<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
REPORT FILED
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
JANUARY 16, 1997
Date of report (date of earliest event reported)
GENERAL BINDING CORPORATION
(Exact name of registrant as specified in charter)
<TABLE>
<C> <C> <C>
DELAWARE 0-2604 36-0887470
State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
</TABLE>
ONE GBC PLAZA
NORTHBROOK, IL 60062
(Address of Principal Executive Offices, Including Zip Code)
(847) 272-3700
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
================================================================================
<PAGE> 2
ITEM 2. ACQUISITION OF ASSETS
On January 16, 1997, General Binding Corporation (GBC) completed the
acquisition of the business and assets and liabilities of Quartet Manufacturing.
The consideration paid was approximately $216 million including assumption of
debt. Quartet is a manufacturer and distributor of visual communications
products including markerboards, bulletin boards and easels. GBC previously
issued a press release announcing the transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired:
<TABLE>
<S> <C>
QUARTET
- ------------------------------------------------------------
Report of Independent Public Accountants.................. F-1
Combined Statement of Financial Condition as of December
31, 1996 and 1995...................................... F-2
Combined Statements of Income for the years ended December
31, 1996, 1995 and 1994................................ F-3
Combined Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994....................... F-4
Notes to Combined Financial Statements.................... F-5
</TABLE>
(b) Pro forma financial information:
<TABLE>
<S> <C>
GENERAL BINDING CORPORATION AND SUBSIDIARIES
- ------------------------------------------------------------
Unaudited Condensed Pro Forma Balance Sheet as of December
31, 1996............................................... F-10
Unaudited Pro Forma Combined Statements of Income for the
period ended
December 31, 1996...................................... F-11
</TABLE>
2
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of General Binding Corporation:
We have audited the combined statement of financial condition of Quartet
Manufacturing as of December 31, 1996 and 1995, and the related combined
statements of income, and cash flows for each of the three years in the period
ended December 31, 1996. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the combined financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall combined
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Quartet
Manufacturing as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Chicago, Illinois
March 14, 1997
F-1
<PAGE> 4
QUARTET MANUFACTURING
COMBINED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND 1995
(000'S OMITTED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 987 $ 1,197
Accounts receivable (net of allowance for doubtful
accounts and sales returns of $1,745 and $945 in 1996
and 1995, respectively)................................ 19,402 19,985
Inventories............................................... 22,347 21,140
Prepaid expenses and other current assets................. 974 973
------- -------
Total current assets................................. 43,710 43,295
------- -------
PROPERTY, PLANT AND EQUIPMENT
Land...................................................... 2,781 1,133
Buildings and improvements................................ 18,522 17,486
Machinery and equipment................................... 19,872 18,176
Vehicles.................................................. 5,508 4,562
Furniture and fixtures.................................... 4,549 4,141
------- -------
51,232 45,498
Less -- Accumulated depreciation.......................... 19,838 15,033
------- -------
Property, plant and equipment, net................... 31,394 30,465
------- -------
GOODWILL.................................................... 3,340 3,619
------- -------
$78,444 $77,379
======= =======
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES:
Line of credit............................................ $ 7,000 $15,000
Current portion of long-term debt......................... 2,200 2,200
Accounts payable.......................................... 5,079 7,909
Accruals:
Distribution allowances................................ 9,261 8,794
Payrolls and benefits.................................. 760 1,308
Taxes and other........................................ 1,067 1,315
------- -------
Total current liabilities............................ 25,367 36,526
------- -------
LONG-TERM DEBT.............................................. 6,400 8,600
------- -------
DEFERRED WARRANTY INCOME.................................... 161 156
------- -------
NET ASSETS.................................................. 46,516 32,097
------- -------
$78,444 $77,379
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE> 5
QUARTET MANUFACTURING
COMBINED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(000'S OMITTED)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Sales....................................................... $149,026 $134,995 $103,726
Costs and expenses:
Cost of sales, including research and development......... 73,433 74,555 56,378
Selling and administrative................................ 50,138 44,644 36,037
Interest.................................................. 1,764 1,292 216
Other..................................................... 3,014 9,875 1,720
-------- -------- --------
Total costs and expenses............................... 128,349 130,366 94,351
-------- -------- --------
