U.S. Office Products Company (NASDAQ:OFIS) plans to spin off 4
companies during its restructuring:
biz.yahoo.com
The company is planning to buy back 30% of its shares by assuming
$800 million in debt and receiving a $270 million equity investment
from Clayton, Dubilier & Rice, Inc.. So there will be a substantial
increase in leverage.
To me, the Corporate Travel and Technology Solution divisions look
especially interesting. All of the spin-offs look like they have the
potential to be sold off (by revenue, each of the 4 divisions is less
than 10% of the parent - in total, the spin-offs are less than 30%).
To help myself look at the resulting companies, I made the following
table based on the information supplied in the press release and some
estimates of my own:
Tech Print Educ. Travel New OFIS
Basic Ratios:
-------------
2-Yr comp. revenue growth: 24% 55% 27% 27% 77%
Current Ratio: 1.4 2.4 1.7 1.4 1.32
Current Ratio Ex. Inventory: 1.2 1.6 1.3 1.4 0.84
LT Debt to Equity: 0.00 0.44 0.71 0.00 2.60
LT Debt to Tangible Equity: 0.00 0.48 7.24 0.09 (-ve)
Growth Rate (FYs ending April):
-------------------------------
2-Yr comp. revenue growth: 24% 55% 27% 27% 77%
(1997/1995)
1-Yr revenue growth: 19% 6% 28% 34% 97%
(1997/1996)
2-Yr comp. operating
income growth: 26% 92% 66% 49% 119%
(1997/1995)
1-Yr operating
income growth: 44% 65% 145% 89% 148%
(1997/1996)
Interest Coverage:
------------------
EBITDA: $25,775 $27,719 $33,723 $25,208 $194,700
(1 Year - Oct. 1997)
Est. Interest: 0 $2,872 $7,264 $243 $110,578
(LT Debt @ 10.5% Rate)
Est Interest Coverage: N/A 9.6 4.6 103.7 1.7
(EBITDA/Est. Int.)
Operating/Profit Margin:
------------------------
Revenues: $266,394 $352,189 $306,211 $146,500 $2,701,711
(1 Year - Oct. 1997)
EBIT: $21,502 $20,920 $29,523 $20,519 $132,920
(per PR)
Est. Taxed Earnings: $13,331 $11,190 $13,801 $12,571 $13,852
(EBIT less Est. Int
@ 38% tax rate)
Est. Profit Margin: 5% 3.2% 4.5% 8.5% 0.5%
1997 Operating Margin: 9.5% 6% 6.5% 9% 4.5%
(per PR)
I'd be very interested in other people's thoughts.
Stew |
