Exhibit 99.1
[ACCO LOGO]
News Release
- --------------------------------------------------------------------------------
ACCO BRANDS CORPORATION REPORTS THIRD QUARTER 2005 RESULTS
o Net sales increase 39%, including former GBC businesses
o Cash position strong - $62 million cash available at end of quarter
o Merger integration "on track," says CEO Campbell
LINCOLNSHIRE, ILLINOIS, November 9, 2005 - ACCO Brands Corporation (NYSE: ABD),
a world leader in branded office products, reported its third quarter 2005
results today. The report is the first quarterly financial results disclosure
since its formation on August 17, 2005, following the merger of the former ACCO
World office products business unit of Fortune Brands, Inc., with General
Binding Corporation ("GBC").
ACCO Brands reported net sales of $421.7 million for the third quarter, compared
to $303.8 million in the prior year, an increase of 39%. The acquisition of GBC
accounted for 33%, or $101.4 million of the growth, an additional five days of
sales in ACCO North America due to a change in reporting to calendar month-end
added 3%, and the favorable impact of foreign currency translation accounted for
1%.
Operating income in the quarter, before restructuring and restructuring-related
charges, was flat, at $38.0 million. However, this amount included $2.4 million
of higher corporate costs related to becoming an independent company and $5.4
million of operating income related to GBC's business.
Net income in the third quarter decreased to $3.6 million, or $0.08 per share,
compared to $38.5 million, or $1.10 per share, in the prior year quarter. The
company partially completed a corporate reorganization to facilitate the merger
of its international operations, resulting in an additional income tax charge of
$11.4 million. In addition, net income was impacted by transaction-related
expenses and restructuring and restructuring-related costs, which, for the
quarter, totaled $5.0 million, after tax.
"We've made substantial progress in bringing the businesses of ACCO and GBC
together," said David D. Campbell, Chairman and Chief Executive Officer, ACCO
Brands Corporation. "The integration is on track, and we've seen no surprises.
We're confident that we will meet our annual target of $40 million in cost
savings over the next three years, a portion of which we plan to reinvest in the
business.
"Because almost 85% of our sales are from brands with number-one or number-two
market positions," Campbell continued, "we believe we are well-positioned to
capitalize on the future growth opportunities that result from combining our
strong portfolio of brands and product lines."
Highlights for the quarter include:
o Achieving a $62 million net cash available position at quarter-end,
accumulated after paying our former parent, Fortune Brands, the ACCO
cash as of March 15th as a dividend, transaction fees and investing in
infrastructure and activities that support the future growth of the
newly combined company.
o Successfully merging the ACCO World and GBC businesses into a new,
NYSE-listed company, ACCO Brands Corporation, including the
distribution of ACCO Brands shares to Fortune Brands shareholders and
former GBC shareholders. ACCO Brands Corporation is the only publicly
traded "pure play" office products company.
o Exploiting a solid back-to-school season with a substantial number of
new and appealing products in the Office Products and Computer Products
sectors.
o Introducing several innovative products, including the GBC ProClick
Pronto line of automated binding systems for high-production binding
environments; the Swingline Optima Grip Compact Stapler, designed to
maximize handheld stapling performance; Quartet Street Sign Magnetic
Dry-Erase Boards, for lockers, bedrooms, dorms and doorways; and the
expansion of the award-winning Kensington line of iPod accessories.
o Relocating approximately 330 ACCO Brands employees into consolidated
office facilities in Lincolnshire, Illinois, and Aylesbury, United
Kingdom, to position our employees to support growth and facilitate the
integration of the former ACCO World and GBC businesses, and closing a
GBC office facility in Skokie, Illinois.
o Finalizing plans to consolidate the company's office products
businesses on both sides of the Atlantic, improve its supply chain
processes, and take full advantage of the economies of scale the merger
will afford it.
o Securing $950 million in debt financing at attractive interest rates,
as well as an additional $150 million unused line of credit.
