
Pro forma | $ | 0.73 | $ | (0.33 | ) | $ | (5.21 | ) | |||||
(2) | Goodwill and Other Intangible Assets |
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Carrying Amount at | |||||||||
December 31, | |||||||||
2004 | 2003 | ||||||||
Commercial and Consumer Group | 144,133 | 143,843 | |||||||
Industrial and Print Finishing Group | 4,440 | 4,440 | |||||||
Other | 292 | 292 | |||||||
Total | $ | 148,865 | $ | 148,575 | |||||
Gross Carrying | Accumulated | ||||||||||||||||
Amount at | Amortization at | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2004 | 2003 | 2004 | 2003 | ||||||||||||||
Customer agreements and relationships | $ | 5,767 | $ | 5,767 | $ | (4,318 | ) | $ | (3,860 | ) | |||||||
Patents | 1,544 | 1,464 | (1,475 | ) | (1,171 | ) | |||||||||||
Total | $ | 7,311 | $ | 7,231 | $ | (5,793 | ) | $ | (5,031 | ) | |||||||
Amortization | ||||
Fiscal Year Ended December 31, | Expense | |||
2005 | 527 | |||
2006 | 458 | |||
2007 | 458 | |||
2008 | 75 |
(3) | Summarized Financial Information — Joint Ventures (unaudited) |
Statement of Income Information | 2004 | 2003 | 2002 | |||||||||
Net sales | $ | 109,596 | $ | 80,832 | $ | 78,767 | ||||||
Gross profit | 35,616 | 24,404 | 18,471 | |||||||||
Net loss | (935 | ) | (5,377 | ) | (475 | ) |
Balance Sheet Information | 2004 | 2003 | ||||||||||
Current assets | $ | 63,646 | $ | 60,222 | ||||||||
Non-current assets | 37,810 | 43,580 | ||||||||||
Current liabilities | 53,828 | 51,541 | ||||||||||
Non-current liabilities | 21,943 | 24,815 |
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(4) | Foreign Currency Exchange and Translation |
Foreign Currency | ||||
Year Ended December 31, | Transaction Gain/(Loss) | |||
2004 | $ | (1,816 | ) | |
2003 | (899 | ) | ||
2002 | 718 |
(5) | Inventories |
December 31, | |||||||||
2004 | 2003 | ||||||||
Raw material | $ | 20,637 | $ | 19,239 | |||||
Work in progress | 6,584 | 6,445 | |||||||
Finished goods | 82,394 | 74,532 | |||||||
Gross inventory | 109,615 | 100,216 | |||||||
Less reserves | (11,619 | ) | (13,976 | ) | |||||
Net inventory | $ | 97,996 | $ | 86,240 | |||||
(6) | Restructuring and Other |
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Asset | ||||||||||||||||
Impairments | Lease | |||||||||||||||
and Other | Cancellation | |||||||||||||||
Project | Severance | Exit Costs | Costs | Total | ||||||||||||
Relocating manufacturing from Booneville to Nuevo Laredo | $ | 2.6 | $ | 4.5 | $ | — | $ | 7.1 | ||||||||
Plant closure — Amelia, Virginia | 0.2 | — | — | 0.2 | ||||||||||||
Reduction-in-force programs | 2.4 | — | — | 2.4 | ||||||||||||
Sublease manufacturing facility | — | — | 1.4 | 1.4 | ||||||||||||
$ | 5.2 | $ | 4.5 | $ | 1.4 | $ | 11.1 | |||||||||
Asset | ||||||||||||||||
Impairments | Lease | |||||||||||||||
and Other | Cancellation | |||||||||||||||
Project | Severance | Exit Costs | Costs | Total | ||||||||||||
Buffalo Grove facility closure | $ | 0.7 | $ | 1.6 | $ | 0.8 | $ | 3.1 | ||||||||
Downsizing of Amelia facility | 0.8 | 0.3 | — | 1.1 | ||||||||||||
Commercial and Consumer Group | 1.6 | 0.2 | — | 1.8 | ||||||||||||
Reduction in support functions | 2.0 | — | — | 2.0 | ||||||||||||
$ | 5.1 | $ | 2.1 | $ | 0.8 | $ | 8.0 | |||||||||
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Asset | |||||||||||||||||
Impairment | Lease | ||||||||||||||||
and Other | Cancellation | ||||||||||||||||
Severance | Exit Costs | Costs | Total | ||||||||||||||
Balance at December 31, 2002 | $ | 4,026 | $ | 810 | $ | 700 | $ | 5,536 | |||||||||
Activities during the year: | |||||||||||||||||
Provision | 5,240 | 4,457 | 1,405 | 11,102 | |||||||||||||
Cash charges | (3,850 | ) | (210 | ) | (676 | ) | (4,736 | ) | |||||||||
Non-cash charges | — | (4,497 | ) | 839 | (3,658 | ) | |||||||||||
Balance at December 31, 2003 | 5,416 | 560 | 2,268 | 8,244 | |||||||||||||
Activities during the year: | |||||||||||||||||
Provision | 851 | — | — | 851 | |||||||||||||
Cash charges | (5,193 | ) | — | (309 | ) | (5,502 | ) | ||||||||||
Non-cash charges | (34 | ) | (677 | ) | — | (711 | ) | ||||||||||
Reclassification | (113 | ) | 216 | (103 | ) | — | |||||||||||
Balance at December 31, 2004(1) | $ | 927 | $ | 99 | $ | 1,856 | $ | 2,882 | |||||||||
(1) | The restructuring reserve at December 31, 2004 consisted of $1.2 million related to current items reported in the balance sheet as a separate item, and $1.6 million related to long-term lease cancellation costs reported in the balance sheet as a component of other long-term liabilities. |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Reorganization realignment severance benefits | $ | 840 | $ | — | $ | 456 | ||||||
Production transition costs of closed/down-sized facilities | — | — | 625 | |||||||||
Impairment of investment in GMP | 850 | 4,679 | — | |||||||||
$ | 1,690 | $ | 4,679 | $ | 1,081 | |||||||
(7) | Retirement Plans and Post-retirement Benefits |
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Pension Benefits | |||||||||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
Domestic | International | Domestic | International | Domestic | Domestic | ||||||||||||||||||||
Change in benefit obligation: | |||||||||||||||||||||||||
Benefit obligation at beginning of year | $ | 791 | $ | 30,324 | $ | 431 | $ | 26,418 | $ | 10,332 | $ | 8,470 | |||||||||||||
Interest cost | 47 | 1,597 | 28 | 1,388 | 600 | 531 | |||||||||||||||||||
Service cost | 314 | 716 | 275 | 615 | 823 | 719 | |||||||||||||||||||
Contributions | — | 282 | — | 245 | — | — | |||||||||||||||||||
Actuarial loss (gain) | 85 | (384 | ) | 57 | (382 | ) | (3,572 | ) | 1,574 | ||||||||||||||||
Plan amendment | — | — | (1,063 | ) | (385 | ) | |||||||||||||||||||
Benefit payments | — | (1,125 | ) | — | (1,219 | ) | (444 | ) | (577 | ) | |||||||||||||||
Special Benefits | — | — | — | — | 332 | — | |||||||||||||||||||
Exchange rate fluctuations | — | 2,318 | — | 3,259 | — | — | |||||||||||||||||||
Benefit obligation at end of year | $ | 1,237 | $ | 33,728 | $ | 791 | $ | 30,324 | $ | 7,008 | $ | 10,332 | |||||||||||||
Change in plan assets: | |||||||||||||||||||||||||
Fair value of plan assets at beginning of year | $ | — | $ | 21,802 | $ | — | $ | 16,828 | $ | — | $ | — | |||||||||||||
Actual return on plan assets | — | 1,662 | — | 2,245 | — | — | |||||||||||||||||||
Contributions | — | 3,386 | — | 1,517 | 444 | 577 | |||||||||||||||||||
Benefit payments | — | (1,125 | ) | — | (1,219 | ) | (444 | ) | (577 | ) | |||||||||||||||
Effect of plans merger | — | 68 | — | — | — | — | |||||||||||||||||||
Exchange rate fluctuations | — | 1,893 | — | 2,431 | — | — | |||||||||||||||||||
Fair value of plan assets at end of year | $ | — | $ | 27,686 | $ | — | $ | 21,802 | $ | — | $ | — | |||||||||||||
Funded status at end of year | $ | (1,237 | ) | $ | (6,042 | ) | $ | (791 | ) | $ | (8,522 | ) | $ | (7,008 | ) | $ | (10,332 | ) | |||||||
Unrecognized transition (asset) obligation | — | — | — | — | — | 373 | |||||||||||||||||||
Unrecognized prior service costs | — | 771 | — | (773 | ) | (732 | ) | — | |||||||||||||||||
Unrecognized loss | 190 | 8,600 | 109 | 10,240 | (138 | ) | 3,663 | ||||||||||||||||||
Net amount recognized | $ | (1,047 | ) | $ | 3,329 | $ | (682 | ) | $ | 945 | $ | (7,878 | ) | $ | (6,296 | ) | |||||||||
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Pension Benefits | Other Benefits | |||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||
2004 | 2003 | |||||||||||||||||||||||
Domestic | International | Domestic | International | Domestic | Domestic | |||||||||||||||||||
Prepaid benefit cost | $ | — | $ | 3,105 | $ | — | $ | 1,490 | $ | — | $ | — | ||||||||||||
Accrued benefit liability | (1,237 | ) | (8,469 | ) | (791 | ) | (10,104 | ) | (7,878 | ) | (6,296 | ) | ||||||||||||
Accumulated other Comprehensive income | 190 | 8,693 | 109 | 9,559 | — | — | ||||||||||||||||||
Net amount recognized | $ | (1,047 | ) | $ | 3,329 | $ | (682 | ) | $ | 945 | $ | (7,878 | ) | $ | (6,296 | ) | ||||||||
2004 | 2003 | |||||||
Projected benefit obligation | $ | 29,542 | $ | 26,767 | ||||
Accumulated benefit obligation | $ | 28,401 | $ | 25,801 | ||||
Fair Value of plan assets | $ | 19,686 | $ | 15,861 |
2004 | 2003 | 2002 | |||||||||||||||||||||||
Domestic | International | Domestic | International | Domestic | International | ||||||||||||||||||||
Service cost | $ | 314 | $ | 716 | $ | 275 | $ | 615 | $ | 230 | $ | 668 | |||||||||||||
Interest cost | 47 | 1,597 | 28 | 1,388 | 10 | 1,206 | |||||||||||||||||||
Expected return on plan assets | — | (1,526 | ) | — | (1,182 | ) | — | (1,278 | ) | ||||||||||||||||
Amortization of unrecognized: | |||||||||||||||||||||||||
Net transition asset | — | — | — | (108 | ) | — | (101 | ) | |||||||||||||||||
Prior-service cost | — | (58 | ) | — | (52 | ) | — | (48 | ) | ||||||||||||||||
Net loss | 4 | 491 | 1 | 570 | — | 273 | |||||||||||||||||||
Net periodic pension cost | $ | 365 | $ | 1,220 | $ | 304 | $ | 1,231 | $ | 240 | $ | 720 | |||||||||||||
Other Benefits | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Service cost | $ | 823 | $ | 719 | $ | 708 | |||||||
Interest cost | 600 | 531 | 601 | ||||||||||
Amortization of unrecognized: | |||||||||||||
Net transition obligation | 41 | 85 | 63 | ||||||||||
Net loss | 229 | 113 | 231 | ||||||||||
Total recognized post retirement benefit cost | $ | 1,693 | $ | 1,448 | $ | 1,603 | |||||||
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2004 | 2003 | |||||||
Decrease in minimum liability | $ | (1,678 | ) | $ | (1,749 | ) |
Pension Benefits | |||||||||||||||||||||||||
Other Benefits | |||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
2004 | 2003 | ||||||||||||||||||||||||
Domestic | International | Domestic | International | Domestic | Domestic | ||||||||||||||||||||
Weighted-average assumptions as of December 31: | |||||||||||||||||||||||||
Discount rate | 6.00 | % | 1.75-6.50 | % | 6.50 | % | 1.50- 6.50 | % | 6.00 | % | 6.00 | % | |||||||||||||
Expected return on plan assets | N/A | 2.00-8.50 | % | N/A | 2.00- 8.50 | % | N/A | N/A | |||||||||||||||||
Rate of compensation increase | N/A | 1.50-4.50 | % | N/A | 1.50- 4.50 | % | N/A | N/A |
1.0% Increase | 1.0% Decrease | |||||||
Effect on total of service and interest cost components of Net periodic post retirement health care benefit costs | $ | 141 | $ | (125 | ) | |||
Effect on the health care component of the accumulated Post retirement benefit obligation | $ | 513 | $ | (466 | ) |
Asset Category | 2004 | 2003 | ||||||
Cash | 5.0 | % | 3.0 | % | ||||
Equity Securities | 55.0 | % | 56.0 | % | ||||
Fixed Income | 7.0 | % | 9.0 | % | ||||
Other | 33.0 | % | 32.0 | % | ||||
100.0 | % | 100.0 | % | |||||
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Pension | Post-Retirement | |||||||
Benefits | Benefits | |||||||
2005 | $ | 1.1 | $ | 0.5 | ||||
2006 | 1.4 | 0.6 | ||||||
2007 | 1.4 | 0.6 | ||||||
2008 | 1.7 | 0.5 | ||||||
2009 | 1.9 | 0.6 | ||||||
2010-2014 | 11.7 | 3.9 |
(8) | Debt and Credit Arrangements |
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December 31, | |||||||||
2004 | 2003 | ||||||||
Revolving Credit Facility | |||||||||
U.S. Dollar borrowings — Term loan — (weighted average floating interest rate of 6.70% at December 31, 2004 and 5.66% at December 31, 2003) | $ | 112,000 | $ | 122,500 | |||||
Industrial Revenue/ Development Bonds (“IRB” or “IDB”) | |||||||||
IDB, due March 2026 — (floating interest rate of 2.06% at December 31, 2004 and 1.25% at December 31, 2003 ) | 6,840 | 6,840 | |||||||
Notes Payable | |||||||||
Senior Subordinated Notes, U.S. Dollar borrowing, due 2008 — (fixed interest rate of 9.375%) | 150,000 | 150,000 | |||||||
Notes Payable, U.S. Dollar borrowing, due monthly August 2003 to July 2008 — (fixed interest rate of 6.62%) | 11,133 | 13,798 | |||||||
Other borrowings | 8,905 | 8,876 | |||||||
Total debt | 288,878 | 302,014 | |||||||
Less-current maturities | (33,713 | ) | (19,995 | ) | |||||
Total long-term debt | $ | 255,165 | $ | 282,019 | |||||
Year Ending December 31, | Amount | |||
2005 | $ | 33,713 | ||
2006 | 17,189 | |||
2007 | 13,897 | |||
2008 | 216,944 | |||
2009 | 148 | |||
Thereafter | 6,987 | |||
Total | $ | 288,878 | ||
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Maximum Month- | ||||||||||||||||||||
Notes Payable | Weighted | End Balance | Average Amount | Weighted | ||||||||||||||||
to Banks | Average Interest | Outstanding | Outstanding | Average Interest | ||||||||||||||||
Balance at End | Rate at End of | During the | During the | Rate During the | ||||||||||||||||
of Year(1) | Year(2) | Year(3) | Year(4) | Year(5) | ||||||||||||||||
2004 | $ | 7,788 | 3.7 | % | $ | 7,919 | $ | 6,682 | 5.1 | % | ||||||||||
2003 | 5,819 | 4.0 | 10,085 | 7,919 | 5.9 | |||||||||||||||
2002 | 10,806 | 5.3 | 10,806 | 8,111 | 6.6 |
(1) | Notes payable by GBC’s foreign subsidiaries were $7,788 at December 31, 2004, $5,819 at December 31, 2003, and $10,806 at December 31, 2002. |
(2) | The weighted average interest rate is computed by dividing the annualized interest expense for the short-term debt outstanding by the short-term debt outstanding at December 31. |
(3) | The composition of GBC’s short-term debt will vary by category at any point in time during the year. |
(4) | Average amount outstanding during the year is computed by dividing the total daily outstanding principal balances by 365 or 366 days. |
(5) | The weighted average interest rate during the year is computed by dividing the actual short-term interest expense by the average short-term debt outstanding. |
(9) | Derivative Financial Instruments |
Interest Rate Swap Agreements |
December 31, | ||||||||
2004 | 2003 | |||||||
Notional amount | $ | 5.0 | $ | 60.0 | ||||
Fair value-net unrecognized (loss) gain | — | (0.8 | ) |
Foreign Exchange Contracts |
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Table of Contents
December 31, | ||||||||
2004 | 2003 | |||||||
Notional amount | $ | 69.3 | $ | 80.3 | ||||
Fair value — net unrealized (loss)(1) | (2.5 | ) | (3.3 | ) |
(1) | As of December 31, 2004, GBC recorded cumulative unrealized losses of approximately $0.2 million in its consolidated statement of income related to hedges of intercompany loans (hedge accounting has not been applied to these transactions). Unrealized losses of approximately $2.3 million related to hedges of intercompany inventory purchases have been recorded in other comprehensive income. |
(10) | Rents and Leases |
Operating | |||||
Year Ending December 31, | Lease Payments | ||||
2005 | $ | 13,240 | |||
2006 | 11,899 | ||||
2007 | 9,801 | ||||
2008 | 8,163 | ||||
2009 | 4,764 | ||||
After 2009 | 11,146 | ||||
Total minimum lease payments | $ | 59,013 | |||
(11) | Common Stock and Earnings Per Share |
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Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Numerator: | |||||||||||||
Net income (loss) income available to common shareholders | $ | 14,762 | $ | (3,262 | ) | $ | (80,010 | ) | |||||
Denominator: | |||||||||||||
Denominator for basic earnings per share — weighted average number of common shares outstanding(1) | 16,171 | 15,978 | 15,883 | ||||||||||
Effect of dilutive securities: | |||||||||||||
Employee stock options(3) | 429 | — | — | ||||||||||
Restricted stock options(3) | 239 | — | — | ||||||||||
Denominator for diluted earnings per share — adjusted weighted-average shares(1) and assumed conversions | 16,839 | 15,978 | 15,883 | ||||||||||
Earnings (loss) per share — basic(2) | $ | 0.91 | $ | (0.20 | ) | $ | (5.04 | ) | |||||
Earnings (loss) per share — diluted(2) | $ | 0.88 | $ | (0.20 | ) | $ | (5.04 | ) | |||||
(1) | Weighted average shares includes both Common Stock and Class B Common Stock. |
(1) | Amounts represent per share amounts for potentially both Common Stock and Class B Common Stock. |
(2) | GBC had 668,067, 457,255 and 479,648 potentially dilutive shares outstanding as of December 31, 2004, 2003 and 2002 respectively. These options were not included in the calculation of earnings per share for 2003 and 2002 as they would have been anti-dilutive. |
(12) | Stock Compensation Plans |
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Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | ||||||||||||||||||||||
Wtd. Avg. | Wtd. Avg. | Wtd. Avg. | ||||||||||||||||||||||
Shares | Exercise Price | Shares | Exercise Price | Shares | Exercise Price | |||||||||||||||||||
