<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
Commission File Number 0-2604
GENERAL BINDING CORPORATION
(Exact name of registrant as specified in its charter)
36-0887470
(I.R.S. employer identification No.)
DELAWARE
(State or other jurisdiction of incorporation or organization)
ONE GBC PLAZA,
NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices, including zip code)
(847) 272-3700
(Registrant's telephone number, including area code)
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>
OUTSTANDING AT
CLASS JULY 31, 1999
- ----- --------------
<S> <C>
Common Stock, $.125 par value 13,338,898
Class B Common Stock, $.125 par value 2,398,275
</TABLE>
<PAGE> 2
GENERAL BINDING CORPORATION AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial statements (unaudited)
Condensed consolidated balance sheets as of
June 30, 1999 and December 31, 1998 2
Condensed consolidated statements of income for the three
and six months ended June 30, 1999 and 1998 3
Condensed consolidated statements of cash flows for the
six months ended June 30, 1999 and 1998 4
Notes to condensed consolidated financial statements 5
Item 2. Management's discussion and analysis of financial condition
and results of operations 15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 22
Signatures 23
</TABLE>
1
<PAGE> 3
GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(unaudited)
--------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,580 $ 6,095
Receivables, less allowances for doubtful accounts
and sales returns: 1999 - $9,361, 1998 - $9,871 177,405 187,939
Inventories:
Raw materials 41,656 53,848
Work in process 6,618 6,533
Finished goods 116,027 104,136
--------- ---------
Total inventories 164,301 164,517
Deferred tax assets 11,766 12,429
Other 25,296 27,663
--------- ---------
Total current assets 388,348 398,643
Property, plant and equipment 210,111 217,179
Less - accumulated depreciation (86,442) (90,743)
--------- ---------
Net property, plant and equipment 123,669 126,436
Goodwill, net of amortization 302,371 304,649
Other 51,303 56,110
--------- ---------
Total assets $ 865,691 $ 885,838
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 49,840 $ 51,669
Accrued liabilities 76,625 77,115
Notes payable 40,564 27,462
Current maturities of long-term debt 808 972
--------- ---------
Total current liabilities 167,837 157,218
Long-term debt, less current maturities 470,566 490,591
Other long-term liabilities 13,103 13,760
Deferred tax liabilities 20,590 21,082
Stockholders' equity:
Common stock 1,962 1,962
Class B common stock 300 300
Additional paid-in capital 11,540 10,976
Retained earnings 218,302 225,112
Treasury stock (27,097) (26,632)
Accumulated other comprehensive income (11,412) (8,531)
--------- ---------
Total stockholders' equity 193,595 203,187
--------- ---------
Total liabilities and stockholders' equity $ 865,691 $ 885,838
========= =========
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
2
<PAGE> 4
GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000'S OMITTED, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 227,032 $ 230,708 $ 448,114 $ 444,652
Costs and expenses:
Cost of sales, including development
and engineering 130,540 131,183 257,609 253,187
Selling, service and administrative 79,540 76,921 158,480 146,585
Amortization of goodwill and related intangibles 2,786 2,822 5,450 5,292
Loss on sale of US RingBinder -- 3,500 -- 3,500
Restructuring and related expenses 11,555 -- 11,555 --
Interest expense 10,396 9,956 20,784 17,428
Other (income) expense, net (474) (264) (666) 245
--------- --------- --------- ---------
(Loss) income before taxes (7,311) 6,590 (5,098) 18,415
Income taxes (2,961) 2,872 (2,064) 7,602
--------- --------- --------- ---------
Net (loss) income $ (4,350) $ 3,718 $ (3,034) $ 10,813
========= ========= ========= =========
Other comprehensive income, net of taxes:
Foreign currency translation adjustments (884) (134) (2,881) (1,072)
--------- --------- --------- ---------
Comprehensive (loss) income $ (5,234) $ 3,584 $ (5,915) $ 9,741
========= ========= ========= =========
Net (loss) income per common share: (1)
Basic $ (0.27) $ 0.24 $ (0.19) $ 0.69
Diluted (0.27) 0.23 (0.19) 0.68
Weighted average number of common shares
outstanding: (2)
Basic 15,734 15,711 15,731 15,736
Diluted 15,734 15,874 15,731 15,876
</TABLE>
(1) Amounts represent per share amounts for both Common Stock and Class B
Common Stock.
(2) Weighted average shares includes both Common Stock and Class B Common
Stock.
The accompanying notes to condensed consolidated financial statements are an
integral part of these financial statements.
