S&P lowers American Color Graphics outlook

Standard & Poor's lowered its outlook on American Color Graphics Inc. to stable from positive and affirmed its ratings, including its B senior secured debt.

The outlook revision follows the company's announcement of operating results for its second quarter ended Sept. 30 that were lower than expected due to competitive pricing pressures, changes in product and customer mix, and an approximate 2% decrease in print production volumes.

This weaker-than-expected performance, in combination with lower guidance for the full year, has resulted in a deterioration of credit measures that are no longer consistent with consideration of a higher rating, the ratings agency said.

Ratings reflect ACG's dependence on a single industry segment (retail inserts), high debt levels and the competitive market conditions of the overall print industry. These factors are offset by the company's good competitive position in the retail insert market, long-standing customer relationships, and ample liquidity.

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