Shares under option at beginning of year | 2,219 | $ | 10 | 2,056 | $ | 12 | 1,831 | $ | 11 | |||||||||||||||
Options granted | 477 | 17 | 502 | 9 | 681 | 13 | ||||||||||||||||||
Options exercised | (192 | ) | 9 | (92 | ) | 8 | (149 | ) | 8 | |||||||||||||||
Options expired/canceled | (250 | ) | 16 | (247 | ) | 21 | (307 | ) | 14 | |||||||||||||||
Shares under option at end of year | 2,254 | 11 | 2,219 | 10 | 2,056 | 12 | ||||||||||||||||||
Options exercisable | 1,137 | 10 | 974 | 10 | 743 | 11 | ||||||||||||||||||
Weighted average fair Value of options granted | $ | 11.96 | $ | 6.07 | $ | 8.89 | ||||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||
Weighted-Average | Weighted-Average | Weighted-Average | ||||||||||||||||||||
Range of | Remaining Contractual | Exercise | Exercise | |||||||||||||||||||
Exercise Prices | Outstanding | Life (Years) | Price | Exercisable | Price | |||||||||||||||||
$ | 7-11 | 1,267 | 6.7 | 8.14 | 830 | 7.97 | ||||||||||||||||
$ | 12-25 | 964 | 8.0 | 14.83 | 288 | 13.76 | ||||||||||||||||
$ | 26-30 | 23 | 0.5 | 29.87 | 19 | 29.84 | ||||||||||||||||
$ | 7-30 | 2,254 | 7.2 | 11.23 | 1,137 | 9.80 |
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(13) | Income Taxes |
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
United States | $ | (3,024 | ) | $ | (15,405 | ) | $ | (12,637 | ) | |||
Foreign | 26,900 | 19,773 | 13,696 | |||||||||
Total income (loss) before taxes | $ | 23,876 | $ | 4,368 | $ | 1,059 | ||||||
Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Current expense (benefit): | |||||||||||||
Federal | $ | 40 | $ | 22 | $ | 664 | |||||||
State | 39 | (52 | ) | 80 | |||||||||
Foreign | 8,194 | 4,760 | 4,664 | ||||||||||
Total current | 8,273 | 4,730 | 5,408 | ||||||||||
Deferred expense (benefit): | |||||||||||||
Federal | 2,326 | 2,857 | (2,286 | ) | |||||||||
State | 17 | (195 | ) | (554 | ) | ||||||||
Foreign | (1,502 | ) | 238 | (523 | ) | ||||||||
Total deferred | 841 | 2,900 | (3,363 | ) | |||||||||
Total provision (benefit) | $ | 9,114 | $ | 7,630 | $ | 2,045 | |||||||
Year Ended December 31, | |||||||||||||
2004 | 2003 | 2002 | |||||||||||
Income tax expense (benefit) at U.S. statutory tax rate | $ | 8,357 | $ | 1,529 | $ | 371 | |||||||
State income taxes, net of federal income tax benefit | 36 | (62 | ) | (308 | ) | ||||||||
Impairment of investment in GMP — not tax deductible | 297 | 1,637 | — | ||||||||||
Foreign entity reorganization | — | 4,492 | — | ||||||||||
Other non-tax deductible items | — | 592 | 1,449 | ||||||||||
Tax settlement | — | (99 | ) | (902 | ) | ||||||||
Tax credits displaced by NOL carrybacks | — | — | 1,513 | ||||||||||
Impact of non-U.S. earnings taxed at other rates | 424 | (453 | ) | (78 | ) | ||||||||
Other, net | — | (6 | ) | — | |||||||||
Total provision (benefit) | $ | 9,114 | $ | 7,630 | $ | 2,045 | |||||||
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December 31, | |||||||||
2004 | 2003 | ||||||||
Significant components of deferred tax assets: | |||||||||
Net operating loss carryovers | $ | 28,688 | $ | 25,467 | |||||
Inventory valuation and related reserves | 2,918 | 3,325 | |||||||
Foreign deferred tax assets | 4,453 | 1,823 | |||||||
Compensation and employee benefits | 3,781 | 3,607 | |||||||
Restructuring reserves | 1,336 | 2,631 | |||||||
Bad debt and sales return allowance | 3,526 | 3,623 | |||||||
FAS No. 106 post-retirement benefits | 2,757 | 2,204 | |||||||
Foreign tax credits | 2,850 | 3,641 | |||||||
Other | 6,375 | 7,104 | |||||||
Gross deferred tax assets | 56,684 | 53,425 | |||||||
Valuation allowance | (20,055 | ) | (19,900 | ) | |||||
Net deferred tax assets | 36,629 | 33,525 | |||||||
Significant components of deferred tax liabilities: | |||||||||
Depreciation | 5,637 | 8,048 | |||||||
Amortization of intangible assets | 6,070 | 1,454 | |||||||
Foreign deferred tax liabilities | 2,914 | 2,961 | |||||||
Unremitted earnings of certain subsidiaries | 3,697 | 833 | |||||||
Other | 2,261 | 1,635 | |||||||
Total deferred tax liabilities | 20,579 | 14,931 | |||||||
Net Deferred Tax Asset | $ | 16,050 | $ | 18,594 | |||||
(14) | Contingencies |
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(15) | Subsequent Event |
(16) | Business Segments and Foreign Operations |
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Unaffiliated Customer Sales | Affiliated Customer Sales | ||||||||||||||||||||||||
Year Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
Commercial and Consumer Group | $ | 447,011 | $ | 460,243 | $ | 467,543 | $ | 1,293 | $ | 2,488 | $ | 3,171 | |||||||||||||
Industrial and Print Finishing Group | 157,447 | 137,064 | 138,299 | 26,220 | 26,426 | 27,192 | |||||||||||||||||||
Europe | 107,860 | 100,601 | 95,886 | 10,807 | 11,069 | 13,543 | |||||||||||||||||||
Eliminations | — | — | — | (38,320 | ) | (39,983 | ) | (43,906 | ) | ||||||||||||||||
Total | $ | 712,318 | $ | 697,908 | $ | 701,728 | $ | — | $ | — | $ | — | |||||||||||||
Operating Income | Total Segment Assets | ||||||||||||||||||||||||
Year Ended December 31, | December 31, | ||||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | ||||||||||||||||||||
Commercial and Consumer Group | $ | 48,142 | $ | 59,211 | $ | 62,261 | $ | 346,138 | $ | 339,539 | $ | 342,937 | |||||||||||||
Industrial and Print Finishing Group | 21,563 | 17,965 | 19,418 | 78,591 | 71,341 | 72,082 | |||||||||||||||||||
Europe | 6,880 | 6,085 | 1,359 | 60,642 | 56,507 | 55,277 | |||||||||||||||||||
Unallocated corporate items | (23,539 | ) | (28,548 | ) | (31,691 | ) | 55,043 | 62,944 | 87,146 | ||||||||||||||||
Eliminations | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | 53,046 | $ | 54,713 | $ | 51,347 | $ | 540,414 | $ | 530,331 | $ | 557,442 | |||||||||||||
Year Ended December 31, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Total segment operating income | $ | 53,046 | $ | 54,713 | $ | 51,347 | ||||||
Interest expense | (25,923 | ) | (34,408 | ) | (39,898 | ) | ||||||
Restructuring and other expenses | (2,541 | ) | (15,781 | ) | (10,143 | ) | ||||||
Other (expense) income | (706 | ) | (156 | ) | (247 | ) | ||||||
Income before taxes and cumulative effect of accounting change | $ | 23,876 | $ | 4,368 | $ | 1,059 | ||||||
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Unaffiliated Customer Sales | Long-Lived Assets | |||||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||||||
2004 | 2003 | 2002 | 2004 | 2003 | 2002 | |||||||||||||||||||
US | $ | 419,925 | $ | 440,337 | $ | 459,836 | $ | 303,929 | $ | 310,686 | $ | 357,992 | ||||||||||||
Europe | 161,846 | 142,975 | 132,418 | 58,919 | 53,291 | 17,932 | ||||||||||||||||||
Other International | 130,547 | 114,596 | 109,474 | 27,119 | 25,623 | 21,215 | ||||||||||||||||||
Eliminations | — | — | — | (121,733 | ) | (116,905 | ) | (105,630 | ) | |||||||||||||||
$ | 712,318 | $ | 697,908 | $ | 701,728 | $ | 268,234 | $ | 272,695 | $ | 291,509 | |||||||||||||
(17) | Quarterly Financial Data (Unaudited) |
Three Months Ended | |||||||||||||||||
2004 | March 31 | June 30 | September 30 | December 31 | |||||||||||||
Sales | $ | 170,931 | $ | 174,375 | $ | 175,848 | $ | 191,164 | |||||||||
Gross profit(1) | 65,325 | 67,588 | 69,954 | 74,543 | |||||||||||||
Income before taxes | 978 | 4,543 | 8,015 | 10,340 | |||||||||||||
Net income | 450 | 2,586 | 5,174 | 6,552 | |||||||||||||
Net income per common share: | |||||||||||||||||
Basic | $ | 0.03 | $ | 0.16 | $ | 0.32 | $ | 0.40 | |||||||||
Diluted | 0.03 | 0.15 | 0.31 | 0.39 |
Three Months Ended | |||||||||||||||||
2003 | March 31 | June 30 | September 30 | December 31 | |||||||||||||
Sales | $ | 169,435 | $ | 171,150 | $ | 175,092 | $ | 182,231 | |||||||||
Gross profit(1) | 67,470 | 68,192 | 69,829 | 73,762 | |||||||||||||
(Loss) income before taxes | (645 | ) | (7,181 | ) | 7,481 | 4,713 | |||||||||||
Net (loss) income | 83 | (5,124 | ) | 4,886 | (3,107 | ) | |||||||||||
Net (loss) income per common share: | |||||||||||||||||
Basic | $ | 0.01 | $ | (0.32 | ) | $ | 0.31 | $ | (0.19 | ) | |||||||
Diluted | 0.01 | (0.32 | ) | 0.30 | (0.19 | ) |
(1) | Gross profit is computed as sales less cost of sales. |
(18) | Condensed Consolidating Financial Information |
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December 31, 2004 | |||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 556 | $ | 1 | $ | 5,702 | $ | — | $ | 6,259 | |||||||||||||
Receivables, net | 71,593 | — | 69,852 | — | 141,445 | ||||||||||||||||||
Inventories, net | 60,035 | 387 | 37,574 | — | 97,996 | ||||||||||||||||||
Deferred tax assets | 13,228 | (3,161 | ) | 2,370 | — | 12,437 | |||||||||||||||||
Other | 4,678 | — | 9,365 | — | 14,043 | ||||||||||||||||||
Due from affiliates | — | 51,877 | 47,553 | (99,430 | ) | — | |||||||||||||||||
Total current assets | 150,090 | 49,104 | 172,416 | (99,430 | ) | 272,180 | |||||||||||||||||
Net capital assets | 49,737 | 5,980 | 28,976 | — | 84,693 | ||||||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 119,900 | 22,394 | 8,089 | — | 150,383 | ||||||||||||||||||
Other | 11,811 | 10,390 | 10,957 | — | 33,158 | ||||||||||||||||||
Investment in subsidiaries | 177,359 | 165,427 | — | (342,786 | ) | — | |||||||||||||||||
Total assets | $ | 508,897 | $ | 253,295 | $ | 220,438 | $ | (442,216 | ) | $ | 540,414 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts payable | $ | 30,624 | $ | 878 | $ | 18,256 | $ | — | $ | 49,758 | |||||||||||||
Accrued liabilities | 53,031 | 486 | 36,688 | — | 90,205 | ||||||||||||||||||
Notes payable | — | — | 7,788 | — | 7,788 | ||||||||||||||||||
Current maturities of long-term debt | 25,547 | — | 378 | — | 25,925 | ||||||||||||||||||
Due to affiliates | 48,077 | — | 17,210 | (65,287 | ) | — | |||||||||||||||||
Total current liabilities | 157,279 | 1,364 | 80,320 | (65,287 | ) | 173,676 | |||||||||||||||||
Long-term debt — affiliated | 71 | — | 595 | (666 | ) | — | |||||||||||||||||
Long-term debt, less current maturities | 254,426 | — | 739 | — | 255,165 | ||||||||||||||||||
Other long-term liabilities | 19,275 | 174 | 11,364 | — | 30,813 | ||||||||||||||||||
Deferred tax liabilities | — | — | 2,914 | — | 2,914 | ||||||||||||||||||
Stockholders’ equity: | |||||||||||||||||||||||
Common stock | 1,962 | — | 2,332 | (2,332 | ) | 1,962 | |||||||||||||||||
Class B common stock | 300 | — | — | — | 300 | ||||||||||||||||||
Additional paid-in capital | 26,445 | 95,470 | 167,539 | (263,009 | ) | 26,445 | |||||||||||||||||
Retained earnings | 78,171 | 139,360 | (44,524 | ) | (94,836 | ) | 78,171 | ||||||||||||||||
Treasury stock | (21,398 | ) | — | — | — | (21,398 | ) | ||||||||||||||||
Accumulated other comprehensive income | (7,634 | ) | 16,927 | (841 | ) | (16,086 | ) | (7,634 | ) | ||||||||||||||
Total stockholders’ equity | 77,846 | 251,757 | 124,506 | (376,263 | ) | 77,846 | |||||||||||||||||
Total liabilities and stockholders’ equity | $ | 508,897 | $ | 253,295 | $ | 220,438 | $ | (442,216 | ) | $ | 540,414 | ||||||||||||
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December 31, 2003 | |||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 3,749 | $ | 1 | $ | 5,818 | $ | — | $ | 9,568 | |||||||||||||
Receivables, net | 69,404 | — | 58,987 | — | 128,391 | ||||||||||||||||||
Inventories, net | 48,424 | 406 | 37,410 | — | 86,240 | ||||||||||||||||||
Deferred tax assets | 17,440 | 1,197 | 1,459 | — | 20,096 | ||||||||||||||||||
Other | 1,429 | 5,519 | 6,393 | — | 13,341 | ||||||||||||||||||
Due from affiliates | — | 38,039 | 41,525 | (79,564 | ) | — | |||||||||||||||||
Total current assets | 140,446 | 45,162 | 151,592 | (79,564 | ) | 257,636 | |||||||||||||||||
Net capital assets | 58,142 | 6,485 | 30,359 | — | 94,986 | ||||||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 120,581 | 22,394 | 7,800 | — | 150,775 | ||||||||||||||||||
Other | 14,695 | 9,328 | 2,911 | — | 26,934 | ||||||||||||||||||
Investment in subsidiaries | 159,297 | 182,757 | — | (342,054 | ) | — | |||||||||||||||||
Total assets | $ | 493,161 | $ | 266,126 | $ | 192,662 | $ | (421,618 | ) | $ | 530,331 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts payable | $ | 35,057 | $ | 893 | $ | 15,303 | $ | — | $ | 51,253 | |||||||||||||
Accrued liabilities | 60,409 | 170 | 25,968 | — | 86,547 | ||||||||||||||||||
Notes payable | — | — | 5,819 | — | 5,819 | ||||||||||||||||||
Current maturities of long-term debt | 13,165 | — | 1,011 | — | 14,176 | ||||||||||||||||||
Due to affiliates | 30,337 | — | 26,096 | (56,433 | ) | — | |||||||||||||||||
Total current liabilities | 138,968 | 1,063 | 74,197 | (56,433 | ) | 157,795 | |||||||||||||||||
Long-term debt — affiliated | 519 | — | 3,135 | (3,654 | ) | — | |||||||||||||||||
Long-term debt, less current maturities | 279,973 | — | 2,046 | — | 282,019 | ||||||||||||||||||
Other long-term liabilities | 19,492 | 248 | 16,568 | — | 36,308 | ||||||||||||||||||
Stockholders’ equity: | |||||||||||||||||||||||
Common stock | 1,962 | — | 2,332 | (2,332 | ) | 1,962 | |||||||||||||||||
Class B common stock | 300 | — | — | — | 300 | ||||||||||||||||||
Additional paid-in capital | 26,727 | 121,115 | 167,539 | (288,654 | ) | 26,727 | |||||||||||||||||
Retained earnings | 63,409 | 133,924 | (63,091 | ) | (70,833 | ) | 63,409 | ||||||||||||||||
Treasury stock | (23,588 | ) | — | — | — | (23,588 | ) | ||||||||||||||||
Accumulated other comprehensive income | (14,601 | ) | 9,776 | (10,064 | ) | 288 | (14,601 | ) | |||||||||||||||
Total stockholders’ equity | 54,209 | 264,815 | 96,716 | (361,531 | ) | 54,209 | |||||||||||||||||
Total liabilities and stockholders’ equity | $ | 493,161 | $ | 266,126 | $ | 192,662 | $ | (421,618 | ) | $ | 530,331 | ||||||||||||
F-90
Table of Contents
Year Ended December 31, 2004 | ||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
Unaffiliated sales | $ | 419,925 | $ | — | $ | 292,393 | $ | — | $ | 712,318 | ||||||||||||
Affiliated sales | 46,499 | — | 34,551 | (81,050 | ) | — | ||||||||||||||||
Net sales | 466,424 | — | 326,944 | (81,050 | ) | 712,318 | ||||||||||||||||
Cost of sales, including development and engineering | 307,418 | (119 | ) | 208,659 | (81,050 | ) | 434,908 | |||||||||||||||
Selling, service and administrative | 137,774 | — | 87,857 | — | 225,631 | |||||||||||||||||
Earnings from joint ventures | 1,752 | — | (3,019 | ) | — | (1,267 | ) | |||||||||||||||
Restructuring and other: | ||||||||||||||||||||||
Restructuring | 237 | — | 614 | — | 851 | |||||||||||||||||
Other | 1,690 | — | — | — | 1,690 | |||||||||||||||||
Interest expense | 25,749 | 18 | 731 | (575 | ) | 25,923 | ||||||||||||||||
Other (income) expense | (4,476 | ) | (650 | ) | 5,257 | 575 | 706 | |||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly-owned subsidiaries | (3,720 | ) | 751 | 26,845 | — | 23,876 | ||||||||||||||||
Income taxes | (1,420 | ) | 286 | 10,248 | — | 9,114 | ||||||||||||||||
(Loss) income before undistributed earnings of wholly-owned subsidiaries | (2,300 | ) | 465 | 16,597 | — | 14,762 | ||||||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 17,062 | 15,146 | — | (32,208 | ) | — | ||||||||||||||||
Net income (loss) | $ | 14,762 | $ | 15,611 | $ | 16,597 | $ | (32,208 | ) | $ | 14,762 | |||||||||||
F-91
Table of Contents
Year Ended December 31, 2003 | ||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
Unaffiliated sales | $ | 440,337 | $ | — | $ | 257,571 | $ | — | $ | 697,908 | ||||||||||||
Affiliated sales | 42,798 | — | 25,726 | (68,524 | ) | — | ||||||||||||||||
Net sales | 483,135 | — | 283,297 | (68,524 | ) | 697,908 | ||||||||||||||||
Cost of sales, including development and engineering | 307,483 | 233 | 179,463 | (68,524 | ) | 418,655 | ||||||||||||||||
Selling, service and administrative | 145,604 | — | 78,948 | — | 224,552 | |||||||||||||||||
Earnings from joint ventures | — | — | (12 | ) | — | (12 | ) | |||||||||||||||
Restructuring and other: | ||||||||||||||||||||||
Restructuring | 10,592 | — | 510 | — | 11,102 | |||||||||||||||||
Other | 4,679 | — | — | — | 4,679 | |||||||||||||||||
Interest expense | 33,062 | 347 | 1,557 | (558 | ) | 34,408 | ||||||||||||||||
Other (income) expense | (2,473 | ) | (1,116 | ) | 3,187 | 558 | 156 | |||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly-owned subsidiaries | (15,812 | ) | 536 | 19,644 | — | 4,368 | ||||||||||||||||
Income taxes | 629 | 186 | 6,815 | — | 7,630 | |||||||||||||||||
(Loss) income before undistributed earnings of wholly-owned subsidiaries | (16,441 | ) | 350 | 12,829 | — | (3,262 | ) | |||||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 13,179 | 19,872 | — | (33,051 | ) | — | ||||||||||||||||