3
<PAGE> 5
GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000'S OMITTED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1999 1998
--------- ---------
<S> <C> <C>
Operating activities:
Net (loss) income $ (3,034) $ 10,813
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation 8,996 7,833
Amortization 9,642 8,156
Provision for doubtful accounts 1,595 1,601
Restructuring charges 11,555 -
(Increase) in non-current deferred taxes (479) (256)
(Increase) in other long-term assets (2,733) (504)
Other (540) 1,927
Changes in current assets and liabilities:
Decrease (increase) in receivables 5,909 (59)
(Increase) in inventories (3,087) (11,537)
Decrease (increase) in other current assets 1,611 (3,342)
(Increase) decrease in deferred tax assets (1,516) 1,112
(Decrease) in accounts payable and accrued liabilities (6,437) (5,665)
(Decrease) in income taxes payable (1,853) (3,751)
--------- ---------
Net cash provided by operating activities 19,629 6,328
INVESTING ACTIVITIES:
Capital expenditures (9,254) (12,688)
Payments for acquisitions and investments (net of cash acquired) - (143,662)
Proceeds from sale of plant and equipment 1,675 1,103
--------- ---------
Net cash (used in) investing activities (7,579) (155,247)
FINANCING ACTIVITIES:
Increase (decrease) in notes payable 13,102 (2,549)
Proceeds from long-term borrowings 180,041 231,964
Repayments of long-term debt (199,067) (60,139)
(Reduction) increase in current portion of long-term debt (169) 283
Payments of debt issuance costs (659) (7,685)
Dividends paid (3,774) (3,463)
Purchases of treasury stock (536) (3,231)
Proceeds from the exercise of stock options 636 728
--------- ---------
Net cash (used in) provided by financing activities (10,426) 155,908
Effect of exchange rates on cash 1,861 (759)
--------- ---------
Net increase in cash and cash equivalents 3,485 6,230
Cash and cash equivalents at the beginning of the year 6,095 3,753
--------- ---------
Cash and cash equivalents at the end of the period $ 9,580 $ 9,983
========= =========
Supplemental disclosure:
Interest paid $ 18,780 $ 15,388
Income taxes paid 3,781 7,499
</TABLE>
The accompanying notes to condensed consolidated financial statements are an
integral part of these statements.
4
<PAGE> 6
GENERAL BINDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of
General Binding Corporation and its subsidiaries ("GBC" or the
"Company"). These financial statements have been prepared by GBC,
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. GBC believes that the disclosures included in
these condensed consolidated financial statements are adequate to make
the information presented not misleading. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the financial statements and the notes thereto included in GBC's 1998
Annual Report on Form 10-K. In the opinion of GBC, all adjustments
necessary to present fairly the financial position of GBC as of June
30, 1999 and December 31, 1998 and the results of their operations for
the six months ended June 30, 1999 and 1998 have been included.
Operating results for any interim period are not necessarily indicative
of results that may be expected for the full year.
(2) LONG-TERM DEBT
Long-term debt consists of the following at June 30, 1999 and December
31, 1998 - outstanding borrowings denominated in foreign currencies
have been converted to U.S. dollars (000's omitted):
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
REVOLVING CREDIT FACILITY
U.S. Dollar borrowings - (weighted average floating interest rate of 6.42% at
June 30, 1999 and 6.2% at December 31, 1998) $267,000 $288,300
British Pound borrowings - (floating interest rate of 6.51% at June 30, 1999
and 7.8% at December 31, 1998) 21,293 19,416
Swiss Franc borrowings - (floating interest rate of 2.35% at June 30, 1999 and
2.33% at December 31, 1998) 8,902 7,785
Dutch Guilder borrowings - (floating interest rate of 3.95% at June 30, 1999
and 4.3% at December 31, 1998) 4,834 5,394
INTERNATIONAL CREDIT AGREEMENT
Australian Dollar borrowings - due July 2000 (floating interest rate of 6.23%
at June 30, 1999 and 6.5% at December 31, 1998) 2,670 2,449
INDUSTRIAL REVENUE BONDS
Industrial Revenue Bond - due March 2026 (floating interest rate of 3.75% at
June 30, 1999 and 4.2% at December 31, 1998) 7,511 7,511
Industrial Revenue Bond - due annually from July 1994 to July 2008 (floating
interest rate of 3.99% at June 30, 1999 and 3.6% at December 31, 1998) 1,750 1,750
Industrial Revenue Bond - due annually from June 2002 to June 2007
(floating interest rate of 2.91% at June 30, 1999 and 3.45% at
December 31, 1998) 1,050 1,050
