<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to ______________
Commission File Number 0-2604
GENERAL BINDING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-0887470
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One GBC Plaza, Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 272-3700
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ___X___ No ________
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
<TABLE>
<CAPTION>
Class Outstanding at April 30, 1995
- ----------------------------------------- --------------------------------------
<S> <C> <C>
Common Stock $.125 par value 13,335,672 shares
Class B - Common Stock $.125 par value 2,398,275 shares
</TABLE>
<PAGE> 2
GENERAL BINDING CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information: Page No.
------------
<S> <C>
Consolidated Condensed Balance Sheets -
March 31, 1995 and December 31, 1994 1
Consolidated Condensed Statements of Income -
Three Months Ended March 31, 1995 and 1994 2
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994 3
Notes to Consolidated Condensed
Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 6
PART II. Other Information 8
Signature 9
</TABLE>
<PAGE> 3
- 1 -
PART I. FINANCIAL INFORMATION
GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(000 Omitted)
<TABLE>
<CAPTION>
March 31, 1995 December 31,
ASSETS (unaudited) 1994
- ------ --------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,858 $ 5,569
Receivables, net 76,223 74,413
Inventories -
Raw materials 19,712 20,828
Work in process 6,394 6,092
Finished goods 50,640 49,090
-------- --------
Total inventories 76,746 76,010
Deferred tax assets 8,814 8,807
Other 5,518 6,355
-------- --------
Total current assets 170,159 171,154
-------- --------
Property, plant and equipment 131,603 130,625
Less - accumulated depreciation and amortization (66,795) (65,095)
-------- --------
Net property, plant and equipment 64,808 65,530
-------- --------
Other long-term assets:
Cost in excess of fair value of assets
of acquired companies, net of amortization 30,882 31,099
Other 16,663 16,495
-------- --------
Total other long-term assets 47,545 47,594
-------- --------
Total assets $282,512 $284,278
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable $ 19,012 $ 23,814
Current maturities of long-term obligations 632 674
Accounts payable 21,824 20,647
Accrued liabilities 37,604 39,469
Taxes on income 574 --
-------- --------
Total current liabilities 79,646 84,604
-------- --------
Long-term debt 42,175 42,020
Other long-term liabilities 10,359 9,340
Deferred tax liabilities 6,609 7,225
Stockholders' equity:
Common stock 1,962 1,962
Class B common stock 300 300
Additional paid-in capital 6,829 6,562
Cumulative translation adjustments (2,081) (1,204)
Retained earnings 156,910 153,330
-------- --------
163,920 160,950
Less - Treasury stock (20,197) (19,861)
-------- --------
Total stockholders' equity 143,723 141,089
-------- --------
Total liabilities and stockholders' equity $282,512 $284,278
======== ========
</TABLE>
The accompanying notes to consolidated condensed financial statements are an
integral part of these statements.
<PAGE> 4
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GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(000 Omitted Except Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1995 1994
--------------------------
<S> <C> <C>
Sales $109,252 $96,227
Costs and expenses:
Cost of sales, including research, development
and engineering 61,624 53,121
Selling, service and administrative 36,862 34,505
Interest expense 1,074 762
Other expense, net 967 554
--------------------
Total costs and expenses 100,527 88,942
Income before taxes 8,725 7,285
Income taxes 3,490 2,932
Net income $ 5,235 $ 4,353
======= ========
Net income per common share $ .33 $ .28
======= =======
Dividends per common share $ .105 $ .10
======== =======
Average common shares outstanding 15,751 15,764
======= ========
</TABLE>
The accompanying notes to consolidated condensed financial statements are an
integral part of these statements.