Net (loss) income | $ | (3,262 | ) | $ | 20,222 | $ | 12,829 | $ | (33,051 | ) | $ | (3,262 | ) | |||||||||
Year Ended December 31, 2002 | ||||||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
Unaffiliated sales | $ | 459,836 | $ | — | $ | 241,892 | $ | — | $ | 701,728 | ||||||||||||
Affiliated sales | 38,178 | — | 21,942 | (60,120 | ) | — | ||||||||||||||||
Net sales | 498,014 | — | 263,834 | (60,120 | ) | 701,728 | ||||||||||||||||
Cost of sales: | ||||||||||||||||||||||
Product cost of sales, including development and engineering | 310,779 | (151 | ) | 172,009 | (60,120 | ) | 422,517 | |||||||||||||||
Inventory rationalization and write-down charge | 672 | — | 377 | — | 1,049 | |||||||||||||||||
Selling, service and administrative | 152,691 | 26 | 75,368 | — | 228,085 | |||||||||||||||||
Earnings from joint ventures | (221 | ) | — | — | — | (221 | ) | |||||||||||||||
Restructuring and other: | ||||||||||||||||||||||
Restructuring | 7,257 | — | 756 | — | 8,013 | |||||||||||||||||
Other | 1,081 | — | — | — | 1,081 | |||||||||||||||||
Interest expense | 38,863 | 205 | 1,928 | (1,098 | ) | 39,898 | ||||||||||||||||
Other (income) expense | (921 | ) | (489 | ) | 559 | 1,098 | 247 | |||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly-owned subsidiaries | (12,187 | ) | 409 | 12,837 | — | 1,059 | ||||||||||||||||
Income (benefits) taxes | (3,787 | ) | 913 | 4,919 | — | 2,045 | ||||||||||||||||
Cumulative effect of accounting change, net of taxes | 79,024 | (21,695 | ) | 66,291 | (44,596 | ) | 79,024 | |||||||||||||||
(Loss) income before undistributed earnings of wholly-owned subsidiaries | (87,424 | ) | 21,191 | (58,373 | ) | 44,596 | (80,010 | ) | ||||||||||||||
Undistributed (losses) earnings of wholly-owned subsidiaries | (37,182 | ) | 1,974 | — | 35,208 | — | ||||||||||||||||
Net (loss) income | $ | (124,606 | ) | $ | 23,165 | $ | (58,373 | ) | $ | 79,804 | $ | (80,010 | ) | |||||||||
F-92
Table of Contents
Year Ended December 31, 2004 | ||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Consolidated | |||||||||||||||
Net cash provided by operating activities | $ | 13,196 | $ | 576 | $ | 8,938 | $ | 22,710 | ||||||||||
Investing activities: | ||||||||||||||||||
Capital expenditures | (3,762 | ) | (577 | ) | (3,008 | ) | (7,347 | ) | ||||||||||
Payments of acquisitions and investments | (3,327 | ) | — | — | (3,327 | ) | ||||||||||||
Dividends from joint venture investment | — | — | 1,430 | 1,430 | ||||||||||||||
Proceeds from sale of plant and equipment | 978 | 1 | 22 | 1,001 | ||||||||||||||
Net cash used in investing activities | (6,111 | ) | (576 | ) | (1,556 | ) | (8,243 | ) | ||||||||||
Financing activities: | ||||||||||||||||||
Increase (reduction) in intercompany debt | 2,540 | — | (2,540 | ) | — | |||||||||||||
Proceeds of long-term debt — maturities greater than 90 days | 218,500 | — | 8,875 | 227,375 | ||||||||||||||
Repayments of long-term debt — maturities greater than 90 days | (225,500 | ) | — | (9,851 | ) | (235,351 | ) | |||||||||||
Net change in debt-maturities of 90 days or less | 7,000 | — | — | 7,000 | ||||||||||||||
(Decrease) increase in current portion of long-term obligations | (13,166 | ) | — | 697 | (12,469 | ) | ||||||||||||
Distribution related to tax allocation agreement | (1,261 | ) | — | — | (1,261 | ) | ||||||||||||
Payments of debt issuance costs | (52 | ) | — | — | (52 | ) | ||||||||||||
Proceeds from the exercise of stock options | 1,661 | — | — | 1,661 | ||||||||||||||
Net cash used in financing activities | (10,278 | ) | — | (2,819 | ) | (13,097 | ) | |||||||||||
Effect of exchange rates on cash | — | — | (4,679 | ) | (4,679 | ) | ||||||||||||
Net (decrease) in cash & cash equivalents | (3,193 | ) | — | (116 | ) | (3,309 | ) | |||||||||||
Cash and cash equivalents at the beginning of the year | 3,749 | 1 | 5,818 | 9,568 | ||||||||||||||
Cash and cash equivalents at the end of the period | $ | 556 | $ | 1 | $ | 5,702 | $ | 6,259 | ||||||||||
F-93
Table of Contents
Year Ended December 31, 2003 | ||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Consolidated | |||||||||||||||
Net cash provided by operating activities | $ | 30,347 | $ | 517 | $ | 20,760 | $ | 51,624 | ||||||||||
Investing activities: | ||||||||||||||||||
Capital expenditures | (3,281 | ) | (518 | ) | (4,669 | ) | (8,468 | ) | ||||||||||
Payments of acquisitions and investments | (2,162 | ) | — | — | (2,162 | ) | ||||||||||||
Proceeds from sale of plant and equipment | 22 | — | 80 | 102 | ||||||||||||||
Net cash used in investing activities | (5,421 | ) | (518 | ) | (4,589 | ) | (10,528 | ) | ||||||||||
Financing activities: | ||||||||||||||||||
Increase (reduction) in intercompany debt | 1,823 | — | (1,823 | ) | — | |||||||||||||
Proceeds of long-term debt — maturities greater than 90 days | 159,988 | — | 22,652 | 182,640 | ||||||||||||||
Repayments of long-term debt — maturities greater than 90 days | (100,474 | ) | — | (22,112 | ) | (122,586 | ) | |||||||||||
Net change in debt — maturities of 90 days or less | (91,640 | ) | — | 461 | (91,179 | ) | ||||||||||||
Decrease in current portion of long-term obligations | (2,741 | ) | — | (6,677 | ) | (9,418 | ) | |||||||||||
Contribution related to tax allocation agreement | 2,537 | — | — | 2,537 | ||||||||||||||
Payments of debt issuance costs | (4,154 | ) | — | — | (4,154 | ) | ||||||||||||
Proceeds from the exercise of stock options | 737 | — | — | 737 | ||||||||||||||
Net cash used in (provided by) financing activities | (33,924 | ) | — | (7,499 | ) | (41,423 | ) | |||||||||||
Effect of exchange rates on cash | — | — | (8,356 | ) | (8,356 | ) | ||||||||||||
Net (decrease) increase in cash & cash equivalents | (8,998 | ) | (1 | ) | 316 | (8,683 | ) | |||||||||||
Cash and cash equivalents at the beginning of the year | 12,747 | 2 | 5,502 | 18,251 | ||||||||||||||
Cash and cash equivalents at the end of the period | $ | 3,749 | $ | 1 | $ | 5,818 | $ | 9,568 | ||||||||||
F-94
Table of Contents
Year Ended December 31, 2002 | ||||||||||||||||||
Parent | Guarantors | Non-Guarantors | Consolidated | |||||||||||||||
Net cash provided by operating activities | $ | 30,437 | $ | 439 | $ | 15,590 | $ | 46,466 | ||||||||||
Investing activities: | ||||||||||||||||||
Capital expenditures | (5,627 | ) | (439 | ) | (2,944 | ) | (9,010 | ) | ||||||||||
Payments for acquisitions and investments | (416 | ) | — | — | (416 | ) | ||||||||||||
Proceeds from sale of subsidiary | 470 | — | — | 470 | ||||||||||||||
Proceeds from sale of plant and equipment | 885 | — | 401 | 1,286 | ||||||||||||||
Net cash used in investing activities | (4,688 | ) | (439 | ) | (2,543 | ) | (7,670 | ) | ||||||||||
Financing activities: | ||||||||||||||||||
Increase (reduction) in intercompany debt | 11,196 | — | (11,196 | ) | — | |||||||||||||
Proceeds of long-term debt — maturities greater than 90 days | 344,610 | — | — | 344,610 | ||||||||||||||
Repayments of long-term debt — maturities greater than 90 days | (270,000 | ) | — | (827 | ) | (270,827 | ) | |||||||||||
Net change in debt — maturities of 90 days or less | (154,110 | ) | — | 2,426 | (151,684 | ) | ||||||||||||
Decrease in current portion of long-term debt | (150 | ) | — | (36 | ) | (186 | ) | |||||||||||
Payments of debt issuance costs | (3,438 | ) | — | — | (3,438 | ) | ||||||||||||
Contribution related to tax allocation agreement | 1,490 | — | — | 1,490 | ||||||||||||||
Proceeds from the exercise of stock options | 1,164 | — | — | 1,164 | ||||||||||||||
Net cash used in financing activities | (69,238 | ) | — | (9,633 | ) | (78,871 | ) | |||||||||||
Effect of exchange rates on cash | — | — | (1,610 | ) | (1,610 | ) | ||||||||||||
Net (decrease) increase in cash & cash equivalents | (43,489 | ) | — | 1,804 | (41,685 | ) | ||||||||||||
Cash and cash equivalents at the beginning of the year | 56,236 | 2 | 3,698 | 59,936 | ||||||||||||||
Cash and cash equivalents at the end of the period | $ | 12,747 | $ | 2 | $ | 5,502 | $ | 18,251 | ||||||||||
(19) | Subsequent Event |
F-95
Table of Contents
December 31, 2004 | ||||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 557 | $ | 5,702 | $ | — | $ | 6,259 | ||||||||||
Receivables, net | 71,593 | 69,852 | — | 141,445 | ||||||||||||||
Inventories, net | 60,422 | 37,574 | — | 97,996 | ||||||||||||||
Deferred tax assets | 10,067 | 2,370 | — | 12,437 | ||||||||||||||
Other | 4,678 | 9,365 | — | 14,043 | ||||||||||||||
Due from affiliates | — | 47,553 | (47,553 | ) | — | |||||||||||||
Total current assets | 147,317 | 172,416 | (47,553 | ) | 272,180 | |||||||||||||
Net capital assets | 55,717 | 28,976 | — | 84,693 | ||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 142,294 | 8,089 | — | 150,383 | ||||||||||||||
Other | 22,201 | 10,957 | — | 33,158 | ||||||||||||||
Investment in subsidiaries | 177,359 | — | (177,359 | ) | — | |||||||||||||
Total assets | $ | 544,888 | $ | 220,438 | $ | (224,912 | ) | $ | 540,414 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 31,502 | $ | 18,256 | $ | — | $ | 49,758 | ||||||||||
Accrued liabilities | 53,517 | 36,688 | — | 90,205 | ||||||||||||||
Notes payable | — | 7,788 | — | 7,788 | ||||||||||||||
Current maturities of long-term debt | 25,547 | 378 | — | 25,925 | ||||||||||||||
Due to affiliates | 82,530 | 17,210 | (99,740 | ) | — | |||||||||||||
Total current liabilities | 193,096 | 80,320 | (99,740 | ) | 173,676 | |||||||||||||
Long-term debt — affiliated | 71 | 595 | (666 | ) | — | |||||||||||||
Long-term debt, less current maturities | 254,426 | 739 | — | 255,165 | ||||||||||||||
Other long-term liabilities | 19,449 | 11,364 | — | 30,813 | ||||||||||||||
Deferred tax liabilities | — | 2,914 | — | 2,914 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Common stock | 1,962 | 2,332 | (2,332 | ) | 1,962 | |||||||||||||
Class B common stock | 300 | — | — | 300 | ||||||||||||||
Additional paid-in capital | 26,445 | 167,539 | (167,539 | ) | 26,445 | |||||||||||||
Retained earnings | 78,171 | (44,524 | ) | 44,524 | 78,171 | |||||||||||||
Treasury stock | (21,398 | ) | — | — | (21,398 | ) | ||||||||||||
Accumulated other comprehensive income | (7,634 | ) | (841 | ) | 841 | (7,634 | ) | |||||||||||
Total stockholders’ equity | 77,846 | 124,506 | (124,506 | ) | 77,846 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 544,888 | $ | 220,438 | $ | (224,912 | ) | $ | 540,414 | |||||||||
F-96
Table of Contents
December 31, 2003 | ||||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 3,750 | $ | 5,818 | $ | — | $ | 9,568 | ||||||||||
Receivables, net | 69,404 | 58,987 | — | 128,391 | ||||||||||||||
Inventories, net | 48,830 | 37,410 | — | 86,240 | ||||||||||||||
Deferred tax assets | 18,637 | 1,459 | — | 20,096 | ||||||||||||||
Other | 6,948 | 6,393 | — | 13,341 | ||||||||||||||
Due from affiliates | — | 41,525 | (41,525 | ) | — | |||||||||||||
Total current assets | 147,569 | 151,592 | (41,525 | ) | 257,636 | |||||||||||||
Net capital assets | 64,627 | 30,359 | 94,986 | |||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 142,975 | 7,800 | 150,775 | |||||||||||||||
Other | 24,023 | 2,911 | 26,934 | |||||||||||||||
Investment in subsidiaries | 159,297 | — | (159,297 | ) | — | |||||||||||||
Total assets | $ | 538,491 | $ | 192,662 | $ | (200,822 | ) | $ | 530,331 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 35,950 | $ | 15,303 | $ | — | $ | 51,253 | ||||||||||
Accrued liabilities | 60,579 | 25,968 | — | 86,547 | ||||||||||||||
Notes payable | — | 5,819 | — | 5,819 | ||||||||||||||
Current maturities of long-term debt | 13,165 | 1,011 | — | 14,176 | ||||||||||||||
Due to affiliates | 74,356 | 26,096 | (100,452 | ) | — | |||||||||||||
Total current liabilities | 184,050 | 74,197 | (100,452 | ) | 157,795 | |||||||||||||
Long-term debt — affiliated | 519 | 3,135 | (3,654 | ) | — | |||||||||||||
Long-term debt, less current maturities | 279,973 | 2,046 | — | 282,019 | ||||||||||||||
Other long-term liabilities | 19,740 | 16,568 | — | 36,308 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Common stock | 1,962 | 2,332 | (2,332 | ) | 1,962 | |||||||||||||
Class B common stock | 300 | — | — | 300 | ||||||||||||||
Additional paid-in capital | 26,727 | 167,539 | (167,539 | ) | 26,727 | |||||||||||||
Retained earnings | 63,409 | (63,091 | ) | 63,091 | 63,409 | |||||||||||||
Treasury stock | (23,588 | ) | — | — | (23,588 | ) | ||||||||||||
Accumulated other comprehensive income | (14,601 | ) | (10,064 | ) | 10,064 | (14,601 | ) | |||||||||||
Total stockholders’ equity | 54,209 | 96,716 | (96,716 | ) | 54,209 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 538,491 | $ | 192,662 | $ | (200,822 | ) | $ | 530,331 | |||||||||
F-97
Table of Contents
Year Ended December 31, 2004 | ||||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
Unaffiliated sales | $ | 419,925 | $ | 292,393 | $ | — | $ | 712,318 | ||||||||||
Affiliated sales | 46,499 | 34,551 | (81,050 | ) | — | |||||||||||||
Net sales | 466,424 | 326,944 | (81,050 | ) | 712,318 | |||||||||||||
Cost of sales, including development and engineering | 307,299 | 208,659 | (81,050 | ) | 434,908 | |||||||||||||
Selling, service and administrative | 137,774 | 87,857 | — | 225,631 | ||||||||||||||
Earnings from joint ventures | 1,752 | (3,019 | ) | — | (1,267 | ) | ||||||||||||
Restructuring and other: | ||||||||||||||||||
Restructuring | 237 | 614 | — | 851 | ||||||||||||||
Other | 1,690 | — | — | 1,690 | ||||||||||||||
Interest expense | 25,767 | 731 | (575 | ) | 25,923 | |||||||||||||
Other (income) expense | (5,126 | ) | 5,257 | 575 | 706 | |||||||||||||
(Loss) income before taxes and undistributed earnings of wholly-owned subsidiaries | (2,969 | ) | 26,845 | — | 23,876 | |||||||||||||
Income taxes | (1,134 | ) | 10,248 | — | 9,114 | |||||||||||||
(Loss) income before undistributed earnings of wholly-owned subsidiaries | (1,835 | ) | 16,597 | — | 14,762 | |||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 16,597 | — | (16,597 | ) | — | |||||||||||||
Net income (loss) | $ | 14,762 | $ | 16,597 | $ | (16,597 | ) | $ | 14,762 | |||||||||
F-98
Table of Contents
Year Ended December 31, 2003 | |||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||
Unaffiliated sales | $ | 440,337 | $ | 257,571 | $ | — | $ | 697,908 | |||||||||
Affiliated sales | 42,798 | 25,726 | (68,524 | ) | — | ||||||||||||
Net sales | 483,135 | 283,297 | (68,524 | ) | 697,908 | ||||||||||||
Cost of sales, including development and engineering | 307,716 | 179,463 | (68,524 | ) | 418,655 | ||||||||||||
Selling, service and administrative | 145,604 | 78,948 | — | 224,552 | |||||||||||||
Equity in earnings from joint ventures | — | (12 | ) | — | (12 | ) | |||||||||||
Restructuring and other | 15,271 | 510 | — | 15,781 | |||||||||||||
Interest expense | 33,409 | 1,557 | (558 | ) | 34,408 | ||||||||||||
Other (Income) expense | (3,589 | ) | 3,187 | 558 | 156 | ||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (15,276 | ) | 19,644 | — | 4,368 | ||||||||||||
Income (benefits) taxes | 815 | 6,815 | — | 7,630 | |||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (16,091 | ) | 12,829 | — | (3,262 | ) | |||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 12,829 | — | (12,829 | ) | — | ||||||||||||
Net income (loss) | $ | (3,262 | ) | $ | 12,829 | $ | (12,829 | ) | $ | (3,262 | ) | ||||||
Year Ended December 31, 2002 | |||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||
Unaffiliated sales | $ | 459,836 | $ | 241,892 | $ | — | $ | 701,728 | |||||||||
Affiliated sales | 38,178 | 21,942 | (60,120 | ) | — | ||||||||||||
Net sales | 498,014 | 263,834 | (60,120 | ) | 701,728 | ||||||||||||
Cost of sales, including development and engineering | 310,628 | 172,009 | (60,120 | ) | 422,517 | ||||||||||||
Inventory rationalization and write-down charge | 672 | 377 | — | 1,049 | |||||||||||||
Selling, service and administrative | 152,717 | 75,368 | — | 228,085 | |||||||||||||
Equity in earnings from joint ventures | (221 | ) | — | — | (221 | ) | |||||||||||
Restructuring and other | 8,338 | 756 | — | 9,094 | |||||||||||||
Interest expense | 39,068 | 1,928 | (1,098 | ) | 39,898 | ||||||||||||
Other (Income) expense | (1,410 | ) | 559 | 1,098 | 247 | ||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (11,778 | ) | 12,837 | — | 1,059 | ||||||||||||
Income (benefits) taxes | (2,874 | ) | 4,919 | — | 2,045 | ||||||||||||