NOTES PAYABLE
Senior Subordinated Notes, U.S. borrowing - due 2008 (fixed interest rate of
9.375%) 150,000 150,000
Note payable, Dutch Guilder borrowing - due monthly from November 1994 to
October 2004 (fixed interest rate of 8.85%) 1,440 1,782
Note payable, Dutch guilder borrowing - due June 2000 (fixed interest rate of
7.05%) 1,525 1,701
OTHER BORROWINGS 3,399 4,425
-------- --------
Total debt 471,374 491,563
Less - current maturities 808 972
-------- --------
Total long-term debt $470,566 $490,591
======== ========
</TABLE>
5
<PAGE> 7
(3) EARNINGS PER SHARE
In accordance with SFAS No. 128, net income per common share was
computed as follows (000's omitted, except per share amounts):
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
1999 1998 1999 1998
-------- ------- -------- -------
<S> <C> <C> <C> <C>
(A) Net (loss) income available to common
shareholders (4,350) 3,718 (3,034) 10,813
======== ======= ======== =======
(B) Weighted average number of common
shares outstanding (1) 15,734 15,711 15,731 15,736
Additional common shares issuable under
employee stock options using the treasury
stock method 163 140
-------- ------- -------- -------
(C) Weighted average number of common shares
outstanding assuming the exercise of stock
options (1) 15,734 15,874 15,731 15,876
======== ======= ======== =======
Net (loss) income per common share (2) (A) / (B) $ (0.27) $ 0.24 $ (0.19) $ 0.69
======== ======= ======== =======
Net (loss) income per common share, assuming
dilution (2) (A) / (C) $ (0.27) $ 0.23 $ (0.19) $ 0.68
======== ======= ======== =======
</TABLE>
(1) Weighted average shares includes both Common Stock and Class B
Common Stock.
(2) Amounts represent per share amounts for both Common Stock and
Class B Common Stock.
(4) Restructuring and related expenses
During the second quarter of 1999 GBC recorded an after-tax
restructuring charge of $6.9 million ($11.6 million pre-tax), or
approximately $.44 per diluted share. The restructuring charge
primarily consists of severance costs, early retirement benefits, lease
cancellation expenses and fixed asset write-offs related to facility
closures in conjunction with the rationalization of various functions
and reductions in discretionary spending. GBC's restructuring efforts
will be focused in three areas:
- Consolidating all European distribution, logistics and
accounting operations;
- Streamlining the sales functions of the Document Finishing
Group's North American direct sales operations; and
- Closing or consolidating several worldwide distribution
centers and rationalizing certain of the Company's supplies
manufacturing operations.
Approximately 435 positions, or about 8% of the Company's worldwide
workforce, will be affected. The components of the restructuring charge
are as follows (000's omitted):
Severance and early retirement benefits $ 7.3
Lease cancellation expenses 1.0
Asset write-off and write-downs 2.0
All other 1.3
-------
$ 11.6
6
<PAGE> 8
(5) BUSINESS SEGMENTS
In accordance with SFAS No. 131, GBC has identified three reportable
operating segments based on the amount of revenues and operating income
of these segments. GBC's operating segments are based on the
organization of GBC into business groups comprised of similar products
and services. The Document Finishing Group's revenues are primarily
derived from sales of binding and punching equipment and related
supplies, custom binders and folders, and maintenance and repair
services. The Films Group's revenues are primarily derived through
sales of thermal films, mid-range and commercial high-speed laminators
and large-format digital print laminators. The Document Finishing Group
and the Films Group's products and services are sold through direct
channels to the general office markets, commercial reprographic
centers, educational and training markets, commercial printers, and to
government agencies. The Office Products Group's revenues are primarily
derived from the sale of binding and laminating equipment and supplies,
document shredders, visual communications products and desktop
accessories through indirect channels including office product
superstores, contract/commercial stationers, wholesalers, mail order
companies and retail dealers. Expenses incurred by the three reportable
segments described above relate to costs incurred to manufacture or
purchase products and selling, general and administrative costs. The
All Others category presented below primarily represents expenses of a
corporate nature and revenues and expenses for certain entities not
assigned to one of the other three reportable segments.