"Strategically, we've made great strides in the quarter as we integrate the ACCO
and GBC businesses," said Neal V. Fenwick, Executive Vice President and Chief
Financial Officer. "When the ACCO and former GBC businesses are combined,
pro-forma sales are up 5% for the quarter and 4% year to date. While the ACCO
office products business in isolation is down overall for the full year, the new
ACCO Brands office products sector must be looked at on a pro-forma basis in
order to be fully understood. On a pro-forma basis, the office products sector
is up 3% for the quarter and 2% for the year.
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"We're also pleased that we were able to end the quarter with a substantial cash
position, notwithstanding the significant amount of merger-related costs
incurred in the quarter," Fenwick concluded.
ACCO Brands reported net sales of $973.7 million for the first nine months of
2005, compared to $843.4 million in the prior-year nine months, an increase of
15%. The acquisition of GBC was only included for six weeks and accounted for
12% of the increase, the change in accounting calendar accounted for 1%, and the
favorable impact of foreign currency translation accounted for 2%. On a
pro-forma basis, adjusted for the new accounting period and foreign currency
translation, underlying year-to-date sales are up 2%. Operating income,
excluding charges and $5.4 million income from GBC, was $83.3 million, compared
to $83.2 million last year. However, it should be noted that the company
invested $2.7 million in higher corporate costs related to becoming an
independent company during the year. Net income in the current-year nine months
was $30.2 million, compared to $40.6 million in the prior-year nine months. Net
income includes transaction-related expenses and restructuring costs of $7.1
million and $27.3 million in the current and prior-year periods, respectively.
Third-quarter and nine-month financial results include statements of operations
for the former ACCO World business for the full quarter and nine-month periods,
and financial results for the former GBC business from August 17, 2005, through
the end of the quarter and nine-month period in 2005. Prior-period results are
therefore not directly comparable.
RESULTS OF BUSINESS SEGMENTS
The company reports its results in four newly defined global segments:
o Office Products Group
o Computer Products Group
o Commercial-Industrial Print Finishing Group
o Other Commercial
Office Products Group
The Office Products Group reported net sales of $294.6 million in the third
quarter, compared to net sales of $238.7 million, an increase of 23%. The
acquisition of GBC accounted for $52 million, or 22% of the increase, the change
in the North American calendar added 3%, and foreign currency added 1%. Results
in Office Products were driven by strong back-to-school volumes in the U.S. and
sales improvements in Australia, Continental Europe, and Mexico. These broad
gains were offset by the effects of competitive pricing, which resulted in the
loss of a customer contract in a product category, as well as the loss of some
ACCO World business to the former GBC. The company also recorded sales declines
in the United Kingdom.
Office Products operating income, excluding charges and $1.6 million of
operating income related to GBC, declined 22% to $21.5 million, compared to
$27.4 million in the
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prior-year quarter. Higher sales volumes were offset by unfavorable pricing
established prior to the merger from price competition including certain
categories where the former ACCO World and GBC businesses overlapped, together
with higher freight and distribution costs. This business is seeing further cost
increases, and expects to recover margins with future actions.
The Office Products Group includes four consumer categories: (1) workspace tools
(staplers, punches, and shredders), (2) document communications solutions
(lamination and binding equipment and supplies), (3) visual communications
products (presentation boards, markers, overhead projectors and related
products), and (4) storage and organization products (binders, storage boxes,
labels, folders, clips, fasteners, and other office essentials).
Computer Products Group
The Computer Products Group reported net sales of $57.9 million, an increase of
25%, compared to $46.2 million in the prior year quarter. The change in the
North American reporting calendar added 4%. The strong sales growth was driven
by new product launches, favorable industry dynamics, share gains in certain
product categories, and favorable back-to-school volumes. Computer Products
operating income increased 15%, to $11.4 million, compared to $9.9 million in
the prior-year quarter. (Note: This segment was unaffected by the GBC merger.)