Cumulative effect of accounting change, net of taxes | 57,329 | 66,291 | (44,596 | ) | 79,024 | ||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (66,233 | ) | (58,373 | ) | 44,596 | (80,010 | ) | ||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | (58,373 | ) | — | 58,373 | — | ||||||||||||
Net income (loss) | $ | (124,606 | ) | $ | (58,373 | ) | $ | 102,969 | $ | (80,010 | ) | ||||||
F-99
Table of Contents
Year Ended December 31, 2004 | ||||||||||||||
Guarantors | Non-Guarantors | Consolidated | ||||||||||||
Net cash provided by operating activities | $ | 13,772 | $ | 8,938 | $ | 22,710 | ||||||||
Investing activities: | ||||||||||||||
Capital expenditures | (4,339 | ) | (3,008 | ) | (7,347 | ) | ||||||||
Payments of acquisitions and investments | (3,327 | ) | — | (3,327 | ) | |||||||||
Dividends from joint venture investment | — | 1,430 | 1,430 | |||||||||||
Proceeds from sale of plant and equipment | 979 | 22 | 1,001 | |||||||||||
Net cash used in investing activities | (6,687 | ) | (1,556 | ) | (8,243 | ) | ||||||||
Financing activities: | ||||||||||||||
Increase (reduction) in intercompany debt | 2,540 | (2,540 | ) | — | ||||||||||
Proceeds of long-term debt — maturities greater than 90 days | 218,500 | 8,875 | 227,375 | |||||||||||
Repayments of long-term debt — maturities greater than 90 days | (225,500 | ) | (9,851 | ) | (235,351 | ) | ||||||||
Net change in debt-maturities of 90 days or less | 7,000 | — | 7,000 | |||||||||||
(Decrease) increase in current portion of long-term obligations | (13,166 | ) | 697 | (12,469 | ) | |||||||||
Distribution related to tax allocation agreement | (1,261 | ) | — | (1,261 | ) | |||||||||
Payments of debt issuance costs | (52 | ) | — | (52 | ) | |||||||||
Proceeds from the exercise of stock options | 1,661 | — | 1,661 | |||||||||||
Net cash used in financing activities | (10,278 | ) | (2,819 | ) | (13,097 | ) | ||||||||
Effect of exchange rates on cash | — | (4,679 | ) | (4,679 | ) | |||||||||
Net (decrease) in cash & cash equivalents | (3,193 | ) | (116 | ) | (3,309 | ) | ||||||||
Cash and cash equivalents at the beginning of the year | 3,750 | 5,818 | 9,568 | |||||||||||
Cash and cash equivalents at the end of the period | $ | 557 | $ | 5,702 | $ | 6,259 | ||||||||
F-100
Table of Contents
Year Ended December 31, 2003 | ||||||||||||||
Guarantors | Non-Guarantors | Consolidated | ||||||||||||
Net cash provided by operating activities | $ | 30,864 | $ | 20,760 | $ | 51,624 | ||||||||
Investing activities: | ||||||||||||||
Capital expenditures | (3,799 | ) | (4,669 | ) | (8,468 | ) | ||||||||
Payments of acquisitions and investments | (2,162 | ) | — | (2,162 | ) | |||||||||
Proceeds from sale of plant and equipment | 22 | 80 | 102 | |||||||||||
Net cash provided by (used in) investing activities | (5,939 | ) | (4,589 | ) | (10,528 | ) | ||||||||
Financing activities: | ||||||||||||||
Increase (decrease) in intercompany borrowings | 1,823 | (1,823 | ) | — | ||||||||||
Proceeds of long-term debt-maturities greater than 90 days | 159,988 | 22,652 | 182,640 | |||||||||||
Repayments of long-term debt-maturities greater than 90 days | (100,474 | ) | (22,112 | ) | (122,586 | ) | ||||||||
Net change in borrowings-maturities of 90 days or less | (91,640 | ) | 461 | (91,179 | ) | |||||||||
Decrease in current portion of long-term obligations | (2,741 | ) | (6,677 | ) | (9,418 | ) | ||||||||
Contribution related to Tax Allocation Agreement | 2,537 | 2,537 | ||||||||||||
Payments of debt issuance costs | (4,154 | ) | — | (4,154 | ) | |||||||||
Proceeds from the exercise of stock options | 737 | — | 737 | |||||||||||
Net cash used in financing activities | (33,924 | ) | (7,499 | ) | (41,423 | ) | ||||||||
Effect of exchange rates on cash | — | (8,356 | ) | (8,356 | ) | |||||||||
Net (decrease) increase in cash & cash equivalents | (8,999 | ) | 316 | (8,683 | ) | |||||||||
Cash and cash equivalents at the beginning of the year | 12,749 | 5,502 | 18,251 | |||||||||||
Cash and cash equivalents at the end of the period | $ | 3,750 | $ | 5,818 | $ | 9,568 | ||||||||
F-101
Table of Contents
Year ended December 31, 2002 | ||||||||||||||
Guarantors | Non-Guarantors | Consolidated | ||||||||||||
Net cash provided by operating activities | $ | 30,876 | $ | 15,590 | $ | 46,466 | ||||||||
Investing activities: | ||||||||||||||
Capital expenditures | (6,066 | ) | (2,944 | ) | (9,010 | ) | ||||||||
Payments of acquisitions and investments | (416 | ) | — | (416 | ) | |||||||||
Proceeds from sale of subsidiary | 470 | — | 470 | |||||||||||
Proceeds from sale of plant and equipment | 885 | 401 | 1,286 | |||||||||||
Net cash provided by (used in) investing activities | (5,127 | ) | (2,543 | ) | (7,670 | ) | ||||||||
Financing activities: | ||||||||||||||
Increase (decrease) in intercompany borrowings | 11,196 | (11,196 | ) | — | ||||||||||
Proceeds of long-term debt-maturities greater than 90 days | 344,610 | — | 344,610 | |||||||||||
Repayments of long-term debt-maturities greater than 90 days | (270,000 | ) | (827 | ) | (270,827 | ) | ||||||||
Net change in borrowings-maturities of 90 days or less | (154,110 | ) | 2,426 | (151,684 | ) | |||||||||
Decrease in current portion of long-term obligations | (150 | ) | (36 | ) | (186 | ) | ||||||||
Contribution related to Tax Allocation Agreement | 1,490 | 1,490 | ||||||||||||
Payments of debt issuance costs | (3,438 | ) | — | (3,438 | ) | |||||||||
Proceeds from the exercise of stock options | 1,164 | — | 1,164 | |||||||||||
Net cash used in financing activities | (69,238 | ) | (9,633 | ) | (78,871 | ) | ||||||||
Effect of exchange rates on cash | — | (1,610 | ) | (1,610 | ) | |||||||||
Net (decrease) increase in cash & cash equivalents | (43,489 | ) | 1,804 | (41,685 | ) | |||||||||
Cash and cash equivalents at the beginning of the year | 56,238 | 3,698 | 59,936 | |||||||||||
Cash and cash equivalents at the end of the period | $ | 12,749 | $ | 5,502 | $ | 18,251 | ||||||||
F-102
Table of Contents
June 30, | December 31, | ||||||||||
2005 | 2004 | ||||||||||
(Unaudited) | |||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 11,951 | $ | 6,259 | |||||||
Receivables, less allowances for doubtful accounts and sales returns: 2005 — $16,263, 2004 — $16,476 | 140,276 | 141,445 | |||||||||
Inventories: | |||||||||||
Raw materials | 18,848 | 20,637 | |||||||||
Work in process | 5,251 | 6,584 | |||||||||
Finished goods | 76,195 | 70,775 | |||||||||
Total inventories | 100,294 | 97,996 | |||||||||
Deferred tax assets | 11,663 | 12,437 | |||||||||
Other | 12,293 | 14,043 | |||||||||
Total current assets | 276,477 | 272,180 | |||||||||
Total capital assets at cost | 257,367 | 272,092 | |||||||||
Less — accumulated depreciation | (182,402 | ) | (187,399 | ) | |||||||
Net capital assets | 74,965 | 84,693 | |||||||||
Goodwill and other intangible assets, net of accumulated amortization | 149,933 | 150,383 | |||||||||
Other | 39,144 | 33,158 | |||||||||
Total assets | $ | 540,519 | $ | 540,414 | |||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 50,008 | $ | 49,758 | |||||||
Accrued liabilities | 85,972 | 90,205 | |||||||||
Notes payable | 6,323 | 7,788 | |||||||||
Current maturities of long-term debt | 22,992 | 25,925 | |||||||||
Total current liabilities | 165,295 | 173,676 | |||||||||
Long-term debt, less current maturities | 265,029 | 255,165 | |||||||||
Other long-term liabilities | 32,432 | 33,727 | |||||||||
Stockholders’ equity: | |||||||||||
Common Stock | 1,962 | 1,962 | |||||||||
Class B Common Stock | 300 | 300 | |||||||||
Additional paid-in capital | 27,806 | 26,445 | |||||||||
Retained earnings | 76,310 | 78,171 | |||||||||
Treasury stock | (16,731 | ) | (21,398 | ) | |||||||
Accumulated other comprehensive income | (11,884 | ) | (7,634 | ) | |||||||
Total stockholders’ equity | 77,763 | 77,846 | |||||||||
Total liabilities and stockholders’ equity | $ | 540,519 | $ | 540,414 | |||||||
F-103
Table of Contents
Three Months Ended | Six Months Ended | |||||||||||||||||
June 30, | June 30, | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
Net sales | $ | 186,900 | $ | 174,375 | $ | 367,052 | $ | 345,306 | ||||||||||
Costs and expenses: | ||||||||||||||||||
Product cost of sales, including development and engineering | 115,390 | 106,787 | 227,478 | 212,393 | ||||||||||||||
Selling, service and administrative | 58,776 | 56,052 | 119,388 | 112,606 | ||||||||||||||
Equity in earnings from joint ventures | (408 | ) | (189 | ) | (967 | ) | (356 | ) | ||||||||||
Interest expense | 6,912 | 6,599 | 13,606 | 13,391 | ||||||||||||||
Restructuring and other: | ||||||||||||||||||
Restructuring | 191 | — | 1,294 | 823 | ||||||||||||||
Other | 1,645 | — | 4,152 | — | ||||||||||||||
Other expense, net | 66 | 583 | 1,057 | 928 | ||||||||||||||
Income before taxes | 4,328 | 4,543 | 1,044 | 5,521 | ||||||||||||||
Income tax expense | 2,754 | 1,957 | 2,905 | 2,485 | ||||||||||||||
Net income (loss) | $ | 1,574 | $ | 2,586 | $ | (1,861 | ) | $ | 3,036 | |||||||||
Other comprehensive income: | ||||||||||||||||||
Foreign currency translation adjustments | (3,108 | ) | (2,145 | ) | (5,520 | ) | (2,551 | ) | ||||||||||
Income on derivative financial instruments | 713 | 744 | 1,270 | 1,622 | ||||||||||||||
Comprehensive (loss) income, net of taxes | $ | (821 | ) | $ | 1,185 | $ | (6,111 | ) | $ | 2,107 | ||||||||
Net income (loss) per common share(1) | ||||||||||||||||||
Basic | $ | 0.10 | $ | 0.16 | $ | (0.11 | ) | $ | 0.19 | |||||||||
Diluted | $ | 0.09 | $ | 0.15 | $ | (0.11 | ) | $ | 0.18 | |||||||||
Weighted average number of common shares outstanding:(2) | ||||||||||||||||||
Basic | 16,501 | 16,180 | 16,400 | 16,143 | ||||||||||||||
Diluted | 17,410 | 16,837 | 16,400 | 16,887 |
(1) | Amounts represent per share amounts for both Common Stock and Class B Common Stock. |
(2) | Weighted average shares includes both Common Stock and Class B Common Stock. |
F-104
Table of Contents
Six Months Ended | |||||||||||
June 30, | |||||||||||
2005 | 2004 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||
Operating activities: | |||||||||||
Net (loss) income | $ | (1,861 | ) | $ | 3,036 | ||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Depreciation | 8,105 | 9,853 | |||||||||
Amortization | 3,163 | 2,258 | |||||||||
Equity in earnings from joint ventures | (967 | ) | (356 | ) | |||||||
Provision for doubtful accounts and sales returns | 1,275 | 1,429 | |||||||||
Provision for inventory reserves | 225 | 3,157 | |||||||||
Decrease in non-current deferred taxes | (905 | ) | (487 | ) | |||||||
Increase in other long-term assets | (4,525 | ) | (1,631 | ) | |||||||
Other | 197 | (1,195 | ) | ||||||||
Changes in current assets and liabilities: | |||||||||||
Increase in receivables | (5,046 | ) | (4,994 | ) | |||||||
Increase in inventories | (5,186 | ) | (22,723 | ) | |||||||
Decrease (increase) in other current assets | 1,055 | (222 | ) | ||||||||
Decrease (increase) in deferred tax assets | 90 | (163 | ) | ||||||||
Decrease (increase) in accounts payable and accrued liabilities | 1,296 | (6,812 | ) | ||||||||
(Decrease) increase in income taxes payable | (743 | ) | 194 | ||||||||
Net cash used in operating activities | (3,827 | ) | (18,656 | ) | |||||||
Investing activities: | |||||||||||
Capital expenditures | (3,755 | ) | (3,594 | ) | |||||||
Payments for acquisitions and investments | (250 | ) | (1,304 | ) | |||||||
Proceeds from sale of plant and equipment | 2,989 | 185 | |||||||||
Net cash used in investing activities | (1,016 | ) | (4,713 | ) | |||||||
Financing activities: | |||||||||||
Proceeds from long-term debt-maturities greater than 90 days | 65,741 | 121,722 | |||||||||
Repayments of long-term debt-maturities greater than 90 days | (111,474 | ) | (132,688 | ) | |||||||
Net change in debt-maturities of 90 days or less | 69,837 | 26,084 | |||||||||
Decrease (increase) in current portion of long-term debt | (18,257 | ) | 651 | ||||||||
Payments of debt issuance costs | (71 | ) | (78 | ) | |||||||
Proceeds from the exercise of stock options | 3,292 | 1,345 | |||||||||
Net cash provided by financing activities | 9,068 | 17,036 | |||||||||
Effect of exchange rates on cash | 1,467 | 713 | |||||||||
Net increase (decrease) in cash and cash equivalents | 5,692 | (5,620 | ) | ||||||||
Cash and cash equivalents at the beginning of the year | 6,259 | 9,568 | |||||||||
Cash and cash equivalents at the end of the period | $ | 11,951 | $ | 3,948 | |||||||
Supplemental disclosure: | |||||||||||
Interest paid | $ | 12,854 | $ | 13,236 | |||||||
Income taxes paid | 4,468 | 2,659 |
F-105
Table of Contents
(1) | Basis of Presentation |
(2) | Stock Compensation Plan |
F-106
Table of Contents
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Net income (loss), as reported | $ | 1,574 | $ | 2,586 | $ | (1,861 | ) | $ | 3,036 | ||||||||
Add: Stock-based compensation expense included in reported net income, net of tax | 294 | 160 | 1,059 | 441 | |||||||||||||
Deduct: Total stock-based compensation expense determined under the fair value method, net of tax | (1,044 | ) | (831 | ) | (2,448 | ) | (1,793 | ) | |||||||||
Pro forma net (loss) income | $ | 824 | $ | 1,915 | $ | (3,250 | ) | $ | 1,684 | ||||||||
Earnings (loss) per share — basic | |||||||||||||||||
As reported | $ | 0.10 | $ | 0.16 | $ | (0.11 | ) | $ | 0.19 | ||||||||
Pro forma | $ | 0.05 | $ | 0.12 | $ | (0.20 | ) | $ | 0.10 | ||||||||
Earnings (loss) per share — diluted | |||||||||||||||||
As reported | $ | 0.09 | $ | 0.15 | $ | (0.11 | ) | $ | 0.18 | ||||||||
Pro forma | $ | 0.05 | $ | 1.11 | $ | (0.20 | ) | $ | 0.10 | ||||||||
(3) | Borrowings |
F-107
Table of Contents
June 30, | December 31, | ||||||||
2005 | 2004 | ||||||||
Credit Facilities | |||||||||
U.S. Dollar borrowings — Term loan — (weighted average floating interest rate of 7.59% at June 30, 2005 and 6.70% at December 31, 2004) | $ | 96,448 | $ | 112,000 | |||||
U.S. Dollar borrowings — Revolving Credit Agreement — (weighted average floating interest rate of 7.09% at June 30, 2005) | 26,000 | — | |||||||
Industrial Development Bond due March 2026 — (floating interest rate of 2.36% at June 30, 2005 and 2.06% at December 31, 2004) | 6,840 | 6,840 | |||||||
Notes Payable | |||||||||
Senior Subordinated Notes, U.S. Dollar borrowing, due 2008 — (fixed interest rate of 9.375%) | 150,000 | 150,000 | |||||||
Notes Payable (Mortgage Financing), U.S. Dollar borrowing, due monthly August 2003 to July 2008 — (fixed interest rate of 6.62%) | 7,999 | 11,133 | |||||||
Other borrowings | 7,057 | 8,905 | |||||||
Total debt | 294,344 | 288,878 | |||||||
Less-current maturities | (29,315 | ) | (33,713 | ) | |||||
Total Long-term debt | $ | 265,029 | $ | 255,165 | |||||
F-108
Table of Contents
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Numerator: | |||||||||||||||||
Net income available to common shareholders | $ | 1,574 | $ | 2,586 | $ | (1,861 | ) | $ | 3,036 | ||||||||
Denominator: | |||||||||||||||||
Denominator for basic earnings per share — Weighted average number of common Shares outstanding(1) | 16,501 | 16,180 | 16,400 | 16,143 | |||||||||||||
Effect of dilutive securities: | |||||||||||||||||
Employee stock options(3) | 754 | 407 | — | 503 | |||||||||||||
Restricted stock units(3) | 155 | 250 | — | 241 | |||||||||||||
Denominator for diluted earnings per share — Adjusted weighted-average shares(1) | |||||||||||||||||
And assumed conversions | 17,410 | 16,837 | 16,400 | 16,887 | |||||||||||||
Earnings (loss) per share — basic(2) | $ | 0.10 | $ | 0.16 | $ | (0.11 | ) | $ | 0.19 | ||||||||
Earnings (loss) per share — diluted(2) | $ | 0.09 | $ | 0.15 | $ | (0.11 | ) | $ | 0.18 | ||||||||
(1) | Weighted average shares includes both Common Stock and Class B Common Stock. |
(2) | Amounts represent per share amounts for both Common Stock and Class B Common Stock. |
(3) | For the six months ended June 30, 2005 and 2004, GBC had 791,812 and 744,185 dilutive shares outstanding, respectively. These dilutive shares are related to stock options and restricted stock units that were granted under the Company’s stock compensation plans. Potentially dilutive shares were not included for the six months ended June 30, 2005 diluted earnings per share calculation as they would have been anti-dilutive. |
F-109
Table of Contents
Three Months | Six Months | ||||||||||||||||
Ended | Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Severance and early retirement benefits | $ | 252 | $ | — | $ | 655 | $ | 823 | |||||||||