<TABLE>
<CAPTION>
Unaffiliated Customer Sales Affiliate Sales Operating Income
--------------------------- --------------------------- ---------------------------
Three months ended June 30, Three months ended June 30, Three months ended June 30,
--------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Document Finishing Group $ 61,149 $ 61,423 $ 5,098 $ 13,130 $ 8,019 $ 8,549
Film Products Group 41,567 39,353 4,374 8,224 8,747 9,041
Office Products Group 111,193 112,528 32 1,881 6,446 12,647
All Others 13,123 17,404 (7) 1,446 (9,046) (10,455)
Eliminations - - (9,497) (24,681) - -
-------- -------- -------- -------- -------- --------
Total $227,032 $230,708 $ - $ - $ 14,166 $ 19,782
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Unaffiliated Customer Sales Affiliate Sales Operating Income
--------------------------- ------------------------- -------------------------
Six months ended June 30, Six months ended June 30, Six months ended June 30,
--------------------------- ------------------------- -------------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Document Finishing Group $118,706 $120,798 $ 23,574 $ 25,260 $ 15,329 $ 17,315
Film Products Group 78,488 75,252 9,807 15,264 15,964 16,801
Office Products Group 227,101 216,239 18,326 2,891 15,526 25,339
All Others 23,819 32,363 60 2,320 (20,244) (19,867)
Eliminations - - (51,767) (45,735) - -
-------- -------- -------- -------- -------- --------
Total $448,114 $444,652 $ - $ - $ 26,575 $ 39,588
======== ======== ======== ======== ======== ========
</TABLE>
Sales information for the three and six months ended June 30, 1999 and 1998 by
geographical area is summarized below.
<TABLE>
<CAPTION>
Sales to Unaffiliated Customers
--------------------------------------------------------
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
United States $150,178 $155,387 $300,021 $308,130
Europe 45,501 45,740 89,115 81,733
International 31,353 29,581 58,978 54,789
-------- -------- -------- --------
Total $227,032 $230,708 $448,114 $444,652
======== ======== ======== ========
</TABLE>
7
<PAGE> 9
(6) SUBSIDIARY GUARANTOR INFORMATION
During 1998, GBC issued $150 million of 9.375% Senior Subordinated
Notes due 2008 in order to finance the acquisition of Ibico AG. Each of
GBC's domestic restricted subsidiaries have jointly and severally,
fully and unconditionally guaranteed the Senior Subordinated Notes.
Rather than filing separate financial statements for each guarantor
subsidiary with the Securities and Exchange commission, GBC has elected
to present the following condensed consolidating results of operations,
financial position and cash flows of the Parent, Guarantors and
Non-Guarantors (in each case carrying investments under the equity
method) and the eliminations necessary to arrive at the information for
GBC on a consolidated basis:
8
<PAGE> 10
CONDENSED CONSOLIDATING BALANCE SHEETS (000'S OMITTED):
<TABLE>
<CAPTION>
June 30, 1999
------------------------------------------------------------------------------
Parent Guarantors Non-Guarantors Eliminations Consolidated
--------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,404 $ 4,925 $ 3,251 $ - $ 9,580
Receivables, net 108,384 1,544 67,477 - 177,405
Inventories, at lower of cost or market 91,200 288 72,813 - 164,301
Deferred tax assets 9,863 353 1,550 - 11,766
Other 10,864 3,782 10,650 - 25,296
Due from affiliates 94,126 55,411 5,363 (154,900) -
--------- --------- --------- --------- ---------
Total current assets 315,841 66,303 161,104 (154,900) 388,348
Net property, plant and equipment 86,593 8,678 28,398 - 123,669
Goodwill, net of amortization 194,319 25,948 82,104 - 302,371
Other 43,604 1,765 7,638 (1,704) 51,303
Investment in subsidiaries 167,060 131,366 - (298,426) -
--------- --------- --------- --------- ---------
Total assets $ 807,417 $ 234,060 $ 279,244 $(455,030) $ 865,691
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,724 $ 496 $ 16,620 $ - $ 49,840
Accrued liabilities 53,511 600 22,514 - 76,625
Notes payable 13,200 - 27,364 - 40,564
Current maturities of long-term debt 383 - 425 - 808
Due to affiliates 34,741 55,270 64,823 (154,834) -
--------- --------- --------- --------- ---------
Total current liabilities 134,559 56,366 131,746 (154,834) 167,837
Long-term debt, less current maturities 457,961 - 14,374 (1,769) 470,566
Other long-term liabilities 7,992 333 4,778 - 13,103
Deferred tax liabilities 13,311 3,079 4,200 - 20,590
Stockholders' equity:
