Moody's: Workflow view negative

Moody's Investors Service said it changed Workflow Management, Inc.'s outlook to negative from stable and affirmed the company's B2 corporate family and probability-of-default ratings, Ba2 (LGD2, 27%) $40 million first-lien revolving credit facility due 2010 and $187 million first-lien term loan facility due 2011 and B3 (LGD5, 72%) $141 million second-lien term loan facility due 2011.

The agency said the outlook change largely reflects the company's recent financial performance, which has fallen short of Moody's expectations, as well as the effects of recent reduced sales levels among Workflow's customers, soft top line performance and slower-than-expected conversion of customer prospects into sales.

Workflow's B2 rating continues to reflect the company's high financial leverage, modest liquidity, relative low margins, its vulnerability to business process outsourcing spending, the intense competition faced in virtually all of its operating segments and the relatively weak asset protection coverage provided to lenders, Moody's said.

The ratings are supported by Workflow's diversified product line, its long-standing customer relationships and the relatively low capital needs of its business, the agency said.

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