Lease costs | (61 | ) | — | 639 | — | ||||||||||||
Total restructuring expenses | $ | 191 | $ | — | $ | 1,294 | $ | 823 | |||||||||
Other Exit | Lease | ||||||||||||||||
Severance | Costs | Costs | Total | ||||||||||||||
Balance at December 31, 2004 | $ | 927 | $ | 99 | $ | 1,856 | $ | 2,882 | |||||||||
Activities during the period: | |||||||||||||||||
Provisions | 655 | — | 639 | 1,294 | |||||||||||||
Cash charges | (799 | ) | — | (159 | ) | (958 | ) | ||||||||||
Non-cash charges | (85 | ) | (6 | ) | (31 | ) | (122 | ) | |||||||||
Balance at June 30, 2005(1) | $ | 698 | $ | 93 | $ | 2,305 | $ | 3,096 | |||||||||
(1) | The restructuring reserve at June 30, 2005 consisted of $1.5 million related to current items reported in the balance sheet as a separate item and $1.6 million related to long-term lease agreement costs reported in the balance sheet as a component of other long-term liabilities. |
F-110
Table of Contents
Three Months Ended | ||||||||||||||||||
June 30, 2005 | June 30, 2004 | |||||||||||||||||
Domestic | International | Domestic | International | |||||||||||||||
Service cost | $ | 91 | $ | 158 | $ | 65 | $ | (212 | ) | |||||||||
Interest cost | 17 | 408 | 10 | (107 | ) | |||||||||||||
Expected return on plan assets | — | (437 | ) | — | 321 | |||||||||||||
Amortization of unrecognized: | ||||||||||||||||||
Recognized losses | 3 | 122 | 1 | 131 | ||||||||||||||
Prior service cost | — | (28 | ) | — | (14 | ) | ||||||||||||
Total | $ | 111 | $ | 223 | $ | 76 | $ | 119 | ||||||||||
Company contributions | $ | — | $ | 1,448 | $ | — | $ | 2,699 | ||||||||||
Six Months Ended | ||||||||||||||||||
June 30, 2005 | June 30, 2004 | |||||||||||||||||
Domestic | International | Domestic | International | |||||||||||||||
Service cost | $ | 178 | $ | 349 | $ | 131 | $ | 371 | ||||||||||
Interest cost | 34 | 847 | 20 | 840 | ||||||||||||||
Expected return on plan assets | — | (896 | ) | — | (835 | ) | ||||||||||||
Amortization of unrecognized: | ||||||||||||||||||
Recognized losses | 5 | 206 | 2 | 282 | ||||||||||||||
Prior service cost | — | (28 | ) | — | (31 | ) | ||||||||||||
Total | $ | 217 | $ | 478 | $ | 153 | $ | 627 | ||||||||||
Company contributions | $ | — | $ | 2,052 | $ | — | $ | 2,904 | ||||||||||
Three Months | Six Months | |||||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||||
Service cost | $ | 156 | $ | 218 | $ | 312 | $ | 437 | ||||||||||
Interest cost | 93 | 160 | 186 | 319 | ||||||||||||||
Amortization of unrecognized: | ||||||||||||||||||
Net transaction obligation | — | 11 | — | 22 | ||||||||||||||
Prior service cost | (19 | ) | — | (39 | ) | — | ||||||||||||
Recognized losses | — | 61 | — | 122 | ||||||||||||||
Total | $ | 230 | $ | 450 | $ | 459 | $ | 900 | ||||||||||
F-111
Table of Contents
Unaffiliated Customer Sales | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Commercial and Consumer Group | $ | 117,511 | $ | 108,897 | $ | 225,787 | $ | 214,325 | |||||||||
Industrial and Print Finishing Group | 42,067 | 39,107 | 84,065 | 76,910 | |||||||||||||
Europe | 27,322 | 26,371 | 57,200 | 54,071 | |||||||||||||
Total | $ | 186,900 | $ | 174,375 | $ | 367,052 | $ | 345,306 | |||||||||
F-112
Table of Contents
Segment Operating Income | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Commercial and Consumer Group | $ | 11,647 | $ | 11,267 | $ | 20,487 | $ | 19,919 | |||||||||
Industrial and Print Finishing Group | 5,699 | 5,067 | 11,455 | 9,925 | |||||||||||||
Europe | 2,099 | 1,444 | 3,904 | 3,594 | |||||||||||||
Unallocated corporate items | (6,303 | ) | (6,053 | ) | (14,693 | ) | (12,775 | ) | |||||||||
Total | $ | 13,142 | $ | 11,725 | $ | 21,153 | $ | 20,663 | |||||||||
Affiliated Customer Sales | |||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||
June 30, | June 30, | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Commercial and Consumer Group | $ | 2,014 | $ | 2,805 | $ | 4,455 | $ | 4,529 | |||||||||
Industrial and Print Finishing Group | 6,331 | 5,716 | 12,919 | 11,997 | |||||||||||||
Europe | 1,680 | 2,753 | 4,549 | 6,103 | |||||||||||||
Eliminations | (10,025 | ) | (11,274 | ) | (21,923 | ) | (22,629 | ) | |||||||||
Total | $ | — | $ | — | $ | — | $ | — | |||||||||
Total Segment Assets | |||||||||
June 30, | December 31, | ||||||||
2005 | 2004 | ||||||||
Commercial and Consumer Group | $ | 350,422 | $ | 346,138 | |||||
Industrial and Print Finishing Group | 77,432 | 78,591 | |||||||
Europe | 59,253 | 60,642 | |||||||
Unallocated corporate items | 53,412 | 55,043 | |||||||
Total | $ | 540,519 | $ | 540,414 | |||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Total segment operating income | $ | 13,142 | $ | 11,725 | $ | 21,153 | $ | 20,663 | ||||||||
Interest expense | (6,912 | ) | (6,599 | ) | (13,606 | ) | (13,391 | ) | ||||||||
Restructuring and other expenses | (1,836 | ) | — | (5,446 | ) | (823 | ) | |||||||||
Other expense | (66 | ) | (583 | ) | (1,057 | ) | (928 | ) | ||||||||
Income before taxes | $ | 4,328 | $ | 4,543 | $ | 1,044 | $ | 5,521 | ||||||||
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Unaffiliated Customer Sales | ||||||||||||||||||||||||
Three Months Ended | Six Months Ended | Total Long-Lived Assets | ||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
June 30, | December 31, | |||||||||||||||||||||||
2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |||||||||||||||||||
US | $ | 109,535 | $ | 104,242 | $ | 211,099 | $ | 202,328 | $ | 220,572 | $ | 222,228 | ||||||||||||
Europe | 41,619 | 39,677 | 85,677 | 80,209 | 17,566 | 20,223 | ||||||||||||||||||
Other International | 35,746 | 30,456 | 70,276 | 62,769 | 25,903 | 25,783 | ||||||||||||||||||
$ | 186,900 | $ | 174,375 | $ | 367,052 | $ | 345,306 | $ | 264,041 | $ | 268,234 | |||||||||||||
(8) | New Accounting Standards |
F-114
Table of Contents
Gross Carrying | Accumulated | ||||||||||||||||
Amount at | Amortization at | ||||||||||||||||
June 30, | December 31, | June 30, | December 31, | ||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Customer agreements and relationships | $ | 5,767 | $ | 5,767 | $ | (4,547 | ) | $ | (4,318 | ) | |||||||
Patents | 1,544 | 1,544 | (1,510 | ) | (1,475 | ) | |||||||||||
Total | $ | 7,311 | $ | 7,311 | $ | (6,057 | ) | $ | (5,793 | ) | |||||||
Amortization | ||||
Fiscal Year Ended December 31, | Expense | |||
2005 | $ | 527 | ||
2006 | 458 | |||
2007 | 458 | |||
2008 | 75 |
(10) | Summarized Financial Information — Joint Ventures (unaudited) |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Income statement information | ||||||||||||||||
Net sales | $ | 47,124 | $ | 37,313 | $ | 78,526 | $ | 62,904 | ||||||||
Gross profit | 16,390 | 13,044 | 25,912 | 20,167 | ||||||||||||
Net income | 985 | 244 | 2,522 | 1,040 |
June 30, | December 31, | |||||||
2005 | 2004 | |||||||
Balance sheet information | ||||||||
Current assets | $ | 91,891 | $ | 63,646 | ||||
Non-current assets | 54,318 | 37,810 | ||||||
Current liabilities | 81,754 | 53,828 | ||||||
Non-current liabilities | 31,228 | 21,943 |
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F-116
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June 30, 2005 | ||||||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 298 | $ | — | $ | 11,653 | $ | — | $ | 11,951 | ||||||||||||
Receivables, net | 74,848 | — | 65,428 | — | 140,276 | |||||||||||||||||
Inventories, net | 60,269 | 788 | 39,237 | — | 100,294 | |||||||||||||||||
Deferred tax assets | 12,622 | (3,239 | ) | 2,280 | — | 11,663 | ||||||||||||||||
Other | 4,394 | — | 7,899 | — | 12,293 | |||||||||||||||||
Due from affiliates | — | 57,013 | 43,264 | (100,277 | ) | — | ||||||||||||||||
Total current assets | 152,431 | 54,562 | 169,761 | (100,277 | ) | 276,477 | ||||||||||||||||
Net capital assets | 43,723 | 5,488 | 25,754 | — | 74,965 | |||||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 119,636 | 22,394 | 7,903 | — | 149,933 | |||||||||||||||||
Other | 24,026 | 6,125 | 8,993 | — | 39,144 | |||||||||||||||||
Investment in subsidiaries | 176,959 | 163,149 | — | (340,108 | ) | — | ||||||||||||||||
Total assets | $ | 516,775 | $ | 251,718 | $ | 212,411 | $ | (440,385 | ) | $ | 540,519 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Accounts payable | $ | 31,188 | $ | 999 | $ | 17,821 | $ | — | $ | 50,008 | ||||||||||||
Accrued liabilities | 53,383 | 852 | 31,737 | — | 85,972 | |||||||||||||||||
Notes payable | — | — | 6,323 | — | 6,323 | |||||||||||||||||
Current maturities of long-term debt | 22,918 | — | 74 | — | 22,992 | |||||||||||||||||
Due to affiliates | 47,069 | — | 18,507 | (65,576 | ) | — | ||||||||||||||||
Total current liabilities | 154,558 | 1,851 | 74,462 | (65,576 | ) | 165,295 | ||||||||||||||||
Long-term debt — affiliated | — | — | 555 | (555 | ) | — | ||||||||||||||||
Long-term debt, less current maturities | 264,369 | — | 660 | — | 265,029 | |||||||||||||||||
Other long-term liabilities | 20,085 | 72 | 12,275 | — | 32,432 | |||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||
Common Stock | 1,962 | — | 2,332 | (2,332 | ) | 1,962 | ||||||||||||||||
Class B Common Stock | 300 | — | — | — | 300 | |||||||||||||||||
Additional paid-in capital | 27,806 | 101,210 | 167,539 | (268,749 | ) | 27,806 | ||||||||||||||||
Retained earnings | 76,310 | 141,770 | (34,922 | ) | (106,848 | ) | 76,310 | |||||||||||||||
Treasury stock | (16,731 | ) | — | — | — | (16,731 | ) | |||||||||||||||
Accumulated other comprehensive income | (11,884 | ) | 6,815 | (10,490 | ) | 3,675 | (11,884 | ) | ||||||||||||||
Total stockholders’ equity | 77,763 | 249,795 | 124,459 | (374,254 | ) | 77,763 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 516,775 | $ | 251,718 | $ | 212,411 | $ | (440,385 | ) | $ | 540,519 | |||||||||||
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December 31, 2004 | ||||||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||
Cash and cash equivalents | $ | 556 | $ | 1 | $ | 5,702 | $ | — | $ | 6,259 | ||||||||||||
Receivables, net | 71,593 | — | 69,852 | — | 141,445 | |||||||||||||||||
Inventories, net | 60,035 | 387 | 37,574 | — | 97,996 | |||||||||||||||||
Deferred tax assets | 13,228 | (3,161 | ) | 2,370 | — | 12,437 | ||||||||||||||||
Other | 4,678 | — | 9,365 | — | 14,043 | |||||||||||||||||
Due from affiliates | — | 51,877 | 47,553 | (99,430 | ) | — | ||||||||||||||||
Total current assets | 150,090 | 49,104 | 172,416 | (99,430 | ) | 272,180 | ||||||||||||||||
Net capital assets | 49,737 | 5,980 | 28,976 | — | 84,693 | |||||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 119,900 | 22,394 | 8,089 | — | 150,383 | |||||||||||||||||
Other | 11,811 | 10,390 | 10,957 | — | 33,158 | |||||||||||||||||
Investment in subsidiaries | 177,359 | 165,427 | — | (342,786 | ) | — | ||||||||||||||||
Total assets | $ | 508,897 | $ | 253,295 | $ | 220,438 | $ | (442,216 | ) | $ | 540,414 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||
Accounts payable | $ | 30,624 | $ | 878 | $ | 18,256 | $ | — | $ | 49,758 | ||||||||||||
Accrued liabilities | 53,031 | 486 | 36,688 | — | 90,205 | |||||||||||||||||
Notes payable | — | — | 7,788 | — | 7,788 | |||||||||||||||||
Current maturities of long-term debt | 25,547 | — | 378 | — | 25,925 | |||||||||||||||||
Due to affiliates | 48,077 | — | 17,210 | (65,287 | ) | — | ||||||||||||||||
Total current liabilities | 157,279 | 1,364 | 80,320 | (65,287 | ) | 173,676 | ||||||||||||||||
Long-term debt — affiliated | 71 | — | 595 | (666 | ) | — | ||||||||||||||||
Long-term debt, less current maturities | 254,426 | — | 739 | — | 255,165 | |||||||||||||||||
Other long-term liabilities | 19,275 | 174 | 11,364 | — | 30,813 | |||||||||||||||||
Deferred tax liabilities | — | — | 2,914 | — | 2,914 | |||||||||||||||||
Stockholders’ equity: | ||||||||||||||||||||||
Common Stock | 1,962 | — | 2,332 | (2,332 | ) | 1,962 | ||||||||||||||||
Class B Common Stock | 300 | — | — | — | 300 | |||||||||||||||||
Additional paid-in capital | 26,445 | 95,470 | 167,539 | (263,009 | ) | 26,445 | ||||||||||||||||
Retained earnings | 78,171 | 139,360 | (44,524 | ) | (94,836 | ) | 78,171 | |||||||||||||||
Treasury stock | (21,398 | ) | — | — | — | (21,398 | ) | |||||||||||||||
Accumulated other comprehensive income | (7,634 | ) | 16,927 | (841 | ) | (16,086 | ) | (7,634 | ) | |||||||||||||
Total stockholders’ equity | 77,846 | 251,757 | 124,506 | (376,263 | ) | 77,846 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 508,897 | $ | 253,295 | $ | 220,438 | $ | (442,216 | ) | $ | 540,414 | |||||||||||
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Three Months Ended June 30, 2005 | |||||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Unaffiliated sales | $ | 109,537 | $ | — | $ | 77,363 | $ | — | $ | 186,900 | |||||||||||
Affiliated sales | 11,100 | — | 7,573 | (18,673 | ) | — | |||||||||||||||
Net sales | 120,637 | — | 84,936 | (18,673 | ) | 186,900 | |||||||||||||||
Cost of sales, including development and engineering | 80,797 | 31 | 53,235 | (18,673 | ) | 115,390 | |||||||||||||||
Selling, service and administrative | 35,304 | — | 23,472 | — | 58,776 | ||||||||||||||||
Equity in earnings from joint ventures | 195 | — | (603 | ) | — | (408 | ) | ||||||||||||||
Restructuring and other | 1,646 | — | 190 | — | 1,836 | ||||||||||||||||
Interest expense | 6,722 | — | 266 | (76 | ) | 6,912 | |||||||||||||||
Other (Income) expense | (912 | ) | (90 | ) | 992 | 76 | 66 | ||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (3,115 | ) | 59 | 7,384 | — | 4,328 | |||||||||||||||
Income (benefits) taxes | (960 | ) | 34 | 3,680 | — | 2,754 | |||||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (2,155 | ) | 25 | 3,704 | — | 1,574 | |||||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 3,729 | (217 | ) | — | (3,512 | ) | — | ||||||||||||||
Net income (loss) | $ | 1,574 | $ | (192 | ) | $ | 3,704 | $ | (3,512 | ) | $ | 1,574 | |||||||||
Three Months Ended June 30, 2004 | |||||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Unaffiliated sales | $ | 104,242 | $ | — | $ | 70,133 | $ | — | $ | 174,375 | |||||||||||
Affiliated sales | 11,432 | — | 8,837 | (20,269 | ) | — | |||||||||||||||
Net sales | 115,674 | — | 78,970 | (20,269 | ) | 174,375 | |||||||||||||||
Cost of sales, including development and engineering | 76,984 | (56 | ) | 50,128 | (20,269 | ) | 106,787 | ||||||||||||||
Selling, service and administrative | 34,605 | — | 21,447 | — | 56,052 | ||||||||||||||||
Equity in earnings from joint ventures | 359 | — | (548 | ) | — | (189 | ) | ||||||||||||||
Restructuring and other | (107 | ) | — | 107 | — | — | |||||||||||||||
Interest expense | 6,438 | 7 | 297 | (143 | ) | 6,599 | |||||||||||||||
Other (Income) expense | (870 | ) | (128 | ) | 1,438 | 143 | 583 | ||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (1,735 | ) | 177 | 6,101 | — | 4,543 | |||||||||||||||
Income (benefits) taxes | (351 | ) | 68 | 2,240 | — | 1,957 | |||||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (1,384 | ) | 109 | 3,861 | — | 2,586 | |||||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 3,970 | 4,683 | — | (8,653 | ) | — | |||||||||||||||
Net income (loss) | $ | 2,586 | $ | 4,792 | $ | 3,861 | $ | (8,653 | ) | $ | 2,586 | ||||||||||
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Six Months Ended June 30, 2005 | |||||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Unaffiliated sales | $ | 211,100 | $ | — | $ | 155,952 | $ | — | $ | 367,052 | |||||||||||
Affiliated sales | 23,561 | — | 16,886 | (40,447 | ) | — | |||||||||||||||
Net sales | 234,661 | — | 172,838 | (40,447 | ) | 367,052 | |||||||||||||||
Cost of sales, including development and engineering | 157,654 | 175 | 110,096 | (40,447 | ) | 227,478 | |||||||||||||||
Selling, service and administrative | 71,874 | — | 47,514 | — | 119,388 | ||||||||||||||||
Equity in earnings from joint ventures | 116 | — | (1,083 | ) | — | (967 | ) | ||||||||||||||
Restructuring and other | 4,247 | — | 1,199 | — | 5,446 | ||||||||||||||||
Interest expense | 13,253 | 1 | 502 | (150 | ) | 13,606 | |||||||||||||||
Other (Income) expense | (1,362 | ) | (413 | ) | 2,682 | 150 | 1,057 | ||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (11,121 | ) | 237 | 11,928 | — | 1,044 | |||||||||||||||
Income (benefits) taxes | (2,934 | ) | 114 | 5,725 | — | 2,905 | |||||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (8,187 | ) | 123 | 6,203 | — | (1,861 | ) | ||||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 6,326 | 2,095 | — | (8,421 | ) | — | |||||||||||||||