Common stock 1,961 5 4,277 (4,281) 1,962
Class B common stock 300 - - - 300
Additional paid-in capital 11,540 55,667 108,213 (163,880) 11,540
Retained earnings 218,302 119,102 22,698 (141,800) 218,302
Treasury stock (27,097) - - - (27,097)
Accumulated other comprehensive income (11,412) (492) (11,042) 11,534 (11,412)
--------- --------- --------- --------- ---------
Total stockholders' equity 193,594 174,282 124,146 (298,427) 193,595
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 807,417 $ 234,060 $ 279,244 $(455,030) $ 865,691
========= ========= ========= ========= =========
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
December 31, 1998
------------------------------------------------------------------------------
Parent Guarantors Non-Guarantors Eliminations Consolidated
--------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,049 $ (650) $ 2,696 $ - $ 6,095
Receivables, net 118,477 1,609 67,853 - 187,939
Inventories, at lower of cost or market 79,657 7,033 77,760 67 164,517
Deferred tax assets 9,386 957 2,160 (74) 12,429
Other 18,667 559 8,437 - 27,663
Due from affiliates 84,457 53,169 2,465 (140,091) -
--------- --------- --------- --------- ---------
Total current assets 314,693 62,677 161,371 (140,098) 398,643
Net property, plant and equipment 85,589 11,307 29,540 - 126,436
Goodwill, net of amortization 191,511 31,264 82,073 (199) 304,649
Other 45,732 1,622 10,460 (1,704) 56,110
Investment in subsidiaries 168,617 152,006 - (320,623) -
--------- --------- --------- --------- ---------
Total assets $ 806,142 $ 258,876 $ 283,444 $(462,624) $ 885,838
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 30,775 $ 3,187 $ 17,707 $ - $ 51,669
Accrued liabilities 53,757 (253) 23,611 - 77,115
Notes payable - - 27,462 - 27,462
Current maturities of long-term debt 413 15 544 - 972
Due to affiliates 21,910 58,956 60,057 (140,923) -
--------- --------- --------- --------- ---------
Total current liabilities 106,855 61,905 129,381 (140,923) 157,218
Long-term debt - affiliated 1,704 - - (1,704) -
Long-term debt, less current maturities 473,559 1,050 15,982 - 490,591
Other long-term liabilities 7,901 226 5,633 - 13,760
Deferred tax liabilities 12,936 3,454 4,692 - 21,082
Stockholders' equity:
Common stock 1,962 5 5,171 (5,176) 1,962
Class B common stock 300 - - - 300
Additional paid-in capital 10,976 53,421 102,788 (156,209) 10,976
Retained earnings 225,112 143,616 27,847 (171,463) 225,112
Treasury stock (26,632) - - - (26,632)
Accumulated other comprehensive income (8,531) (4,801) (8,050) 12,851 (8,531)
--------- --------- --------- --------- ---------
Total stockholders' equity 203,187 192,241 127,756 (319,997) 203,187
--------- --------- --------- --------- ---------
Total liabilities and stockholders' equity $ 806,142 $ 258,876 $ 283,444 $(462,624) $ 885,838
========= ========= ========= ========= =========
</TABLE>
10
<PAGE> 12
<TABLE>
<CAPTION>
Three months ended June 30, 1999
---------------------------------------------------------------------
Parent Guarantors (a) Non-Guarantors Eliminations Consolidated
--------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Unaffiliated sales $ 150,178 $ - $ 76,854 $ - $ 227,032
Affiliated sales 11,767 - 11,639 (23,406) -
--------- --------- --------- --------- ---------
Net sales 161,945 - 88,493 (23,406) 227,032
Costs and expenses:
Cost of sales, including development and engineering 95,739 194 57,979 (23,372) 130,540
Selling, service and administrative 51,807 18 27,715 - 79,540
Amortization of goodwill and related intangibles 2,067 44 675 - 2,786
Restructuring and related expenses 8,860 - 2,695 - 11,555
Interest expense 9,719 371 1,072 (766) 10,396
Other (income) expense, net (1,178) (773) 1,299 178 (474)
--------- --------- --------- --------- ---------
(Loss) income before taxes and undistributed
earnings of wholly owned subsidiaries (5,069) 146 (2,942) 554 (7,311)
Income taxes (1,815) 60 (1,192) (14) (2,961)
--------- --------- --------- --------- ---------
(Loss) income before undistributed earnings
of wholly owned subsidiaries (3,254) 86 (1,750) 568 (4,350)
Undistributed (losses) earnings of wholly-
owned subsidiaries (3,905) (1,170) - 5,075 -
--------- --------- --------- --------- ---------
Net (loss) income $ (7,159) $ (1,084) $ (1,750) $ 5,643 $ (4,350)
========= ========= ========= ========= =========
</TABLE>
(a) Effective January 1, 1999 the Pro-Tech and Sickinger subsidiaries were
merged into the Parent company.