Net income.................................................. $ 20,677 $ 4,629 $ 9,375
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 6
QUARTET MANUFACTURING
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(000'S OMITTED)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 20,677 $ 4,629 $ 9,375
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization.......................... 5,136 4,269 2,472
(Gain) loss on disposal of property and equipment...... (97) 11 (37)
Exchange (gain) loss on foreign currency
transactions......................................... (225) 22 (22)
Change in operating assets and liabilities, net of
effect of
acquired businesses:
Accounts receivable.................................. 583 (6,610) 799
Inventory............................................ (1,207) (3,455) 909
Prepaid expenses and other assets.................... (1) 220 (45)
Accounts payable and accruals........................ (3,154) 5,015 2,603
-------- -------- --------
Total adjustments................................. 1,035 (528) 6,679
-------- -------- --------
Net cash provided by operating activities......... 21,712 4,101 16,054
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of equipment/inventory................. 109 -- 82
Acquisition of businesses, net of cash.................... -- -- (10,716)
Capital expenditures...................................... (4,158) (14,192) (6,632)
-------- -------- --------
Net cash used in investing activities............. (4,049) (14,192) (17,266)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit.......................... (8,000) 10,000 5,000
Proceeds of long-term debt................................ -- 10,000 --
Principal repayments...................................... (2,200) (200) (200)
Dividends paid............................................ (7,672) (9,395) (8,045)
-------- -------- --------
Net cash provided by (used in) financing
activities...................................... (17,872) 10,405 (3,245)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (209) 314 (4,457)
EFFECT OF EXCHANGE RATE CHANGES ON CASH..................... (1) (98) (7)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............. 1,197 981 5,445
-------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR.................... $ 987 $ 1,197 $ 981
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 7
QUARTET MANUFACTURING
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(000'S OMITTED)
1. BASIS OF PRESENTATION AND OPERATIONS
The combined financial statements include the accounts of Quartet
Manufacturing Company, a Delaware Corporation ("QMC"), Quartet Manufacturing
Limited, an English Company ("QML") and Quartet Manufacturing Company
International, a U.S. Corporation with Australian operations ("QMCI"). All
significant intercompany balances and transactions have been eliminated. The
operations of these entities have been combined for purposes of presentation in
these financial statements and are collectively herein referred to as Quartet
Manufacturing or the Company.
The Company is a manufacturer and distributor of visual communications
products including marker boards, bulletin boards and easels primarily to
wholesalers, dealers and retailers. The most significant Company operations are
located in Booneville, Mississippi and Ashland, Mississippi. The Company also
has locations in Brampton, Canada, Aldershot, England, and Paramatta, Australia.
Its corporate headquarters are in Skokie, Illinois.
The Company's five largest customers in total accounted for approximately
64.7%, 60.9%, and 60.8% of net sales in 1996, 1995 and 1994, respectively. Two
of the five customers accounted for more than 10% of the Company's net sales in
each of the periods. No other single customer accounted for more than 10% of net
sales.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market on a first-in,
first-out basis and at December 31 consisted of:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials............................................. $11,012 $11,351
Work in process........................................... 2,070 1,849
Finished goods............................................ 9,265 7,940
------- -------
$22,347 $21,140
======= =======
</TABLE>
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is provided using the straight-line and accelerated
methods over the estimated useful lives of the assets as follows: a) buildings
40 years and b) machinery and equipment 5 to 7 years. Total maintenance and
repairs expense
F-5
<PAGE> 8
QUARTET MANUFACTURING
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
was approximately $1,245, $1,151, and $825 in 1996, 1995, and 1994,
respectively. Depreciation expense for 1996, 1995 and 1994 was $4,857, $3,997
and $2,403, respectively.
INTANGIBLES
The excess of the acquisition cost over the fair market value of net assets
acquired is being amortized using the straight-line method over the estimated
useful lives, not exceeding 40 years. Amortization expense for 1996, 1995 and
1994 was $279, $272 and $69, respectively.
CHANGES IN NET ASSETS
The changes in net assets for each of the years in the three year period
ending December 31, 1996 are as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance beginning of year........................ $32,097 $36,940 $35,632
Net income....................................... 20,677 4,629 9,375
Dividends paid................................... (7,672) (9,395) (8,045)
Other............................................ 1,414 (77) (22)
------- ------- -------
Balance end of year.............................. $46,516 $32,097 $36,940
======= ======= =======
</TABLE>
Other in 1996 includes the donation of land valued at approximately $1,600.