Net (loss) income | $ | (1,861 | ) | $ | 2,218 | $ | 6,203 | $ | (8,421 | ) | $ | (1,861 | ) | ||||||||
Six Months Ended June 30, 2004 | |||||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||||
Unaffiliated sales | $ | 202,328 | $ | — | $ | 142,978 | $ | — | $ | 345,306 | |||||||||||
Affiliated sales | 22,518 | — | 16,571 | (39,089 | ) | — | |||||||||||||||
Net sales | 224,846 | — | 159,549 | (39,089 | ) | 345,306 | |||||||||||||||
Cost of sales, including development and engineering | 150,729 | (37 | ) | 100,790 | (39,089 | ) | 212,393 | ||||||||||||||
Selling, service and administrative | 68,711 | — | 43,895 | — | 112,606 | ||||||||||||||||
Equity in earnings from joint ventures | 529 | — | (885 | ) | — | (356 | ) | ||||||||||||||
Restructuring and other | 234 | — | 589 | — | 823 | ||||||||||||||||
Interest expense | 12,907 | 12 | 838 | (366 | ) | 13,391 | |||||||||||||||
Other (Income) expense | (1,765 | ) | (278 | ) | 2,605 | 366 | 928 | ||||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (6,499 | ) | 303 | 11,717 | — | 5,521 | |||||||||||||||
Income (benefits) taxes | (2,924 | ) | 136 | 5,273 | — | 2,485 | |||||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (3,575 | ) | 167 | 6,444 | — | 3,036 | |||||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 6,611 | 8,015 | — | (14,626 | ) | — | |||||||||||||||
Net income (loss) | $ | 3,036 | $ | 8,182 | $ | 6,444 | $ | (14,626 | ) | $ | 3,036 | ||||||||||
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Six Months Ended June 30, 2005 | ||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Consolidated | |||||||||||||||
Net cash (used in) provided by operating activities | $ | (11,359 | ) | $ | 54 | $ | 7,478 | $ | (3,827 | ) | ||||||||
Investing activities: | ||||||||||||||||||
Capital expenditures | (1,990 | ) | (55 | ) | (1,710 | ) | (3,755 | ) | ||||||||||
Payments of acquisitions and investments | (250 | ) | — | — | (250 | ) | ||||||||||||
Proceeds from sale of plant and equipment | 2,765 | — | 224 | 2,989 | ||||||||||||||
Net cash used in investing activities | 525 | (55 | ) | (1,486 | ) | (1,016 | ) | |||||||||||
Financing activities: | ||||||||||||||||||
Increase (decrease) in intercompany borrowings | 40 | — | (40 | ) | — | |||||||||||||
Proceeds of long-term debt-maturities greater than 90 days | 64,448 | — | 1,293 | 65,741 | ||||||||||||||
Repayments of long-term debt-maturities greater than 90 days | (110,345 | ) | — | (1,129 | ) | (111,474 | ) | |||||||||||
Net change in borrowings-maturities of 90 days or less | 70,000 | — | (163 | ) | 69,837 | |||||||||||||
Increase in current portion of long-term obligations | (16,788 | ) | — | (1,469 | ) | (18,257 | ) | |||||||||||
Payments of debt issuance costs | (71 | ) | — | — | (71 | ) | ||||||||||||
Proceeds from the exercise of stock options | 3,292 | — | — | 3,292 | ||||||||||||||
Net cash provided by financing activities | 10,576 | — | (1,508 | ) | 9,068 | |||||||||||||
Effect of exchange rates on cash | — | — | 1,467 | 1,467 | ||||||||||||||
Net decrease in cash & cash equivalents | (258 | ) | (1 | ) | 5,951 | 5,692 | ||||||||||||
Cash and cash equivalents at the beginning of the year | 556 | 1 | 5,702 | 6,259 | ||||||||||||||
Cash and cash equivalents at the end of the period | $ | 298 | $ | — | $ | 11,653 | $ | 11,951 | ||||||||||
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Six Months Ended June 30, 2004 | ||||||||||||||||||
GBC Parent | Guarantors | Non-Guarantors | Consolidated | |||||||||||||||
Net cash (used in) provided by operating activities | $ | (6,807 | ) | $ | 266 | $ | (12,115 | ) | $ | (18,656 | ) | |||||||
Investing activities: | ||||||||||||||||||
Capital expenditures | (2,234 | ) | (273 | ) | (1,087 | ) | (3,594 | ) | ||||||||||
Payments of acquisitions and investments | (1,304 | ) | — | — | (1,304 | ) | ||||||||||||
Proceeds from sale of plant and equipment | 185 | — | — | 185 | ||||||||||||||
Net cash used in investing activities | (3,353 | ) | (273 | ) | (1,087 | ) | (4,713 | ) | ||||||||||
Financing activities: | ||||||||||||||||||
(Decrease) increase in intercompany borrowings | (351 | ) | — | 351 | — | |||||||||||||
Proceeds of long-term debt-maturities greater than 90 days | 108,500 | — | 13,222 | 121,722 | ||||||||||||||
Repayments of long-term debt-maturities greater than 90 days | (128,811 | ) | — | (3,877 | ) | (132,688 | ) | |||||||||||
Net change in borrowings-maturities of 90 days or less | 26,000 | — | 84 | 26,084 | ||||||||||||||
Increase in current portion of long-term obligations | — | — | 651 | 651 | ||||||||||||||
Payments of debt issuance costs | (78 | ) | — | — | (78 | ) | ||||||||||||
Proceeds from the exercise of stock options | 1,345 | — | — | 1,345 | ||||||||||||||
Net cash provided by financing activities | 6,605 | — | 10,431 | 17,036 | ||||||||||||||
Effect of exchange rates on cash | — | — | 713 | 713 | ||||||||||||||
Net decrease in cash & cash equivalents | (3,555 | ) | (7 | ) | (2,058 | ) | (5,620 | ) | ||||||||||
Cash and cash equivalents at the beginning of the year | 3,749 | 1 | 5,818 | 9,568 | ||||||||||||||
Cash and cash equivalents at the end of the period | $ | 194 | $ | (6 | ) | $ | 3,760 | $ | 3,948 | |||||||||
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June 30, 2005 | ||||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 298 | $ | 11,653 | $ | — | $ | 11,951 | ||||||||||
Receivables, net | 74,848 | 65,428 | — | 140,276 | ||||||||||||||
Inventories, net | 61,057 | 39,237 | — | 100,294 | ||||||||||||||
Deferred tax assets | 9,383 | 2,280 | — | 11,663 | ||||||||||||||
Other | 4,394 | 7,899 | — | 12,293 | ||||||||||||||
Due from affiliates | — | 43,264 | (43,264 | ) | — | |||||||||||||
Total current assets | 149,980 | 169,761 | (43,264 | ) | 276,477 | |||||||||||||
Net capital assets | 49,211 | 25,754 | — | 74,965 | ||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 142,030 | 7,903 | — | 149,933 | ||||||||||||||
Other | 30,151 | 8,993 | — | 39,144 | ||||||||||||||
Investment in subsidiaries | 176,959 | — | (176,959 | ) | — | |||||||||||||
Total assets | $ | 548,331 | $ | 212,411 | $ | (220,223 | ) | $ | 540,519 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 32,187 | $ | 17,821 | $ | — | $ | 50,008 | ||||||||||
Accrued liabilities | 54,235 | 31,737 | — | 85,972 | ||||||||||||||
Notes payable | — | 6,323 | — | 6,323 | ||||||||||||||
Current maturities of long-term debt | 22,918 | 74 | — | 22,992 | ||||||||||||||
Due to affiliates | 76,702 | 18,507 | (95,209 | ) | — | |||||||||||||
Total current liabilities | 186,042 | 74,462 | (95,209 | ) | 165,295 | |||||||||||||
Long-term debt — affiliated | — | 555 | (555 | ) | — | |||||||||||||
Long-term debt, less current maturities | 264,369 | 660 | — | 265,029 | ||||||||||||||
Other long-term liabilities | 20,157 | 12,275 | — | 32,432 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Common Stock | 1,962 | 2,332 | (2,332 | ) | 1,962 | |||||||||||||
Class B Common Stock | 300 | — | — | 300 | ||||||||||||||
Additional paid-in capital | 27,806 | 167,539 | (167,539 | ) | 27,806 | |||||||||||||
Retained earnings | 76,310 | (34,922 | ) | 34,922 | 76,310 | |||||||||||||
Treasury stock | (16,731 | ) | — | — | (16,731 | ) | ||||||||||||
Accumulated other comprehensive income | (11,884 | ) | (10,490 | ) | 10,490 | (11,884 | ) | |||||||||||
Total stockholders’ equity | 77,763 | 124,459 | (124,459 | ) | 77,763 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 548,331 | $ | 212,411 | $ | (220,223 | ) | $ | 540,519 | |||||||||
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December 31, 2004 | ||||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | |||||||||||||||
ASSETS | ||||||||||||||||||
Current assets: | ||||||||||||||||||
Cash and cash equivalents | $ | 557 | $ | 5,702 | $ | — | $ | 6,259 | ||||||||||
Receivables, net | 71,593 | 69,852 | — | 141,445 | ||||||||||||||
Inventories, net | 60,422 | 37,574 | — | 97,996 | ||||||||||||||
Deferred tax assets | 10,067 | 2,370 | — | 12,437 | ||||||||||||||
Other | 4,678 | 9,365 | — | 14,043 | ||||||||||||||
Due from affiliates | — | 47,553 | (47,553 | ) | — | |||||||||||||
Total current assets | 147,317 | 172,416 | (47,553 | ) | 272,180 | |||||||||||||
Net capital assets | 55,717 | 28,976 | — | 84,693 | ||||||||||||||
Goodwill and other intangibles, net of accumulated amortization | 142,294 | 8,089 | — | 150,383 | ||||||||||||||
Other | 22,201 | 10,957 | — | 33,158 | ||||||||||||||
Investment in subsidiaries | 177,359 | — | (177,359 | ) | — | |||||||||||||
Total assets | $ | 544,888 | $ | 220,438 | $ | (224,912 | ) | $ | 540,414 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||
Current liabilities: | ||||||||||||||||||
Accounts payable | $ | 31,502 | $ | 18,256 | $ | — | $ | 49,758 | ||||||||||
Accrued liabilities | 53,517 | 36,688 | — | 90,205 | ||||||||||||||
Notes payable | — | 7,788 | — | 7,788 | ||||||||||||||
Current maturities of long-term debt | 25,547 | 378 | — | 25,925 | ||||||||||||||
Due to affiliates | 82,530 | 17,210 | (99,740 | ) | — | |||||||||||||
Total current liabilities | 193,096 | 80,320 | (99,740 | ) | 173,676 | |||||||||||||
Long-term debt — affiliated | 71 | 595 | (666 | ) | — | |||||||||||||
Long-term debt, less current maturities | 254,426 | 739 | — | 255,165 | ||||||||||||||
Other long-term liabilities | 19,449 | 11,364 | — | 30,813 | ||||||||||||||
Deferred tax liabilities | — | 2,914 | — | 2,914 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||||
Common stock | 1,962 | 2,332 | (2,332 | ) | 1,962 | |||||||||||||
Class B common stock | 300 | — | — | 300 | ||||||||||||||
Additional paid-in capital | 26,445 | 167,539 | (167,539 | ) | 26,445 | |||||||||||||
Retained earnings | 78,171 | (44,524 | ) | 44,524 | 78,171 | |||||||||||||
Treasury stock | (21,398 | ) | — | — | (21,398 | ) | ||||||||||||
Accumulated other comprehensive income | (7,634 | ) | (841 | ) | 841 | (7,634 | ) | |||||||||||
Total stockholders’ equity | 77,846 | 124,506 | (124,506 | ) | 77,846 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 544,888 | $ | 220,438 | $ | (224,912 | ) | $ | 540,414 | |||||||||
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Three months ended June 30, 2005 | |||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||
Unaffiliated sales | $ | 109,537 | $ | 77,363 | $ | — | $ | 186,900 | |||||||||
Affiliated sales | 11,100 | 7,573 | (18,673 | ) | — | ||||||||||||
Net sales | 120,637 | 84,936 | (18,673 | ) | 186,900 | ||||||||||||
Cost of sales, including development and engineering | 80,828 | 53,235 | (18,673 | ) | 115,390 | ||||||||||||
Selling, service and administrative | 35,304 | 23,472 | — | 58,776 | |||||||||||||
Equity in earnings from joint ventures | 195 | (603 | ) | — | (408 | ) | |||||||||||
Restructuring and other | 1,646 | 190 | — | 1,836 | |||||||||||||
Interest expense | 6,722 | 266 | (76 | ) | 6,912 | ||||||||||||
Other (Income) expense | (1,002 | ) | 992 | 76 | 66 | ||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (3,056 | ) | 7,384 | — | 4,328 | ||||||||||||
Income (benefits) taxes | (926 | ) | 3,680 | — | 2,754 | ||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (2,130 | ) | 3,704 | — | 1,574 | ||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 3,704 | — | (3,704 | ) | — | ||||||||||||
Net income (loss) | $ | 1,574 | $ | 3,704 | $ | (3,704 | ) | $ | 1,574 | ||||||||
Three months ended June 30, 2004 | |||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||
Unaffiliated sales | $ | 104,242 | $ | 70,133 | $ | — | $ | 174,375 | |||||||||
Affiliated sales | 11,432 | 8,837 | (20,269 | ) | — | ||||||||||||
Net sales | 115,674 | 78,970 | (20,269 | ) | 174,375 | ||||||||||||
Cost of sales, including development and engineering | 76,928 | 50,128 | (20,269 | ) | 106,787 | ||||||||||||
Selling, service and administrative | 34,605 | 21,447 | — | 56,052 | |||||||||||||
Equity in earnings from joint ventures | 359 | (548 | ) | — | (189 | ) | |||||||||||
Restructuring and other | (107 | ) | 107 | — | — | ||||||||||||
Interest expense | 6,445 | 297 | (143 | ) | 6,599 | ||||||||||||
Other (Income) expense | (998 | ) | 1,438 | 143 | 583 | ||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (1,558 | ) | 6,101 | — | 4,543 | ||||||||||||
Income (benefits) taxes | (283 | ) | 2,240 | — | 1,957 | ||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (1,275 | ) | 3,861 | — | 2,586 | ||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 3,861 | — | (3,861 | ) | — | ||||||||||||
Net income (loss) | $ | 2,586 | $ | 3,861 | $ | (3,861 | ) | $ | 2,586 | ||||||||
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Six Months Ended June 30, 2005 | |||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||
Unaffiliated sales | $ | 211,100 | $ | 155,952 | $ | — | $ | 367,052 | |||||||||
Affiliated sales | 23,561 | 16,886 | (40,447 | ) | — | ||||||||||||
Net sales | 234,661 | 172,838 | (40,447 | ) | 367,052 | ||||||||||||
Cost of sales, including development and engineering | 157,829 | 110,096 | (40,447 | ) | 227,478 | ||||||||||||
Selling, service and administrative | 71,874 | 47,514 | — | 119,388 | |||||||||||||
Equity in earnings from joint ventures | 116 | (1,083 | ) | (967 | ) | ||||||||||||
Restructuring and other | 4,247 | 1,199 | — | 5,446 | |||||||||||||
Interest expense | 13,254 | 502 | (150 | ) | 13,606 | ||||||||||||
Other (Income) expense | (1,775 | ) | 2,682 | 150 | 1,057 | ||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (10,884 | ) | 11,928 | — | 1,044 | ||||||||||||
Income (benefits) taxes | (2,820 | ) | 5,725 | — | 2,905 | ||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (8,064 | ) | 6,203 | — | (1,861 | ) | |||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 6,203 | — | (6,203 | ) | — | ||||||||||||
Net (loss) income | $ | (1,861 | ) | $ | 6,203 | $ | (6,203 | ) | $ | (1,861 | ) | ||||||
Six months ended June 30, 2004 | |||||||||||||||||
Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||
Unaffiliated sales | $ | 202,328 | $ | 142,978 | $ | — | $ | 345,306 | |||||||||
Affiliated sales | 22,518 | 16,571 | (39,089 | ) | — | ||||||||||||
Net sales | 224,846 | 159,549 | (39,089 | ) | 345,306 | ||||||||||||
Cost of sales, including development and engineering | 150,692 | 100,790 | (39,089 | ) | 212,393 | ||||||||||||
Selling, service and administrative | 68,711 | 43,895 | — | 112,606 | |||||||||||||
Equity in earnings from joint ventures | 529 | (885 | ) | (356 | ) | ||||||||||||
Restructuring and other | 234 | 589 | — | 823 | |||||||||||||
Interest expense | 12,919 | 838 | (366 | ) | 13,391 | ||||||||||||
Other (Income) expense | (2,043 | ) | 2,605 | 366 | 928 | ||||||||||||
(Loss) income before taxes and undistributed earnings of wholly owned subsidiaries | (6,196 | ) | 11,717 | — | 5,521 | ||||||||||||
Income (benefits) taxes | (2,788 | ) | 5,273 | — | 2,485 | ||||||||||||
(Loss) income before undistributed earnings of wholly owned subsidiaries | (3,408 | ) | 6,444 | — | 3,036 | ||||||||||||
Undistributed earnings (losses) of wholly-owned subsidiaries | 6,444 | — | (6,444 | ) | — | ||||||||||||
Net (loss) income | $ | 3,036 | $ | 6,444 | $ | (6,444 | ) | $ | 3,036 | ||||||||
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Six Months Ended June 30, 2005 | ||||||||||||||
Guarantors | Non-Guarantors | Consolidated | ||||||||||||
Net cash (used in) provided by operating activities | $ | (11,305 | ) | $ | 7,478 | $ | (3,827 | ) | ||||||
Investing activities: | ||||||||||||||
Capital expenditures | (2,045 | ) | (1,710 | ) | (3,755 | ) | ||||||||
Payments of acquisitions and investments | (250 | ) | — | (250 | ) | |||||||||
Proceeds from sale of plant and equipment | 2,765 | 224 | 2,989 | |||||||||||
Net cash provided by (used in) investing activities | 470 | (1,486 | ) | (1,016 | ) | |||||||||
Financing activities: | ||||||||||||||
Increase (decrease) in intercompany borrowings | 40 | (40 | ) | — | ||||||||||
Proceeds of long-term debt-maturities greater than 90 days | 64,448 | 1,293 | 65,741 | |||||||||||
Repayments of long-term debt-maturities greater than 90 days | (110,345 | ) | (1,129 | ) | (111,474 | ) | ||||||||
Net change in borrowings-maturities of 90 days or less | 70,000 | (163 | ) | 69,837 | ||||||||||
Increase in current portion of long-term obligations | (16,788 | ) | (1,469 | ) | (18,257 | ) | ||||||||