The Computer Products Group includes the company's security locks and power
adapters for laptop computers; input devices, such as wireless mice and
keyboards; computer cases; other computer accessories; and accessories for Apple
iPod products. These devices are sold principally under the Kensington brand
name.
Commercial-Industrial Print Finishing Group
The Commercial-Industrial Print Finishing Group reported net sales of $24.9
million and operating income of $2.0 million for the third quarter. These
results represent net sales and operating income generated by this former GBC
unit between August 17, 2005 and September 30, 2005. Prior-period results, being
pre-merger, are not reported.
The Commercial-Industrial Print Finishing Group manufactures and markets
specialized laminating films for book printing, packaging and digital print
lamination, as well as high-speed laminating and binding equipment, sold under
the GBC brand.
Other Commercial
The Other Commercial segment reported net sales of $44.3 million in the third
quarter, compared to $18.9 million in the prior year, an increase of 134%. The
acquisition of GBC accounted for 128% of the growth, 6% was attributable to the
change in reporting calendar, and the favorable impact of foreign currency
translation accounted for 1%.
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Operating income for this segment was $6.5 million, including $3.1 million
related to GBC, compared to $2.9 million in the prior-year quarter. Excluding
the impact of GBC, operating income increased 17%.
The Other Commercial segment includes the Day-Timers time management unit, which
markets personal organizers and time management planners, primarily direct to
consumers, as well as the GBC Document Finishing solutions business,
incorporating the direct sales of binding and laminating equipment and supplies
to high-volume users.
BUSINESS OUTLOOK
Long-term, the company is influenced by macroeconomic growth factors which
currently enable the company to grow revenues in the low- to mid-single-digits,
operating income in the mid- to high-single-digits and diluted earnings per
share in the low-double-digits. As a result of expected negative synergies in
2005 and 2006 due to the spin-out of ACCO World from Fortune Brands and the
merger with GBC and subsequent integration, management expects operating income
and earnings growth in 2005 and 2006 to be lower.
THIRD-QUARTER RESULTS CONFERENCE CALL
At 8:30 a.m. Eastern Time today, ACCO Brands Corporation will host a conference
call to discuss the company's third-quarter results. The call will be broadcast
live via webcast. The webcast can be accessed through the Investor Relations
section of www.accobrands.com. The webcast will be in listen-only mode and will
be available for replay for one month following the event.
ABOUT ACCO BRANDS CORPORATION
ACCO Brands Corporation is a world leader in branded office products, with
annual revenues of nearly $2 billion. Its industry-leading brands include
Day-Timer, Swingline, Kensington, Quartet, GBC, Rexel, and Wilson Jones, among
others. Under the GBC brand, the company is also a leader in the professional
print finishing market.
FORWARD-LOOKING STATEMENTS
This press release contains statements which may constitute "forward-looking"
statements as that term is defined in the Private Securities Litigation Reform
Act of 1995.
These forward-looking statements are subject to certain risks and uncertainties,
are made as of the date hereof and the company assumes no obligation to update
them. ACCO Brands' ability to predict results or the actual effect of future
plans or strategies is inherently uncertain and actual results may differ from
those predicted depending on a variety of factors, including but not limited to
fluctuations in cost and availability of raw materials; competition within the
markets in which the company operates; the effects of both general and
extraordinary economic, political and social conditions; the dependence of the
Company on certain suppliers of manufactured products; the effect of
consolidation in the office products industry; the risk that businesses that
have been
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combined into the Company as a result of the merger with General
Binding Corporation will not be integrated successfully; the risk that targeted
cost savings and synergies from the aforesaid merger and other previous business
combinations may not be fully realized or take longer to realize than expected;
disruption from business combinations making it more difficult to maintain
relationships with the Company's customers, employees or suppliers; foreign
exchange rate fluctuations; the development, introduction and acceptance of new
products; the degree to which higher raw material costs, and freight and
distribution costs, can be passed on to customers through selling price
increases and the effect on sales volumes as a result thereof; increases in
health care, pension and other employee welfare costs; as well as other risks
and uncertainties detailed from time to time in the Company's SEC filings.