<TABLE>
<CAPTION>
Three months June 30, 1998
--------------------------------------------------------------------
Parent Guarantors Non-Guarantors Eliminations Consolidated
--------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Unaffiliated sales $ 134,708 $ 13,573 $ 82,427 $ - $ 230,708
Affiliated sales 15,389 6,059 10,667 (32,115) -
--------- --------- --------- --------- ---------
Net sales 150,097 19,632 93,094 (32,115) 230,708
Costs and expenses:
Cost of sales, including development and engineering 87,319 27,978 48,298 (32,412) 131,183
Selling, service and administrative 46,434 8,657 21,830 - 76,921
Amortization of goodwill and related intangibles 1,667 354 801 - 2,822
Loss on sale of US RingBinder - 3,500 - - 3,500
Interest expense 11,743 592 1,055 (3,434) 9,956
Other (income) expense, net (734) (2,888) (76) 3,434 (264)
--------- --------- --------- --------- ---------
Income (loss) before taxes and undistributed
earnings of wholly owned subsidiaries 3,668 (18,561) 21,186 297 6,590
Income taxes 282 1,652 818 120 2,872
--------- --------- --------- --------- ---------
Income (loss)before undistributed earnings
of wholly owned subsidiaries 3,386 (20,213) 20,368 177 3,718
Undistributed earnings (loss) of wholly-
owned subsidiaries 332 3,577 - (3,909) -
--------- --------- --------- --------- ---------
Net income (loss) $ 3,718 $ (16,636) $ 20,368 $ (3,732) $ 3,718
========= ========= ========= ========= =========
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
Six months ended June 30, 1999
-----------------------------------------------------------------------
Parent Guarantors (a) Non-Guarantors Eliminations Consolidated
--------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Unaffiliated sales $ 300,021 $ - $ 148,093 $ - $ 448,114
Affiliated sales 28,341 - 31,953 (60,294) -
--------- --------- --------- --------- ---------
Net sales 328,362 - 180,046 (60,294) 448,114
Costs and expenses:
Cost of sales, including development and engineering 195,422 379 122,102 (60,294) 257,609
Selling, service and administrative 105,607 45 52,828 - 158,480
Amortization of goodwill and related intangibles 3,852 375 1,223 - 5,450
Restructuring and related expenses 8,860 - 2,695 - 11,555
Interest expense 19,427 698 2,087 (1,428) 20,784
Other (income) expense, net (2,030) (829) 1,353 840 (666)
--------- --------- --------- --------- ---------
(Loss) income before taxes and undistributed
earnings of wholly owned subsidiaries (2,776) (668) (2,242) 588 (5,098)
Income taxes (886) (270) (908) - (2,064)
--------- --------- --------- --------- ---------
(Loss) income before undistributed earnings
of wholly owned subsidiaries (1,890) (398) (1,334) 588 (3,034)
Undistributed (losses) earnings of wholly-
owned subsidiaries (3,953) (576) - 4,529 -
--------- --------- --------- --------- ---------
Net (loss) income $ (5,843) $ (974) $ (1,334) $ 5,117 $ (3,034)
========= ========= ========= ========= =========
</TABLE>
(a) Effective January 1, 1999 the Pro-Tech and Sickinger subsidiaries were
merged into the Parent company.
<TABLE>
<CAPTION>
Six months ended June 30, 1998
--------------------------------------------------------------------
Parent Guarantors Non-Guarantors Eliminations Consolidated
--------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Unaffiliated sales $ 275,288 $ 20,891 $ 148,473 $ - $ 444,652
Affiliated sales 31,128 9,798 14,462 (55,388) -
--------- --------- --------- --------- ---------
Net sales 306,416 30,689 162,935 (55,388) 444,652
Costs and expenses:
Cost of sales, including development and engineering 178,184 39,255 91,910 (56,162) 253,187
Selling, service and administrative 93,166 10,259 43,160 - 146,585
Amortization of goodwill and related intangibles 3,545 675 1,072 - 5,292
Loss on sale of US RingBinder - 3,500 - - 3,500
Interest expense 20,963 924 2,088 (6,547) 17,428
Other (income) expense, net (1,338) (5,323) 359 6,547 245
--------- --------- --------- --------- ---------
Income (loss) before taxes and undistributed
earnings of wholly owned subsidiaries 11,896 (18,601) 24,346 774 18,415
Income taxes 3,351 1,838 2,100 313 7,602
--------- --------- --------- --------- ---------