Payments of debt issuance costs | (71 | ) | — | (71 | ) | |||||||||
Proceeds from the exercise of stock options | 3,292 | — | 3,292 | |||||||||||
Net cash provided by (used in) financing activities | 10,576 | (1,508 | ) | 9,068 | ||||||||||
Effect of exchange rates on cash | — | 1,467 | 1,467 | |||||||||||
Net (decrease) increase in cash & cash equivalents | (259 | ) | 5,951 | 5,692 | ||||||||||
Cash and cash equivalents at the beginning of the year | 557 | 5,702 | 6,259 | |||||||||||
Cash and cash equivalents at the end of the period | $ | 298 | $ | 11,653 | $ | 11,951 | ||||||||
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Six months ended June 30, 2004 | ||||||||||||||
Guarantors | Non-Guarantors | Consolidated | ||||||||||||
Net cash (used in) provided by operating activities | $ | (6,541 | ) | $ | (12,115 | ) | $ | (18,656 | ) | |||||
Investing activities: | ||||||||||||||
Capital expenditures | (2,507 | ) | (1,087 | ) | (3,594 | ) | ||||||||
Payments of acquisitions and investments | (1,304 | ) | — | (1,304 | ) | |||||||||
Proceeds from sale of plant and equipment | 185 | — | 185 | |||||||||||
Net cash provided by (used in) | ||||||||||||||
investing activities | (3,626 | ) | (1,087 | ) | (4,713 | ) | ||||||||
Financing activities: | ||||||||||||||
Increase (decrease) in intercompany borrowings | (351 | ) | 351 | — | ||||||||||
Proceeds of long-term debt-maturities greater than 90 days | 108,500 | 13,222 | 121,722 | |||||||||||
Repayments of long-term debt-maturities greater than 90 days | (128,811 | ) | (3,877 | ) | (132,688 | ) | ||||||||
Net change in borrowings-maturities of 90 days or less | 26,000 | 84 | 26,084 | |||||||||||
Increase in current portion of long-term obligations | — | 651 | 651 | |||||||||||
Payments of debt issuance costs | (78 | ) | — | (78 | ) | |||||||||
Proceeds from the exercise of stock options | 1,345 | — | 1,345 | |||||||||||
Net cash provided by (used in) financing activities | 6,605 | 10,431 | 17,036 | |||||||||||
Effect of exchange rates on cash | — | 713 | 713 | |||||||||||
Net (decrease) increase in cash & cash equivalents | (3,562 | ) | (2,058 | ) | (5,620 | ) | ||||||||
Cash and cash equivalents at the beginning of the year | 3,750 | 5,818 | 9,568 | |||||||||||
Cash and cash equivalents at the end of the period | $ | 188 | $ | 3,760 | $ | 3,948 | ||||||||
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Table of Contents
Item 20. | Indemnification of Directors and Officers |
II-1
Table of Contents
II-2
Table of Contents
Delaware Corporate Guarantors |
II-3
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Delaware LLC Guarantors |
II-4
Table of Contents
Boone International, Inc. |
GBC International, Inc. |
II-5
Table of Contents
Item 21. | Exhibits and Financial Statements |
Exhibit Number | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation, Gemini Acquisition Sub, Inc. and General Binding Corporation (incorporated by reference to Annex A to the proxy statement/ prospectus — information statement included in ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
2 | .2 | Amendment to Agreement and Plan of Merger, dated as of August 4, 2005, by and among Fortune Brands, Inc., ACCO World Corporation, Gemini Acquisition Sub, Inc. and General Binding Corporation (incorporated by reference to Exhibit 2.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
3 | .1 | Restated Certificate of Incorporation of ACCO Brands Corporation (incorporated by reference to Exhibit 3.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001-08454)) | ||
3 | .2 | By-laws of ACCO Brands Corporation (incorporated by reference to Exhibit 3.3 to ACCO Brands Corporation’s Amendment to Current Report on Form 8-K/A dated September 21, 2005 (File No. 001-08454)) | ||
3 | .3 | Certificate of Incorporation of ACCO Brands International, Inc. | ||
3 | .4 | By-laws of ACCO Brands International, Inc. | ||
3 | .5 | Certificate of Formation of ACCO Brands USA LLC |
II-6
Table of Contents
Exhibit Number | Description | |||
3 | .6 | Limited Liability Company Agreement of ACCO Brands USA LLC | ||
3 | .7 | Certificate of Formation of ACCO Europe Finance Holdings, LLC | ||
3 | .8 | Limited Liability Company Agreement of ACCO Europe Finance Holdings, LLC | ||
3 | .9 | Certificate of Formation of ACCO Europe International Holdings, LLC | ||
3 | .10 | Limited Liability Company Agreement of ACCO Europe International Holdings, LLC | ||
3 | .11 | Certificate of Incorporation of ACCO International Holdings, Inc. | ||
3 | .12 | By-laws of ACCO International Holdings, Inc. | ||
3 | .13 | Restated Articles of Incorporation of Boone International, Inc. | ||
3 | .14 | By-laws of Boone International, Inc. | ||
3 | .15 | Certificate of Incorporation of Day-Timers, Inc. | ||
3 | .16 | By-laws of Day-Timers, Inc. | ||
3 | .17 | Articles of Incorporation of GBC International, Inc. | ||
3 | .18 | By-laws of GBC International, Inc. | ||
3 | .19 | Restated Certificate of Incorporation of General Binding Corporation | ||
3 | .20 | By-laws of General Binding Corporation | ||
3 | .21 | Certificate of Incorporation of Polyblend Corporation | ||
3 | .22 | By-laws of Polyblend Corporation | ||
3 | .23 | Certificate of Incorporation of Swingline Inc. | ||
3 | .24 | By-laws of Swingline Inc. | ||
3 | .25 | Certificate of Incorporation of VeloBind, Incorporated | ||
3 | .26 | By-laws of VeloBind, Incorporated | ||
4 | .1 | Indenture, dated as of August 5, 2005, between ACCO Finance I, Inc. and Wachovia Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
4 | .2 | Supplemental Indenture, dated as of August 17, 2005, among ACCO Brands Corporation, the Guarantors signatory thereto and Wachovia Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) | ||
4 | .3 | Registration Rights Agreement, dated as of August 5, 2005, among ACCO Finance I, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Harris Nesbitt Corp., ABN AMRO Incorporated, NatCity Investments, Inc. and Piper Jaffray & Co. (incorporated by reference to Exhibit 4.4 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
4 | .4 | Joinder Agreement, dated as of August 17, 2005, among ACCO Brands Corporation, the Guarantors signatory thereto and Citigroup Global Markets Inc. and Goldman, Sachs & Co., as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) | ||
5 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP | ||
5 | .2 | Opinion of Jones Vargas | ||
10 | .1 | Credit Agreement, dated as of August 17, 2005, by and among ACCO Brands Corporation, ACCO Brands Europe Ltd., Furlon Holding B.V. (to be renamed ACCO Nederland Holdings B.V.) and the lenders and issuers party hereto, Citicorp North America, Inc., as Administrative Agent, and ABN AMRO Bank, N.V., as Syndication Agent (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) |
II-7
Table of Contents
Exhibit Number | Description | |||
10 | .2 | Distribution Agreement, dated as of March 15, 2005, by and between Fortune Brands, Inc. and ACCO World Corporation (incorporated by reference to Annex B to the proxy statement/ prospectus — information statement included in ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .2a | Amendment to Distribution Agreement, dated as of August 4, 2005, by and between Fortune Brands, Inc. and ACCO World Corporation (incorporated by reference to Exhibit 2.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
10 | .3 | ACCO Brands Corporation 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005) | ||
10 | .4 | ACCO Brands Corporation 2005 Assumed Option and Restricted Stock Unit Plan, together with Sub-Plan A thereto (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
10 | .5 | Copy of resolutions of the Board of Directors of ACCO, adopted August 3, 2005, approving the conversion to ACCO stock options of certain stock options granted pursuant to the Fortune Brands, Inc. 1999 Long-Term Incentive Plan (the “Fortune 1999 LTIP”), the Fortune Brands, Inc. 2003 Long-Term Incentive Plan (the “Fortune 2003 LTIP”), the General Binding Corporation 1989 Stock Option Plan, as amended and restated (the “GBC 1989 Stock Option Plan”), the General Binding Corporation 2001 Stock Incentive Plan for Employees (the “GBC 2001 Stock Plan”) and the General Binding Corporation Non-Employee Directors 2001 Stock Option Plan (the “GBC 2001 Directors Plan”) and the conversion to ACCO restricted stock units of certain restricted stock units that did not vest in full upon consummation of the merger of Acquisition Sub and GBC (incorporated by reference to Exhibit 10.4 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .6 | Form of Nonqualified Stock Option Award Notice and Terms and Conditions for awards under the Fortune 2003 LTIP (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .7 | Form of Incentive Stock Option Award Notice and Terms and Conditions for awards under the Fortune 2003 LTIP (incorporated by reference to Exhibit 10.9 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .8 | Forms of Nonqualified Stock Option Award Notices and Terms and Conditions for awards under the Fortune 1999 LTIP (incorporated by reference to Exhibit 10.8 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .9 | Forms of Incentive Stock Option Award Notices and Terms and Conditions for awards under the Fortune 1999 LTIP (incorporated by reference to Exhibit 10.9 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .10 | Form of Stock Option Agreement for options granted on February 23, 2005 under the GBC 2001 Stock Plan (incorporated by reference to Exhibit 10.3 to General Binding Corporation’s Current Report on Form 8-K dated March 15, 2005 and filed March 21, 2005 (File No. 000-02604)) | ||
10 | .11 | Form of Stock Option Agreement for options granted under the GBC 2001 Stock Option Plan for Employees (incorporated by reference to Exhibit 10.11 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) |
II-8
Table of Contents
Exhibit Number | Description | |||
10 | .12 | Form of Stock Option Agreement for options granted under the GBC 1989 Stock Option Plan (incorporated by reference to Exhibit 10.12 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .13 | Forms of Stock Option Agreements for options granted under the GBC 2001 Non-Employee Directors Stock Option Plan (incorporated by reference to Exhibit 10.13 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .14 | Form of 2005 Restricted Stock Unit Grant Notice for restricted stock units awarded on February 23, 2005 under the GBC 2001 Stock Plan (incorporated by reference to Exhibit 10.5 to General Binding Corporation’s Current Report on Form 8-K dated March 15, 2005 and filed March 21, 2005 (File No. 000-02604)) | ||
10 | .15 | Form of 2004 Restricted Stock Unit Grant Notice for restricted stock units awarded on February 26, 2004 under the GBC 2001 Stock Incentive Plan for Employees, as amended and restated (incorporated by reference to Exhibit 10.15 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .16 | ACCO Brands Corporation Annual Executive Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005) | ||
10 | .17 | Employee Matters Agreement, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation and General Binding Corporation (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .18 | Tax Allocation Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005) | ||
10 | .19 | Tax Allocation Agreement, dated as of August 16, 2005, between General Binding Corporation and Lane Industries, Inc. (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001- 08454)) | ||
10 | .20 | Transition Services Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. | ||
10 | .21 | Executive Severance/ Change in Control Agreement, dated as of August 26, 2000, by and between Steven Rubin and GBC (incorporated by reference to Exhibit 10.15 to General Binding Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-08454)) | ||
10 | .22 | Executive Severance/ Change in Control Agreement, dated as of August 26, 2000, by and between John E. Turner and GBC (incorporated by reference to Exhibit 10.18 to General Binding Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-08454)) | ||
10 | .23 | Letter Agreement, dated as of September 5, 2003, between ACCO World Corporation and Neal Fenwick, Executive Vice President, Finance and Administration of ACCO World Corporation. (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .24 | Letter Agreement, dated November 8, 2000, as revised in January 2001, between ACCO World Corporation and Neal Fenwick, Executive Vice President, Finance and Administration of ACCO World Corporation. (incorporated by reference to Exhibit 10.7 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) |
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Exhibit Number | Description | |||
10 | .25 | Letter Agreement, dated September 8, 1999, between ACCO World Corporation and Neal Fenwick, Executive Vice President, Finance and Administration of ACCO World Corporation (incorporated by reference to Exhibit 10.8 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .26 | ACCO Executive Severance Plan and Summary Plan Description, as Amended and Restated effective October 1, 2002 (incorporated by reference to Exhibit 10.9 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
12 | Statement re: Computation of Ratio to Earnings to Fixed Charges | |||
23 | .1 | Consent of PricewaterhouseCoopers LLP | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP | ||
24 | Powers of attorney (included on signature pages to the registration statement) | |||
25 | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wachovia Bank, National Association. | |||
99 | .1 | Form of Letter of Transmittal | ||
99 | .2 | Form of Notice of Guaranteed Delivery | ||
99 | .3 | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | ||
99 | .4 | Form of Letter to Clients |
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Year Ended December 27, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Balance at beginning of year | $ | 6.5 | $ | 7.3 | $ | 8.7 | ||||||
Additions charged to expense | — | 2.2 | 2.6 | |||||||||
Deductions — write offs | (0.7 | ) | (3.7 | ) | (4.1 | ) | ||||||
Foreign exchange changes | 0.3 | 0.7 | 0.1 | |||||||||
Balance at end of year | 6.1 | 6.5 | 7.3 | |||||||||
Changes in the allowances for sales returns were as follows (in millions of dollars): |
Year Ended December 27, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Balance at beginning of year | $ | 11.5 | $ | 15.6 | $ | 14.5 | ||||||
Additions charged to expense | 29.8 | 26.4 | 27.4 | |||||||||
Deductions — returns | (30.9 | ) | (30.6 | ) | (26.3 | ) | ||||||
Foreign exchange changes | 0.2 | 0.1 | (0.1 | ) | ||||||||
Other | — | — | 0.1 | |||||||||
Balance at end of year | 10.6 | 11.5 | 15.6 | |||||||||
Year Ended December 27, | ||||||||||||
2004 | 2003 | 2002 | ||||||||||
Balance at beginning of year | $ | 1.3 | $ | 1.5 | $ | 1.7 | ||||||
Additions charged to expense | 9.1 | 9.4 | 9.3 | |||||||||
Deductions — discounts taken | (8.6 | ) | (9.6 | ) | (9.5 | ) | ||||||
Balance at end of year | 1.8 | 1.3 | 1.5 | |||||||||
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Item 22. | Undertakings |
(a) The undersigned registrant hereby undertakes: |
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrants of expenses incurred or paid by a director, officer or controlling person of the registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrants will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. |
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ACCO BRANDS CORPORATION |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: Chairman and Chief Executive Officer |
Name | Title | Date | ||||
/s/ David D. Campbell | Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | October 3, 2005 | ||||
/s/ Thomas P. O’Neill, Jr. | Vice President, Finance and Accounting (Principal Accounting Officer) | October 3, 2005 | ||||
/s/ George V. Bayly | Director | September 26, 2005 | ||||
/s/ Patricia O. Ewers | Director | September 28, 2005 | ||||
/s/ G. Thomas Hargrove | Director | September 28, 2005 | ||||
/s/ Robert J. Keller | Director | September 28, 2005 |
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Name | Title | Date | ||||
/s/ Pierre E. Leroy | Director | September 28, 2005 | ||||
/s/ Gordon R. Lohman | Director | September 28, 2005 | ||||
/s/ Forrest M. Schneider | Director | September 28, 2005 | ||||