NON-GAAP FINANCIAL MEASURES
Operating Income is a measure derived in accordance with GAAP. Operating income
before charges (transaction-related expenses, restructuring,
restructuring-related non-recurring costs and infrastructure investments) is a
measure not derived in accordance with GAAP. Management uses this measure to
determine the returns generated by its operating segments and to evaluate and
identify cost-reduction initiatives. Management believes this measure provides
investors with helpful supplemental information regarding the underlying
performance of the company from year to year. This measure may be inconsistent
with measures presented by other companies.
FOR FURTHER INFORMATION:
Rich Nelson
Media Relations
(847) 484-3030
Jennifer Rice
Investor Relations
(847) 484-3020
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ACCO BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in millions, except per-share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- --------------------------
2005 (1) 2004 2005 (1) 2004
------------ ----------- ----------- -- --------
Net sales............................................. $ 421.7 $ 303.8 $ 973.7 $ 843.4
----------- ----------- ----------- -----------
Cost of products sold (2)............................. 300.0 208.4 689.7 595.5
Advertising, selling, general and
administrative expenses (2)........................... 88.5 59.0 202.0 182.7
Amortization of intangibles........................... 1.4 0.3 2.4 0.9
Restructuring charges................................. 0.3 - 0.3 19.4
----------- ----------- ----------- -----------
Operating Income................................... 31.5 36.1 79.3 44.9
Interest expense, including allocation from parent.... 7.9 2.1 12.0 6.0
Other expense, net.................................... (1.1) (0.5) 0.6 (4.0)
----------- ----------- ----------- -----------
Income before income taxes and cumulative
effect of change in accounting principle........... 24.7 34.5 66.7 42.9
Income taxes.......................................... 21.1 (4.0) 38.1 2.3
----------- ----------- ----------- -----------
Net income before change in accounting principle .. 3.6 38.5 28.6 40.6
Cumulative effect of change in accounting principle,
net of tax............................................ - - 1.6 -
----------- ----------- ----------- -----------
Net income................................ $ 3.6 $ 38.5 $ 30.2 $ 40.6
=========== =========== =========== ===========
Earnings per share:
Basic.............................................. $0.08 $ 1.10 $0.80 $1.16
Diluted............................................ $0.08 $ 1.08 $0.79 $1.15
Weighted average shares:
Basic.............................................. 43,416,000 34,969,000 37,816,000 34,969,000
Diluted............................................ 44,364,000 35,508,000 38,491,000 35,508,000
Actual shares at end of period 52,351,000 34,969,000 52,351,000 34,969,000
Fully diluted shares at end of period 53,726,000 35,509,000 53,726,000 35,509,000
<FN>
(1) The results of General Binding Corporation are included in the
Company's results from the acquisition date of August 17, 2005.
(2) Freight and distribution costs have been reclassified from Advertising,
selling, general and administrative expenses into Cost of products
sold.
</FN>
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- --------------------------
2005 (1) 2004 2005 (1) 2004
------------ ----------- ----------- ----------
Reconciliation of Non-GAAP measures:
Operating Income...................................... $ 31.5 $ 36.1 $ 79.3 $ 44.9
Plus: Restructuring charges...................... 0.3 - 0.3 19.4
Merger and integration related............. 7.7 - 8.6 -
Restructuring related in COS............... (1.8) (0.1) (1.8) 8.7
Restructuring related in SG&A.............. 0.3 1.6 2.3 10.2
------ ------ ------- -------
Operating income before restructuring and
restructuring-related charges......................... 38.0 37.6 88.7 83.2
Adjustments:
GBC income........................................ (5.4) - (5.4) -
------ ------ ------- -------
Operating income before restructuring and
restructuring-related charges, and GBC income......... $ 32.6 $ 37.6 $ 83.3 $ 83.2
====== ====== ======= =======
Net income............................ $ 3.6 $ 38.5 $ 30.2 $ 40.6
Plus: Charges, after tax...................... 5.0 (3.9) 7.1 27.3
------ ------ ------- -------
Adjusted net income................................... $ 8.6 $ 34.6 $ 37.3 $ 67.9
====== ====== ======= =======
(1) The results of General Binding Corporation are included in the
Company's results from the acquisition date of August 17, 2005.