RESEARCH AND DEVELOPMENT AND ADVERTISING
All research and development and advertising costs are charged to
operations when incurred. The amounts charged were:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Research and development.......................... $ 692 $ 861 $1,571
====== ====== ======
Advertising....................................... $2,212 $1,808 $2,000
====== ====== ======
</TABLE>
TAXES
The stockholders of the Company elected to have the Company treated as an S
Corporation. Because of this election, there is no provision for federal income
taxes since the stockholders report their share of net income on their personal
income tax returns. The Company is, however, liable for certain state and
foreign taxes.
DEFERRED WARRANTY INCOME
The Company sells extended warranty contracts for one and three years.
Warranty revenue is recognized over the life of the warranty.
FOREIGN CURRENCY TRANSLATION
For translation of its international currency, the Company has determined
that the local currency of its Canadian, English and Australian branches are the
functional currencies of those branches.
In combining international operations, all balance sheet assets and
liabilities were translated at current exchange rates, and all results of
operations were translated at the average exchange rates during the period. The
net exchange differences resulting from these translations are not material and
have been included in
F-6
<PAGE> 9
QUARTET MANUFACTURING
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
"Other" in the changes in net assets note to the combined financial statements
for the appropriate period. Foreign currency transaction gains and losses are
included in income.
3. BUSINESS COMBINATIONS
On October 25, 1994, the Company purchased substantially all of the assets
and assumed certain liabilities of Pega Industries Corporation, a Canadian
company, for $925. Pega Industries Corporation was engaged in the business of
manufacturing and selling cork and board products and accessories to wholesalers
and retailers of such products. The results of operations of Pega Industries
Corporation are included in the accompanying financial statements since the date
of acquisition. The excess of the purchase price over the estimated fair value
of the net assets acquired was approximately $436.
On November 11, 1994, the Company purchased substantially all of the assets
and assumed certain liabilities of the Davson division of Rubbermaid Office
Products, Inc. Davson was engaged in the business of designing, manufacturing,
marketing, distributing and selling visual communication products to wholesalers
of such products internationally. The results of operations of Davson are
included in the accompanying financial statements since the date of acquisition.
The total cost of the acquisition was $9,792 which exceeded the book value of
the net assets of Davson by $3,168. This excess was partially allocated to
property, plant and equipment based on appraisal values and are being
depreciated over the estimated useful lives of the assets. The remaining excess
of the purchase price over the estimated fair value of the net assets was
approximately $2,207
4. DEBT OBLIGATIONS
The Company has a $30,000 line of credit with Harris Trust and Savings Bank
of Chicago. Borrowings under this line are on a demand basis and bear interest
with reference to the bank's domestic rate or offered rate (6.525% for 30, 60
and 90 days, respectively, at December 31, 1996 and 7.15%, 7.0875% and 7.025%
for 30, 60 and 90 days, at December 31, 1995). The line contains restrictive
covenants which call for the maintenance of certain debt to equity ratios and
equity and profitability requirements as defined in the agreement. As of
December 31, 1996 the Company was in compliance with all restrictive covenants.
The line expires June 30, 1997 and is uncollateralized. Amounts outstanding
under the line of credit were $7,000 and $15,000 at December 31, 1996 and 1995,
respectively.
On November 14, 1995, the Company entered into an uncollateralized term
loan with Harris Trust and Savings Bank of $10,000 due December 31, 2000,
payable in quarterly installments of $500 plus interest at 7.05%, beginning
March 31, 1996.
The Company is obligated under an Industrial Revenue Bond issued by the
Village of Skokie and assigned to the Harris Trust and Savings Bank. The note
calls for semiannual payments of $100 through October 1, 1999. Interest is
payable quarterly at 80.99% of the prime rate of the bank. The note is
collateralized by a building.
The weighted average interest rate on debt outstanding during 1996 and 1995
was 7.32% and 7.74%, respectively. Long-term debt at December 31 consists of the
following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Term Loan, Harris Trust and Savings Bank.................... $8,000 $10,000
Industrial Revenue Bond, Village of Skokie.................. 600 800
------ -------
8,600 10,800
Less Current Portion........................................ 2,200 2,200
------ -------
Total Long-Term Debt........................................ $6,400 $ 8,600
====== =======
</TABLE>
F-7
<PAGE> 10
QUARTET MANUFACTURING
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Under existing agreements, maturities of long-term debt as of December 31,
1996, are as follows:
<TABLE>
<S> <C>
1997................................................... $2,200
1998................................................... 2,200
1999................................................... 2,200
2000................................................... 2,000
------
$8,600
======
</TABLE>
Interest expense for the line of credit, term loan and revenue bond was
$1,764, $1,292 and $216 in 1996, 1995 and 1994, respectively. Cash paid for
interest in 1996, 1995 and 1994 was $1,887, $1,196 and $149, respectively.
