9/30/01 - Robert G. Burton, President and Chief Executive Officer of Moore Corporation Limited reaffirmed on September 4th that the company is “comfortable with current analysts' expectations for third quarter results as well as the full year outlook.” What that means is Moore will break even this quarter and be profitable by the next. Moore is an international provider of products and services that help companies communicate through print and digital technologies. As a leading supplier of document formatted information, print outsourcing and data based marketing, Moore designs, manufactures and delivers business communication products, services and solutions. Flashback: Moore celebrated 2001 by appointing Robert G. Burton as President and Chief Executive Officer. Burton was the former Chairman and CEO of World Color Press and coincidentally, an investor in Chancery Lane/GSC Investors. Chancery Lane/GSC Investors is a private equity vehicle led by Theodore Ammon and GSC Partners. Important, because the investment firm put $70 million into Moore to turn the company around. Ammon has since joined Moore’s Board of Directors as Non-Executive Chairman. At World Color for almost a decade, Burton orchestrated the merger with Quebecor Printing. The merger resulted in the formation of the world’s largest printing company. Burton-Style What has changed since Burton took over the troubled company at the end of last year? Here is a basic example that illustrates the structural style of Burton. As you know, WhatTheyThink.com publishes news on a daily basis and we review hundreds of press releases each week. What is interesting about Moore’s releases, is the way their statements to the press are presented. After reading this article, type “Moore” or "Burton" into the news archive search box and scan their news for the past year. They always start with: “Moore's CEO Robert G. Burton today announced abc which means xyz.” Next Paragraph “Burton Stated:” And Burton goes into what one observer called a “BS-free” explanation of what the announcement means. There is very little if any editorial within the releases and rarely has anyone else besides Burton been quoted in their public statements. It’s a small matter, but very telling of the Burton and Co. playbook. Burton is clearly in control with one thing in mind - turning Moore around. Moore Appoints “VP of Cut Our Expenses by $100 Million” After Burton was announced as CEO, he soon named James Lillie as Vice President of Operations. It was clear that Lillie would be Burton’s point man for leading the cost cutting campaign. Of Lillie Burton said, “I need a proven leader at my side who has the ability to make the difficult, but necessary, decisions required to achieve Moore’s goal of $100 million in cost savings and create an organizational structure that will consistently deliver improved financial performance. Jim Lillie is that person. I have made Jim personally accountable for ensuring we deliver on our cost savings commitment in the next 12 to 18 months. He is a “no excuses” manager who will immediately raise the performance level of those around him.” Lillie is a loyal Burtonite having served with him as Executive Vice President of Operations at World Color Press and he too is an investor in Chancery Lane/GSC Investors. Burton-style comments about reducing the company’s expenses and improving overall performance ensured a management house-cleaning. (see new management below) How bad was Moore prior to Burton? Take a look at these comments compiled from announcements in their financial filings and press statements earlier this year. “The results of the company are unacceptable.” “The costs of this company are completely out of line with our revenue.” “(Moore has) significantly more people in the organization than are required to meet the needs of customers.” “The organization is top heavy.” “There is a significant amount of redundancy within the organization.” “We have made processes more complicated than they need to be resulting in both a waste of time and money.” Get the picture? Since January, Burton and Lillie began the process. The Board has already suspended annual $18 million payments in future dividends and started rolling up Moore’s US pension plan freeing up $165 million of cash. Their restructuring efforts have also reduced Moore's workforce, cutting some 1300 jobs. Specific changes include: - Closing its stand alone research and development facility in Grand Island, NY - Savings: $15 Million - Integrating its operations in Canada with its U.S. forms and labels operations - Savings: Upgraded to $30 Million - Combining two of Moore's existing businesses-Business Communication Services and Response Marketing Services-into one organization - Savings: “Several million dollars” - Streamlining the cost of the company's Information Technology activities - Savings: $15 Million - Selling interest in VISTAinfo and their UK Advertising Business - Savings: “Several million dollars” - Selling the assets of its Phoenix Group division - Savings: “Several million dollars” What About Revenue? Of course, Burton realizes he has to increase revenue to increase shareholder value over the long term. The company has worked as aggressively on new business as it has on reducing expenses. One Moore rep said “Competitors are surprised at our success and renewed efforts. We’re back and while others talk about what they’re doing, we’ll be the one’s pointing to the scoreboard.” Indeed, sales should still reach $1.9 billion this year even after the divesters and analysts predict a gross margin around 30%. For 2002, earnings per share could top $.35. An amazing comeback if Moore can continue to perform. Says Burton, “Based on our current sales visibility and our improved cost structure, we expect that Moore will report substantially improved year-over-year results for the third quarter, ending September 30, 2001. We remain comfortable with the First Call estimate of normalized break-even earnings in the third quarter.'' Many observers believe Moore also has lady luck on it’s side. Who could have predicted the long term nature of the current economic slowdown? Moore was in trouble already and was forced to restructure regardless of the economy. Now, while others in the industry are scrambling to adjust to lower revenues, Moore has a 10 month head start. Says Burton, "The solid, ongoing improvement in our forms and labels business coupled with double digit year-over-year operating improvement in our Integrated Business Solutions business drove improved results for the second quarter. We continue to see this trend hold, despite a challenging economic environment.” Scoreboard Not everyone we spoke with admires Robert G. Burton’s tactics. One former executive wondered how long it would be before Burton and Company “exited with cash from a buy-out or severance without really positioning Moore for future profitability.” The reference to the severance is a slam on Moore for giving prior CEO, Ed Tyler a $26.5 million severance package after only being at Moore for 20 months. Others say cutting will be the easy part, trying to sustain growth in this segment “will show Burton that Moore was sicker than he thought.” It’s hard to argue with the results thus far. One insider said Burton doesn’t watch customer satisfaction surveys or employee happiness charts like he watches the stock price. “If the value of Moore increases - customers are being served well, employee morale is high and shareholders are happy. Right now, it’s an excellent barometer.” Everyone should be happy. Since Burton and Co. took over, Moore’s stock price has more than doubled from $3 to a recent $8 per share. For now, “Scoreboard.” When Burton Calls: The World Color Connection (World Color was sold to Quebecor for $2.9 billion in 1999.) Robert G. Burton Position at Moore: President and Chief Executive Officer Position at World Color: Chairman, President and Chief Executive Officer James Lillie Position at Moore: Executive Vice President of Operations Position at World Color: Executive Vice President, Operations and Investor Relations Robert B. Lewis Position at Moore: Executive Vice President, Chief Financial Officer Position at World Color: Executive Vice President and Chief Financial Officer Thomas J. Quinlan III Position at Moore: Executive Vice President and Treasurer Position at World Color: Senior Vice President, Treasury Dean E. Cherry Position at Moore: President of International and Subsidiary Operations Position at World Color: A series of senior management positions Tom Oliva Position at Moore: President of Forms/Labels Operations, North America Position at World Color: President of the Catalog and Magazine Group (Pictures Not Available) Robert C. Nelson Position at Moore: Senior Vice President of Corporate Sales Position at World Color: Senior Vice President, Corporate Sales Sean S. Sullivan Position at Moore: Senior Vice President of Corporate Development Position at World Color: Director of Business Development Gordon Grote Position at Moore: President of Response Marketing Services Position at World Color: Various positions