NON-GAAP FINANCIAL MEASURES: Operating Income is a measure derived in accordance
with GAAP. Operating income before charges (including transaction-related
expenses, restructuring, and restructuring-related costs) and adjusted net
income are measures not derived in accordance with GAAP. Management uses these
measures to determine the returns generated by its operating segments and to
evaluate and identify cost-reduction initiatives. Management believes these
measures provide investors with helpful supplemental information regarding the
underlying performance of the company from year to year. These measures may be
inconsistent with measures presented by other companies.
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ACCO BRANDS CORPORATION
BUSINESS SEGMENT RESULTS (1)
(Unaudited)
(Dollars in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
BUSINESS SEGMENTS (1) SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
2005 (2) 2004 2005 (2) 2004
-------- ------- -------- ------
SEGMENT NET SALES
Office Products Group .......................... $ 294.6 $ 238.7 $ 727.2 $ 677.3
Computer Products Group......................... 57.9 46.2 151.5 119.9
Commercial-Industrial Print Finishing Group..... 24.9 - 24.9 -
Other Commercial................................ 44.3 18.9 70.1 46.2
------- ------- ------- -------
Total Segment Net Sales............................. $ 421.7 $ 303.8 $ 973.7 $ 843.4
======= ======= ======= =======
OPERATING INCOME
Office Products Group........................... $ 24.1 $ 26.4 $ 56.3 $ 32.8
Computer Products Group......................... 11.4 9.9 32.3 20.9
Commercial-Industrial Print Finishing Group..... 2.0 - 2.0 -
Other Commercial................................ 6.5 2.9 6.4 2.4
Corporate Expenses.............................. (12.5) (3.1) (17.7) (11.2)
------- ------- ------- -------
Operating income ................................... $ 31.5 $ 36.1 $ 79.3 $ 44.9
======= ======= ======= =======
CHARGES (GAINS) INCLUDED IN OPERATING INCOME (3)
Office Products Group........................... $ (1.0) $ 1.0 $ 1.0 $ 34.6
Computer Products Group......................... 0.1 0.9
Commercial-Industrial Print Finishing Group..... - - - -
Other Commercial................................ - - - 0.7
Corporate Expenses.............................. 7.5 0.4 8.4 2.1
------- ------- ------- -------
Operating income ................................... $ 6.5 $ 1.5 $ 9.4 $ 38.3
======= ======= ======= =======
OPERATING INCOME BEFORE CHARGES (3)
Office Products Group........................... $ 23.1 $ 27.4 $ 57.3 $ 67.4
Computer Products Group......................... 11.4 10.0 32.3 21.8
Commercial-Industrial Print Finishing Group..... 2.0 - 2.0 -
Other Commercial................................ 6.5 2.9 6.4 3.1
Corporate Expenses.............................. (5.0) (2.7) (9.3) (9.1)
------- ------- ------- -------
Operating income before charges..................... $ 38.0 $ 37.6 $ 88.7 $ 83.2
======= ======= ======= =======
(1) The company reports its results under four newly defined segments:
Office Products Group, Computer Products Group, Commercial-Industrial
Print Finishing Group, and Other Commercial.
(2) General Binding Corporation's results are included in the Company's
Office Products, Commercial-Industrial Print Finishing Group, and Other
Commercial segment results from the acquisition date of August 17, 2005
only.