5. LEASES
The Company leases commercial and warehousing space at its facilities in
Canada, UK and Australia.
At December 31, 1996, future minimum lease payments under such leases were
as follows:
<TABLE>
<S> <C>
1997................................................... $ 359
1998................................................... 371
1999................................................... 144
2000................................................... 112
2001................................................... 112
Thereafter............................................. 1,344
------
$2,442
======
</TABLE>
Rental expense for 1996, 1995 and 1994 amounted to $347, $436 and $306,
respectively.
6. EMPLOYMENT AND STOCK AGREEMENTS AND EMPLOYEE BENEFITS
EMPLOYMENT AGREEMENT
The Company had an employment agreement with its principal officer. In
exchange for full-time active service, this officer was to be compensated at a
base salary or such other amount as the parties may agree. The agreement also
granted lifetime retirement benefits at the same base salary for a period of 10
years. At December 31, 1994, the Company had accrued a liability of $124 based
on the discounted (6%) net present value of benefits payable at the estimated
date of retirement. The Board of Directors voted to rescind the previous
agreement and to pay two lump sum amounts to fund his retirement equivalent to a
pension based on his years of service to the corporation since its inception.
The officer was paid $3,000 and $9,850 in 1996 and 1995, respectively. These
amounts have been recognized in other expense.
PROFIT SHARING PLAN
The Company maintains a noncontributory profit sharing plan for all
employees of the Company who have completed at least 1,000 hours of service in
any plan year and are employed by the Company on the last day of the year.
Contributions of the plan are at the discretion of the Board of Directors. For
the years ended December 31, 1996, 1995 and 1994, the Board authorized
contributions of $875, $882 and $599, respectively, for eligible compensation of
all active participants of the plan.
F-8
<PAGE> 11
QUARTET MANUFACTURING
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
CAPITAL STOCK REPURCHASE AGREEMENT
The Company and certain stockholders are parties to stock repurchase
agreements which require the Company to purchase certain shares of common stock
owned by those stockholders in the event of termination of employment or death.
The purchase price is based on a formula as defined in the agreement.
EMPLOYEE STOCK BONUS
In accordance with the key employee stock bonus plan, on April 21, 1995, a
key employee was issued 1,700 shares of common stock valued at $61.75 per share.
7. SUBSEQUENT SALE OF NET ASSETS
On January 16, 1997 the business and assets and liabilities of the Company
were acquired by General Binding Corporation ("GBC") for approximately $216
million including assumption of debt.
F-9
<PAGE> 12
The following unaudited pro forma condensed balance sheet of GBC as of
December 31, 1996, reflects the acquisition of Quartet Manufacturing on January
16, 1997 for approximately $216 million including assumption of debt. The
following unaudited pro forma statement of income of GBC reflects the
acquisition of Quartet as if the transaction was consummated on January 1, 1996.
Pro forma adjustments have been made to GBC's balance sheet and statement of
income to reflect the acquisition. Although management has used its best
judgment and available information in estimating the fair value of those assets
acquired and liabilities assumed, various pending studies, analyses and
operational decisions may result in significant changes in the current
estimates. The following unaudited pro forma condensed balance sheet and
statement of income should be read in conjunction with the consolidated
financial statements and related notes of GBC.
