ACCO Brands planning to reduce debt by $90 million to $110 million in 2008

By Jennifer Lanning Drey

Portland, Ore., Feb. 13 - ACCO Brands Corp. expects to reduce debt by $90 million to $110 million in 2008 through an increase in free cash flow, David D. Campbell, ACCO's chief executive officer, said Wednesday during the company's fourth-quarter earnings conference call.

The company expects free cash flow to also reach $90 million to $110 million for the full year as capital expenditures and cash restructuring costs are expected to decline by $45 million to $50 million.

ACCO posted a net debt reduction of $40 million for 2007, Neil V. Fenwick, the company's chief financial officer, reported during the call. At Dec. 31, ACCO's total outstanding debt stood at $775.3 million and its cash balance was $42.3 million.

"We ended 2007 a stronger company as a result of the many actions we have taken over the past couple of years and with the benefit of much of this work yet to flow through into 2008," Campbell said.

ACCO is in the middle of a 36-month integration and repositioning plan under which it is working to shed non-strategic businesses and sharpen its focus on core brands. The company is on target to achieve $40 million in merger integration synergies by the end of 2008 and an additional $20 million by year-end 2009.

During the fourth quarter, the company engaged BMO Capital Markets to assist in the completion of a strategic review of its commercial laminating solutions business, including a possible sale.

For the full-year 2007, ACCO reported a net loss of $700,000, compared with net income of $7.2 million in the prior year. The company attributed the decline to lost product placements, lower consumer demand and volume declines due to customer inventory adjustments.

The current year is also expected to be difficult.

"2008 will be a challenging economic environment. Our key issue is to complete the repositioning of the business, both restructuring and new product development, so that we can start to regain the share benefit as the economy turns," Campbell said.

The company believes its current business plans and ongoing deleveraging should result in longer-term growth rates comprising revenue growth of low- to mid-single-digits and operating income of low double-digits.

ACCO is a Lincolnshire, Ill.-based designer, developer, manufacturer and marketer of branded office products.

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