(3) The Company incurred various charges, including transaction-related
expenses, and restructuring in the current-year periods, and
restructuring and restructuring-related charges in the prior-year
periods.
NON-GAAP FINANCIAL MEASURES: Operating Income is a measure derived in accordance
with GAAP. Operating income before charges (including transaction-related
expenses, restructuring, and restructuring-related costs) is a measure not
derived in accordance with GAAP. Management uses this measure to determine the
returns generated by its operating segments and to evaluate and identify
cost-reduction initiatives. Management believes this measure provides investors
with helpful supplemental information regarding the underlying performance of
the company from year to year. This measure may be inconsistent with measures
presented by other companies.
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ACCO BRANDS CORPORATION
SELECTED FINANCIAL INFORMATION
(Unaudited)
(Dollars in millions)
THREE MONTHS ENDED NINE MONTHS ENDED
BUSINESS SEGMENTS (1) SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
2005 (1) 2004 2005 (1) 2004
-------- ---- -------- ----
Depreciation expense.............................. $ 8.5 $ 6.5 $ 21.1 $ 21.2
------ ------ ------- -------
Capital expenditures.............................. $ 6.5 $ 4.3 $ 19.3 $ 16.0
------ ------ ------- -------
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ACCO BRANDS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
SEPTEMBER 30, DECEMBER 27,
2005 2004
------------- ------------
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 71.0 $ 79.8
Receivables, net...................................................... 426.7 320.1
Inventories, net...................................................... 280.9 172.5
Other................................................................. 70.7 24.1
--------- --------
Total current assets............................................. 849.3 596.5
Property and equipment, net........................................... 246.7 157.7
Goodwill, net......................................................... 399.4 -
Intangibles, net...................................................... 243.3 117.6
Other assets.......................................................... 126.5 112.7
--------- --------
Total Assets..................................................... $ 1,865.2 $ 984.5
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank notes payable.................................................... $ 9.0 $ 0.1
Current portion of long-term debt..................................... 18.7 -
Accounts payable...................................................... 154.9 120.6
Other ................................................................ 266.3 204.1
--------- --------
Total current liabilities........................................ 448.9 324.8
Debt, less current portion............................................ 930.9 -
Post-retirement and other liabilities................................. 73.1 42.9
Total stockholders' equity............................................ 412.3 616.8
--------- --------
Total Liabilities and Stockholders' Equity...................... $ 1,865.2 $ 984.5
========= ========
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ACCO BRANDS CORPORATION
UNAUDITED HISTORIC PROFORMA SALES
(DOLLARS IN MILLIONS)
THREE MONTHS ENDED THREE MONTHS ENDED THREE MONTHS ENDED NINE MONTHS ENDED
MARCH JUNE SEPTEMBER SEPTEMBER
------------------- ------------------ ------------------ -------------------
2005 2004 2005 2004 2005 2004 2005 2004
---- ---- ---- ---- ---- ---- ---- ----
SEGMENT PRO FORMA NET SALES
Office Products Group....... $ 308.0 $ 309.3 $ 314.8 $ 306.5 $ 338.7 $ 328.9 $ 961.5 $ 944.7
Computer Products Group..... 43.3 34.8 50.3 38.9 57.9 46.2 151.5 119.9
Commercial-Industrial Print
Finishing Group............. 46.4 42.2 46.7 43.3 45.3 42.3 138.4 127.8
Other Commercial............ 54.6 55.1 54.3 54.2 62.7 62.1 171.6 171.4
------- ------- ------- ------- ------- ------- -------- --------
TOTAL SEGMENT PRO FORMA
NET SALES ..................... $ 452.3 $ 441.4 $ 466.1 $ 442.9 $ 504.6 $ 479.5 $1,423.0 $1,363.8
------- ------- ------- ------- ------- ------- -------- --------
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