GENERAL BINDING CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 1996
(000'S OMITTED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
(UNAUDITED)
-----------------------------------------------
PRO FORMA PRO FORMA
GBC QUARTET ADJUSTMENTS COMBINED
-------- ------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................................. $ 6,721 $ 987 $ 7,708
Receivables, net.......................................... 115,865 19,402 135,267
Inventories, at lower of cost or market................... 96,734 22,347 4,000(1) 123,081
Deferred tax assets....................................... 11,453 -- 11,453
Other..................................................... 6,441 974 7,415
-------- ------- -------- --------
Total current assets............................... 237,214 43,710 4,000 284,924
-------- ------- -------- --------
Property, plant and equipment............................... 140,951 51,232 (479) 191,704
Less -- accumulated depreciation and amortization......... 71,940 19,838 14,979 76,799
-------- ------- -------- --------
Net property, plant and equipment.................. 69,011 31,394 14,500(2) 114,905
-------- ------- -------- --------
Other Long-Term Assets:
Cost in excess of fair value of assets of acquired
companies, net of amortization.......................... 43,510 3,340 134,587(4) 181,437
Other..................................................... 43,971 -- 43,971
-------- ------- -------- --------
Total other long-term assets....................... 87,481 3,340 134,587 225,408
-------- ------- -------- --------
Total assets................................................ $393,706 $78,444 $153,087 $625,237
======== ======= ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable............................................. $ 31,700 $ 7,000 $ (7,000)(3) $ 31,700
Current maturities of long-term obligations............... 483 2,200 (2,000)(3) 683
Accounts payable.......................................... 28,506 5,079 33,585
Accrued liabilities....................................... 51,440 11,249 62,689
-------- ------- -------- --------
Total current liabilities.......................... 112,129 25,528 (9,000)(3) 128,657
-------- ------- -------- --------
Long-term debt.............................................. 87,029 6,400 208,603(3) 302,032
Other long-term liabilities................................. 10,229 10,229
Deferred tax liabilities.................................... 12,187 12,187
Stockholders' Equity:
Common stock.............................................. 1,962 1,962
Class B common stock...................................... 300 300
Additional paid-in capital................................ 8,564 8,564
Cumulative translation adjustments........................ (3,035) (3,035)
Retained earnings......................................... 186,663 186,663
-------- ------- -------- --------
Less -- Treasury stock.................................... (22,322) (22,322)
-------- ------- -------- --------
Total stockholders' equity......................... 172,132 46,516 (46,516) 172,132
-------- ------- -------- --------
Total liabilities and stockholders' equity.................. $393,706 $78,444 $153,087 $625,237
======== ======= ======== ========
</TABLE>
- -------------------------
(1) Inventories have been adjusted to reflect the preliminary estimate of the
write-up of inventory to fair market value.
(2) Property, plant and equipment has been adjusted to reflect the preliminary
estimate of the write-up of fixed assets to fair market value.
(3) Represents financing incurred to acquire Quartet Manufacturing including
refinancing of certain existing debt.
(4) Represents preliminary estimated goodwill.
F-10
<PAGE> 13
GENERAL BINDING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(000'S OMITTED, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------
PRO FORMA PRO FORMA
GBC(1) QUARTET(1) ADJUSTMENTS COMBINED
------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Sales............................................ $536,836 $149,026 $ -- $685,862
Costs and Expenses:
Cost of sales, including research, development
and engineering............................. 315,949 73,433 3,868(5) 393,250
Selling, service and administrative............ 171,473 50,138 (1,357)(6) 220,254
Interest expense............................... 6,172 1,764 11,931(2) 19,867
Other (income)/expense, net.................... 688 3,014 6,571(3) 10,273
-------- -------- -------- --------
Total costs and expenses.................... 494,282 128,349 21,013 643,644
Income before taxes.............................. 42,554 20,677 (21,013) 42,218
Income taxes..................................... 17,341 -- (116)(4) 17,225
Net income....................................... $ 25,213 $ 20,677 $(20,897) $ 24,993
======== ======== ======== ========
Net income per common share...................... $ 1.60 $ 1.59
======== ========
</TABLE>
- -------------------------
(1) Represents the audited results of operations for the year ended December 31,
1996.
(2) Interest expense has been adjusted to reflect interest on borrowings to
complete the acquisition, as if such borrowings had been outstanding for the
entire period. Such interest has been calculated at 6.36%, which
approximates GBC's 1996 effective domestic borrowing rate.
(3) Primarily represents the amortization of goodwill related to the
acquisition. Actual goodwill may change pending studies and valuations
currently in process.
(4) Represents the income tax effect of the pro forma adjustments based on GBC's
effective income tax rate during 1996 which is not materially different than
the statutory rate.
(5) Primarily represents the net effect of the estimated amortization of the
step-up of inventory and property, plant and equipment to fair market
values.
(6) Primarily represents the elimination of certain expenditures that are
non-essential to future operations.
F-11
<PAGE> 14
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
GENERAL BINDING CORPORATION
(Registrant)
By:
--------------------------------------
Edward J. McNulty
Vice President and Chief Financial
Officer
Date: March 27, 1997
F-12