<PAGE> 5
- 3 -
GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(000 Omitted)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
-------------------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $5,235 $4,353
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,202 2,923
(Decrease) increase in non-current deferred
tax liabilities (476) 224
Provision for doubtful accounts 467 381
(Increase) in other long-term assets (610) (676)
Other 1,164 763
Changes in current assets and liabilities:
(Increase) in receivables (2,432) (5,434)
(Increase) in inventories (1,137) (6,627)
(Increase) in deferred tax assets (54) (141)
Decrease (increase) in other current assets 724 (847)
(Decrease) increase in accounts payable and
accrued expenses (1,104) 291
Increase in taxes on income 517 1,696
------- ---------
Net cash provided by (used in)
operating activities 5,496 (3,094)
------------------------------
Cash flows from investing activities:
Capital expenditures (1,408) (2,633)
Proceeds from sale of plant and equipment 110 2,185
------ -------
Net cash (used in) investing activities (1,298) (448)
---------- -----
Cash flows from financing activities:
(Reduction) increase in notes payable (5,068) 4,829
(Reduction) in current portion of
long-term obligations (65) (2)
(Reduction) in long-term obligations (57) (66)
Dividends paid (1,655) (1,576)
Purchases of treasury stock (394) (83)
Proceeds from the exercise of stock options 277 69
-------- --------
Net cash (used in) provided by
financing activities (6,962) 3,171
-------- --------
Effect of exchange rates on cash 53 37
------- --------
Net (decrease) in cash
and cash equivalents (2,711) (334)
Cash and cash equivalents at beginning of the year 5,569 4,462
-------- -------
Cash and cash equivalents at March 31 $2,858 $ 4,128
====== =======
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period for:
Interest $ 1,155 $ 786
Income taxes, net of refunds 690 1,212
</TABLE>
The accompanying notes to consolidated condensed financial statements are
an integral part of these statements.
<PAGE> 6
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GENERAL BINDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The consolidated condensed financial statements included herein have been
prepared by the Company, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes that the disclosures included in
these consolidated condensed financial statements are adequate to make the
information presented not misleading. It is suggested that these consolidated
condensed financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's 1994 Annual Report
on Form 10-K. In the opinion of the Company, all adjustments necessary to
present fairly the financial position of General Binding Corporation and
Subsidiaries as of March 31, 1995 and December 31, 1994, and the results of
their operations for the three months ended March 31, 1995 and 1994 have been
included. The results of operations for such interim periods are not
necessarily indicative of the results for the full year.
(2) Foreign Currency Exchange and Translation
Foreign currency translation adjustments have been excluded from the
Consolidated Condensed Statements of Income and are recorded in a cumulative
translation adjustment account as a separate component of stockholders' equity.
The accompanying Consolidated Condensed Statements of Income include net gains
and losses on foreign currency transactions, which are reported as other
income/expense and summarized as follows:
<TABLE>
<CAPTION>
Foreign Currency
Transaction
Gain/(Loss) (a)
---------------
<S> <C>
Three months ended March 31, 1995 $ (291,000)
===========
Three months ended March 31, 1994
$ (92,000)
===========
</TABLE>
(a) Foreign currency transaction gains/losses are subject to income taxes
at the respective country's effective tax rate.
<PAGE> 7
- 5 -
<TABLE>
<CAPTION>
(3) Long-Term Debt
Long-term debt consists of the following:
(000 OMITTED)
MARCH 31, DECEMBER 31,
1995 1994
--------------- ---------------
<S> <C> <C>
Revolving Credit Agreement (portion classified as
long-term on the basis of the Company's
intention to refinance these borrowings:
weighted average interest rate 6.9% at
March 31, 1995 and 5.7% at December 31, 1994) $ 36,000 $ 36,000
Note Payable, due monthly from November, 1994
to October, 2004 (interest rate 8.85% at
March 31, 1995 and December 31, 1994) 3,389 3,237
Industrial Revenue Bond, due annually from
July, 1994 to July, 2008 (floating
interest rate 4.15% at March 31, 1995
and 5.3% at December 31, 1994) 2,350 2,350
Industrial Revenue Bond due annually from
June, 2002 to June, 2007 (floating
interest rate 4.35% at March 31, 1995
and 5.65% at December 31, 1994)
936 909
--------- ---------
42,675 42,496
Less current maturities (500) (476)
--------- ---------
Total Long-Term Debt
$ 42,175 $ 42,020
========= ========
</TABLE>
(4) Net Income per Common Share
Net income per common share is based on the weighted average number
of common shares outstanding during the period. Assuming exercise of
all outstanding options pursuant to the Company's stock option plans
for key employees, net income per common share would not be materially
different from net income per common share as reported.
<PAGE> 8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's 1995 first quarter sales reached a record high of $109,252,000
increasing 14% over the prior year quarter. Excluding the results of the August
1994 acquisition of Sickinger Company, sales increased 12%. The most
significant factors contributing to the growth were increases in sales in the
Company's: a) international operations; b) domestic office products division; c)
worldwide film products operations; and d) domestic direct /telemarketing
operations.