Income (loss)before undistributed earnings
of wholly owned subsidiaries 8,545 (20,439) 22,246 461 10,813
Undistributed earnings (loss) of wholly-
owned subsidiaries 2,268 4,262 - (6,530) -
--------- --------- --------- --------- ---------
Net income (loss) $ 10,813 $ (16,177) $ 22,246 $ (6,069) $ 10,813
========= ========= ========= ========= =========
</TABLE>
12
<PAGE> 14
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (000'S OMITTED):
<TABLE>
<CAPTION>
Six months ended June 30, 1999
--------------------------------------------------------------------
Parent Guarantors Non-Guarantors Eliminations Consolidated
--------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 23,668 $ 5,767 $ (10,067) $ 261 $ 19,629
INVESTING ACTIVITIES:
Capital expenditures (5,445) (192) (3,617) - (9,254)
Proceeds from sale of plant and equipment 1,675 - - - 1,675
--------- --------- --------- --------- ---------
Net cash used in investing activities (3,770) (192) (3,617) - (7,579)
FINANCING ACTIVITIES:
Increase (decrease) in notes payable 13,199 - (97) - 13,102
(Decrease) increase in intercompany borrowings (13,150) - 13,150 - -
Proceeds from long-term borrowings 180,010 - 31 - 180,041
Repayments of long-term debt (198,361) - (706) - (199,067)
Reduction in current portion of long-term debt (169) - - - (169)
Payments of debt issuance costs (659) - - - (659)
Dividends paid (3,774) - - - (3,774)
Purchases of treasury stock (536) - - - (536)
Proceeds from the exercise of stock options 636 - - - 636
--------- --------- --------- --------- ---------
Net cash (used in) provided by financing
activities (22,804) - 12,378 - (10,426)
Effect of exchange rates on cash - - 1,861 - 1,861
--------- --------- --------- --------- ---------
NET INCREASE IN CASH & CASH EQUIVALENTS (2,906) 5,575 555 261 3,485
Cash and cash equivalents at the beginning of
the year 4,049 (650) 2,696 - 6,095
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD $ 1,143 $ 4,925 $ 3,251 $ 261 $ 9,580
========= ========= ========= ========= =========
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
Six months ended June 30, 1998
--------------------------------------------------------------------
Parent Guarantors Non-Guarantors Eliminations Consolidated
--------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 22,455 $ 278 $ (16,405) $ - $ 6,328
INVESTING ACTIVITIES:
Capital expenditures (8,367) (2,179) (2,142) - (12,688)
Payments for acquisitions and investments
(net of cash acquired) - (143,662) - - (143,662)
Proceeds from sale of plant and equipment 1,026 - 77 - 1,103
Capital contributions to subsidiaries (17,111) 17,111 - - -
--------- --------- --------- ------- ---------
Net cash used in investing activities (24,452) (128,730) (2,065) - (155,247)
FINANCING ACTIVITIES:
(Decrease) in notes payable (680) (5) (1,864) - (2,549)
(Decrease) increase in intercompany borrowings (151,730) 129,953 21,777 - -
Proceeds from long-term borrowings 224,046 - 7,918 - 231,964
Repayments of long-term debt (60,000) - (139) - (60,139)
Increase in current portion of long-term debt 259 - 24 - 283
Payments of debt issuance costs (7,685) - - - (7,685)
Dividends paid (3,463) - - - (3,463)
Purchases of treasury stock (3,231) - - - (3,231)
Proceeds from the exercise of stock options 728 - - - 728
--------- --------- --------- ------- ---------
Net cash provided by financing activities (1,756) 129,948 27,716 - 155,908
Effect of exchange rates on cash - - (759) - (759)
--------- --------- --------- ------- ---------
NET INCREASE IN CASH & CASH EQUIVALENTS (3,753) 1,496 8,487 - 6,230
Cash and cash equivalents at the beginning of
the year 3,753 - - - 3,753
--------- --------- --------- ------- ---------
CASH AND CASH EQUIVALENTS AT THE END OF THE
PERIOD $ - $ 1,496 $ 8,487 $ - $ 9,983
========= ========= ========= ======= =========
</TABLE>
14
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following narrative discusses the results of operations, liquidity
and capital resources for GBC on a consolidated basis. This section
should be read in conjunction with GBC's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
contained therein.