/s/ Norman H. Wesley | Director | September 28, 2005 |
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ACCO BRANDS INTERNATIONAL, INC. |
By: | /s/ David D. Campbell |
Name: David D. Campbell |
Title: | President |
Name | Title | Date | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Secretary and Director | October 3, 2005 |
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Table of Contents
ACCO BRANDS USA LLC |
By: | /s/ David D. Campbell |
Name: David D. Campbell |
Title: | Chairman |
Name | Title | Date | ||||
/s/ David D. Campbell | Chairman and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Dennis L. Chandler | President and Director | October 3, 2005 | ||||
/s/ Steven Rubin | Vice President, Secretary and Director | October 3, 2005 |
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ACCO EUROPE FINANCE HOLDINGS, LLC |
By: | /s/ David D. Campbell |
Name: David D. Campbell |
Title: | President |
Name | Title | Date | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Secretary and Director | October 3, 2005 |
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Table of Contents
ACCO EUROPE INTERNATIONAL HOLDINGS, LLC |
By: | /s/ David D. Campbell |
Name: David D. Campbell |
Title: | President |
Name | Title | Date | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Secretary and Director | October 3, 2005 |
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ACCO INTERNATIONAL HOLDINGS, INC. |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: President |
Name | Title | Dates | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Secretary and Director | October 3, 2005 |
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Table of Contents
BOONE INTERNATIONAL, INC. |
By: | /s/ David K. Clark |
Name: David K. Clark | |
Title: Chief Executive Officer |
Name | Title | Date | ||||
/s/ David K. Clark | Chief Executive Officer and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President — Finance and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Dennis L. Chandler | Director | October 3, 2005 |
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DAY-TIMERS, INC. |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: Chairman and Chief Executive Officer |
Name | Title | Date | ||||
/s/ David D. Campbell | Chairman, Chief Executive Officer and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President — Finance (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Joseph T. Winters | President and Director | September 23, 2005 | ||||
/s/ Michael J. Vogel | Director | September 23, 2005 | ||||
/s/ Steven Rubin | Secretary | October 3, 2005 |
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Table of Contents
GBC INTERNATIONAL, INC. |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: President |
Name | Title | Date | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President, Treasurer and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Vice President and Secretary | October 3, 2005 |
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GENERAL BINDING CORPORATION |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: Chief Executive Officer |
Name | Title | Date | ||||
/s/ David D. Campbell | Chief Executive Officer and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Vice President, Secretary and Director | October 3, 2005 |
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POLYBLEND CORPORATION |
By: | /s/ Neal V. Fenwick |
Name: Neal V. Fenwick | |
Title: President |
Name | Title | Date | ||||
/s/ Neal V. Fenwick | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Thomas P. O’Neill | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Tony Giuliano | Treasurer | October 3, 2005 | ||||
/s/ Steven Rubin | Secretary and Director | October 3, 2005 |
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Table of Contents
SWINGLINE INC. |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: President |
Name | Title | Date | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Thomas P. O’Neill | Vice President and Director | October 3, 2005 | ||||
/s/ Steven Rubin | Secretary and Director | October 3, 2005 |
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Table of Contents
VELOBIND, INCORPORATED |
By: | /s/ David D. Campbell |
Name: David D. Campbell | |
Title: President |
Name | Title | Date | ||||
/s/ David D. Campbell | President and Director (Principal Executive Officer) | October 3, 2005 | ||||
/s/ Neal V. Fenwick | Vice President, Chief Financial Officer and Director (Principal Financial and Accounting Officer) | October 3, 2005 | ||||
/s/ Steven Rubin | Vice President and Secretary | October 3, 2005 |
II-26
Table of Contents
Exhibit Number | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation, Gemini Acquisition Sub, Inc. and General Binding Corporation (incorporated by reference to Annex A to the proxy statement/ prospectus — information statement included in ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
2 | .2 | Amendment to Agreement and Plan of Merger, dated as of August 4, 2005, by and among Fortune Brands, Inc., ACCO World Corporation, Gemini Acquisition Sub, Inc. and General Binding Corporation (incorporated by reference to Exhibit 2.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
3 | .1 | Restated Certificate of Incorporation of ACCO Brands Corporation (incorporated by reference to Exhibit 3.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001-08454)) | ||
3 | .2 | By-laws of ACCO Brands Corporation (incorporated by reference to Exhibit 3.3 to ACCO Brands Corporation’s Amendment to Current Report on Form 8-K/A dated September 21, 2005 (File No. 001-08454)) | ||
3 | .3 | Certificate of Incorporation of ACCO Brands International, Inc. | ||
3 | .4 | By-laws of ACCO Brands International, Inc. | ||
3 | .5 | Certificate of Formation of ACCO Brands USA LLC | ||
3 | .6 | Limited Liability Company Agreement of ACCO Brands USA LLC | ||
3 | .7 | Certificate of Formation of ACCO Europe Finance Holdings, LLC | ||
3 | .8 | Limited Liability Company Agreement of ACCO Europe Finance Holdings, LLC | ||
3 | .9 | Certificate of Formation of ACCO Europe International Holdings, LLC | ||
3 | .10 | Limited Liability Company Agreement of ACCO Europe International Holdings, LLC | ||
3 | .11 | Certificate of Incorporation of ACCO International Holdings, Inc. | ||
3 | .12 | By-laws of ACCO International Holdings, Inc. | ||
3 | .13 | Restated Articles of Incorporation of Boone International, Inc. | ||
3 | .14 | By-laws of Boone International, Inc. | ||
3 | .15 | Certificate of Incorporation of Day-Timers, Inc. | ||
3 | .16 | By-laws of Day-Timers, Inc. | ||
3 | .17 | Articles of Incorporation of GBC International, Inc. | ||
3 | .18 | By-laws of GBC International, Inc. | ||
3 | .19 | Restated Certificate of Incorporation of General Binding Corporation | ||
3 | .20 | By-laws of General Binding Corporation | ||
3 | .21 | Certificate of Incorporation of Polyblend Corporation | ||
3 | .22 | By-laws of Polyblend Corporation | ||
3 | .23 | Certificate of Incorporation of Swingline Inc. | ||
3 | .24 | By-laws of Swingline Inc. | ||
3 | .25 | Certificate of Incorporation of VeloBind, Incorporated | ||
3 | .26 | By-laws of VeloBind, Incorporated | ||
4 | .1 | Indenture, dated as of August 5, 2005, between ACCO Finance I, Inc. and Wachovia Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) |
Table of Contents
Exhibit Number | Description | |||
4 | .2 | Supplemental Indenture, dated as of August 17, 2005, among ACCO Brands Corporation, the Guarantors signatory thereto and Wachovia Bank, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) | ||
4 | .3 | Registration Rights Agreement, dated as of August 5, 2005, among ACCO Finance I, Inc., Citigroup Global Markets Inc., Goldman, Sachs & Co., Harris Nesbitt Corp., ABN AMRO Incorporated, NatCity Investments, Inc. and Piper Jaffray & Co. (incorporated by reference to Exhibit 4.4 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
4 | .4 | Joinder Agreement, dated as of August 17, 2005, among ACCO Brands Corporation, the Guarantors signatory thereto and Citigroup Global Markets Inc. and Goldman, Sachs & Co., as representatives of the Initial Purchasers (incorporated by reference to Exhibit 4.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) | ||
5 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP | ||
5 | .2 | Opinion of Jones Vargas | ||
10 | .1 | Credit Agreement, dated as of August 17, 2005, by and among ACCO Brands Corporation, ACCO Brands Europe Ltd., Furlon Holding B.V. (to be renamed ACCO Nederland Holdings B.V.) and the lenders and issuers party hereto, Citicorp North America, Inc., as Administrative Agent, and ABN AMRO Bank, N.V., as Syndication Agent (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 17, 2005 and filed August 23, 2005 (File No. 001-08454)) | ||
10 | .2 | Distribution Agreement, dated as of March 15, 2005, by and between Fortune Brands, Inc. and ACCO World Corporation (incorporated by reference to Annex B to the proxy statement/ prospectus — information statement included in ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .2a | Amendment to Distribution Agreement, dated as of August 4, 2005, by and between Fortune Brands, Inc. and ACCO World Corporation (incorporated by reference to Exhibit 2.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
10 | .3 | ACCO Brands Corporation 2005 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005) | ||
10 | .4 | ACCO Brands Corporation 2005 Assumed Option and Restricted Stock Unit Plan, together with Sub-Plan A thereto (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005 (File No. 001-08454)) | ||
10 | .5 | Copy of resolutions of the Board of Directors of ACCO, adopted August 3, 2005, approving the conversion to ACCO stock options of certain stock options granted pursuant to the Fortune Brands, Inc. 1999 Long-Term Incentive Plan (the “Fortune 1999 LTIP”), the Fortune Brands, Inc. 2003 Long-Term Incentive Plan (the “Fortune 2003 LTIP”), the General Binding Corporation 1989 Stock Option Plan, as amended and restated (the “GBC 1989 Stock Option Plan”), the General Binding Corporation 2001 Stock Incentive Plan for Employees (the “GBC 2001 Stock Plan”) and the General Binding Corporation Non-Employee Directors 2001 Stock Option Plan (the “GBC 2001 Directors Plan”) and the conversion to ACCO restricted stock units of certain restricted stock units that did not vest in full upon consummation of the merger of Acquisition Sub and GBC (incorporated by reference to Exhibit 10.4 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .6 | Form of Nonqualified Stock Option Award Notice and Terms and Conditions for awards under the Fortune 2003 LTIP (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) |
Table of Contents
Exhibit Number | Description | |||
10 | .7 | Form of Incentive Stock Option Award Notice and Terms and Conditions for awards under the Fortune 2003 LTIP (incorporated by reference to Exhibit 10.9 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .8 | Forms of Nonqualified Stock Option Award Notices and Terms and Conditions for awards under the Fortune 1999 LTIP (incorporated by reference to Exhibit 10.8 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .9 | Forms of Incentive Stock Option Award Notices and Terms and Conditions for awards under the Fortune 1999 LTIP (incorporated by reference to Exhibit 10.9 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .10 | Form of Stock Option Agreement for options granted on February 23, 2005 under the GBC 2001 Stock Plan (incorporated by reference to Exhibit 10.3 to General Binding Corporation’s Current Report on Form 8-K dated March 15, 2005 and filed March 21, 2005 (File No. 000-02604)) | ||
10 | .11 | Form of Stock Option Agreement for options granted under the GBC 2001 Stock Option Plan for Employees (incorporated by reference to Exhibit 10.11 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .12 | Form of Stock Option Agreement for options granted under the GBC 1989 Stock Option Plan (incorporated by reference to Exhibit 10.12 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .13 | Forms of Stock Option Agreements for options granted under the GBC 2001 Non-Employee Directors Stock Option Plan (incorporated by reference to Exhibit 10.13 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .14 | Form of 2005 Restricted Stock Unit Grant Notice for restricted stock units awarded on February 23, 2005 under the GBC 2001 Stock Plan (incorporated by reference to Exhibit 10.5 to General Binding Corporation’s Current Report on Form 8-K dated March 21, 2005 (File No. 000-02604)) | ||
10 | .15 | Form of 2004 Restricted Stock Unit Grant Notice for restricted stock units awarded on February 26, 2004 under the GBC 2001 Stock Incentive Plan for Employees, as amended and restated (incorporated by reference to Exhibit 10.15 to ACCO Brands Corporation’s Quarterly Report on Form 10-Q for the quarterly period ended June 25, 2005 (File No. 001-08454)) | ||
10 | .16 | ACCO Brands Corporation Annual Executive Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 3, 2005 and filed August 8, 2005) | ||
10 | .17 | Employee Matters Agreement, dated as of March 15, 2005, by and among Fortune Brands, Inc., ACCO World Corporation and General Binding Corporation (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .18 | Tax Allocation Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. (incorporated by reference to Exhibit 10.1 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005) | ||
10 | .19 | Tax Allocation Agreement, dated as of August 16, 2005, between General Binding Corporation and Lane Industries, Inc. (incorporated by reference to Exhibit 10.2 to ACCO Brands Corporation’s Current Report on Form 8-K dated August 12, 2005 and filed August 17, 2005 (File No. 001- 08454)) | ||
10 | .20 | Transition Services Agreement, dated as of August 16, 2005, between ACCO World Corporation and Fortune Brands, Inc. |
Table of Contents
Exhibit Number | Description | |||
10 | .21 | Executive Severance/ Change in Control Agreement, dated as of August 26, 2000, by and between Steven Rubin and GBC (incorporated by reference to Exhibit 10.15 to General Binding Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-08454)) | ||
10 | .22 | Executive Severance/ Change in Control Agreement, dated as of August 26, 2000, by and between John E. Turner and GBC (incorporated by reference to Exhibit 10.18 to General Binding Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 (File No. 001-08454)) | ||
10 | .23 | Letter Agreement, dated as of September 5, 2003, between ACCO World Corporation and Neal Fenwick, Executive Vice President, Finance and Administration of ACCO World Corporation. (incorporated by reference to Exhibit 10.6 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .24 | Letter Agreement, dated November 8, 2000, as revised in January 2001, between ACCO World Corporation and Neal Fenwick, Executive Vice President, Finance and Administration of ACCO World Corporation. (incorporated by reference to Exhibit 10.7 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .25 | Letter Agreement, dated September 8, 1999, between ACCO World Corporation and Neal Fenwick, Executive Vice President, Finance and Administration of ACCO World Corporation (incorporated by reference to Exhibit 10.8 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
10 | .26 | ACCO Executive Severance Plan and Summary Plan Description, as Amended and Restated effective October 1, 2002 (incorporated by reference to Exhibit 10.9 to ACCO Brands Corporation’s Registration Statement on Form S-4 (File No. 333-124946)) | ||
12 | Statement re: Computation of Ratio to Earnings to Fixed Charges | |||
23 | .1 | Consent of PricewaterhouseCoopers LLP | ||
23 | .2 | Consent of PricewaterhouseCoopers LLP | ||
23 | .3 | Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1) | ||
23 | .4 | Consent of Jones Vargas (included in Exhibit 5.2) | ||
24 | Powers of attorney (included on signature pages to the registration statement) | |||
25 | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wachovia Bank, National Association. | |||
99 | .1 | Form of Letter of Transmittal | ||
99 | .2 | Form of Notice of Guaranteed Delivery | ||
99 | .3 | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | ||
99 | .4 | Form of Letter to Clients |