On a worldwide basis, sales of the Company's equipment product lines increased
20% in the first quarter of 1995 over the same period last year, while sales of
supplies and service (which for discussion purposes includes the Company's
ringmetals business) increased 11%. Without the impact of Sickinger, equipment
sales for the first quarter increased 17%, while sales of supplies and service
increased 10%.
Worldwide gross profit margins decreased 1 percentage point from the 1994 first
quarter period to the 1995 first quarter period. The primary reasons for the
erosion in gross margins were higher manufacturing costs and strong competitive
pressures on the Company's worldwide direct sales organization and domestic
office products group which were partially offset by increases in margins in
the Company's worldwide film and ringmetals operations. The Sickinger
acquisition had a relatively insignificant impact on the first quarter margins.
Consolidated selling, service and administrative expenses for the first quarter
increased 7%. Without the impact of Sickinger, expenses increased 5%, primarily
as a result of increased sales and the expansion of the Company's European film
products operations. Consolidated selling, service and administrative expenses
as a percentage of sales decreased in the first quarter to 33.7% in 1995 from
35.9% in 1994.
Interest expense for the first quarter of 1995 increased 41% over the same
period in 1994. The primary reasons for the increase were higher interest
rates on the Company's revolving credit agreement and higher average debt
levels. The higher debt levels resulted primarily from: a) higher inventory
and receivable levels; and b) the financing of the Sickinger acquisition and
the expansion of the European film products operations. This increase was
partially offset by the expiration of one of the Company's interest rates
swaps in the fourth quarter of 1994.
Other expense for the first quarter of 1995 was $967,000 compared to $554,000
for the same period in 1994. The increase in the first quarter expense was
substantially due to additional currency losses of $199,000 resulting from the
weakened Mexican peso, losses on a joint venture of $97,000, and higher stock
option expense of $90,000.
The Company's effective tax rate for the first quarter of 1995 was 40.0%
compared to 40.3% for the same period in 1994. Various insignificant items
contributed to the decline.
<PAGE> 9
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LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital totaled $90.5 million at March 31, 1995, an
increase of $4.0 million from December 31, 1994. The Company's current ratio
at March 31, 1995 was 2.1 to 1.0 compared to 2.0 to 1.0 at December 31, 1994.
Cash dividends paid during the first quarter were $.105 per share compared to
$.10 per share in the first quarter of 1994. Total plant and equipment
expenditures for the first quarter of 1995 were $1,408,000 compared to
$2,633,000 for the same period in 1994.
As of March 31, 1995, the Company had access to $66.5 million in short-term
credit lines and had $19.0 million in outstanding borrowings against these
lines. The Company also had access to a $62.5 million credit agreement to
fund both working capital and acquisition requirements. As of March 31, 1995,
the Company had $36 million in borrowings against this agreement classified as
long-term debt on the balance sheet.
The Company believes that funds generated from operations combined with
existing credit facilities are more than sufficient to meet currently
anticipated needs.
<PAGE> 10
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PART II. OTHER INFORMATION
Item 5: Exhibits
(a) Exhibits: None
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant
during the first quarter ended March 31, 1995.
<PAGE> 11
- 9 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENERAL BINDING CORPORATION
AND SUBSIDIARIES
By EDWARD J. MCNULTY
------------------------
Edward J. McNulty
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from General
Binding Corporation's Form 10-Q for the period ended March 31, 1995 and is
qualified in its entirety by references to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,858
<SECURITIES> 0
<RECEIVABLES> 76,223<F1>
<ALLOWANCES> 5,033
<INVENTORY> 76,746
<CURRENT-ASSETS> 170,159
<PP&E> 131,603
<DEPRECIATION> 66,795
<TOTAL-ASSETS> 282,512
<CURRENT-LIABILITIES> 79,646
<BONDS> 42,175
<COMMON> 2,262
0
0
<OTHER-SE> 141,461
<TOTAL-LIABILITY-AND-EQUITY> 282,512
<SALES> 109,252
<TOTAL-REVENUES> 109,252
<CGS> 61,624
<TOTAL-COSTS> 61,624
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 467
<INTEREST-EXPENSE> 1,074
<INCOME-PRETAX> 8,725
<INCOME-TAX> 3,490
<INCOME-CONTINUING> 5,235
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,235
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
<FN>
<F1>
Notes and accounts receivable-trade are stated net of allowances for doubtful
accounts and sales returns.
</FN>
</TABLE>