FORWARD LOOKING STATEMENTS
Certain statements under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and
elsewhere in this Report constitute "forward looking statements" within
the meaning of Section 21E(I) (1) of the Exchange Act. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results and
performance of GBC to be materially different than anticipated future
results and performance expressed or implied by such forward-looking
statements. Such factors include, among other things, the following:
competition within the office products and lamination film products
markets, the effects of economic conditions, the issues associated with
the acquisition and integration of recently acquired operations,
including Ibico AG ("Ibico"), operating risks, the ability of GBC's
distributors to successfully market and sell the Company's products,
the ability of GBC to obtain capital to finance planned growth, the
availability and price of raw materials, dependence on certain
suppliers of manufactured products, the effect of consolidation in the
office products industry and other factors indicated in GBC's
registration statements and reports filed with the SEC. These important
factors may also cause the forward-looking statements made by GBC in
this Report, including but not limited to those contained under the
caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations," to be materially different from the actual
results achieved by the Company. In light of these and other
uncertainties, the inclusion of any forward-looking statements herein
should not be regarded as a representation by GBC that the Company's
plans and objectives will be achieved.
RESULTS OF OPERATIONS -
QUARTER ENDED JUNE 30, 1999 COMPARED TO QUARTER ENDED JUNE 30, 1998
Sales
Net sales for the second quarter of 1999 totaled $227.0 million, a
decrease of 1.6% as compared to the second quarter of 1998. Sales by
U.S. RingBinder, which was sold on June 30, 1998, were $6.6 million
during the second quarter of 1998. Excluding the impact of U.S.
RingBinder, sales increased approximately 1.3% in the second quarter of
1999 compared to 1998. Sales for the second quarter of 1999 for both
the Document Finishing and the Office Products groups were relatively
flat compared to the second quarter of 1998. Sales of the Films Group
increased $2.2 million or 5.6% compared to the second quarter of 1998.
15
<PAGE> 17
Gross Margin, Costs and Expenses
The Company's overall gross profit margin declined to 42.5% in the
second quarter of 1999 compared to 43.1% in 1998. Both the Films and
Office Products Groups experienced lower gross profit margins in the
second quarter of 1999 compared to 1998, while margins in the Document
Finishing Group were relatively flat. Gross profit margins declined in
the Films Group primarily due to price competition. The Office Products
Group gross profit margin was unfavorably impacted due to a higher than
expected level of customer returns of old Ibico product along with
plan-o-gram changes at the Group's retail customers.
Selling, service and administrative expenses increased $2.6 million in
the second quarter of 1999 compared to 1998. As a percentage of sales,
operating expenses were 35.0% in the second quarter of 1999 compared to
33.3% in 1998. The increase in selling, service and administrative
expenses was primarily due to higher costs in the Office Products
Group. The increased costs resulted from higher rebate programs, higher
distribution expenses associated with servicing certain Ibico
customers, costs associated with integrating the Group's operations in
the United Kingdom, and the implementation of new distribution systems.
Amortization of goodwill and related intangibles was $2.8 million for
the second quarter, which was approximately flat compared to the second
quarter of 1998.
Interest expense for the second quarter of 1999 increased to $10.4
million compared to $9.9 million in 1998. The primary reason for the
increase was a higher average debt level.
Restructuring and related expenses
During the second quarter of 1999 GBC recorded an after-tax
restructuring charge of $6.9 million ($11.6 million pre-tax), or
approximately $.44 per diluted share. See Note 4 to the Condensed
Consolidated Financial Statements for additional information.
16
<PAGE> 18
Income Taxes
GBC's overall effective income tax rate was 40.5% for the second
quarter of 1999 compared to 43.6% in 1998. The mix of income and losses
in certain of GBC's international operations, and the benefits recorded
in connection with the restructuring provision were the primary reasons
for the decrease.
Net Loss
As a result of the factors described above, GBC recorded a net loss for
the second quarter of 1999 of ($4.4) million, or ($.27) per diluted
share, compared to net income of $3.7 million, or $0.23 per diluted
share during the second quarter of 1998. Net income for the second
quarter of 1999 was $2.5 million or $.16 per diluted share, excluding
the after-tax charge of $6.9 million for restructuring, or $.44 per
diluted share. By comparison, net income for the second quarter of 1998
was $5.4 million, or $.34 per diluted share, after excluding the
effects of the U.S. RingBinder sale.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30,
1998
Sales
Net sales for the first half of 1999 totaled $448.1 million, an
increase of 0.8% compared to the first half of 1998. The acquisition of
Ibico (which was effective February 27, 1998) contributed an additional
$21.0 million in sales during the first half of 1999 compared to 1998.
Sales by U.S. RingBinder, which was sold on June 30, 1998, were $12.7
million during the first half of 1998. Excluding the impact of Ibico
and U.S. RingBinder, sales decreased approximately 1.1% in the first
half of 1999 compared to 1998. Sales for the Document Finishing Group
for the first six months of 1999 were down slightly compared to 1998.
The Films Group's sales increased $3.2 million, or 4.3% primarily due
to higher sales of laminating film. Sales in the Office Products Group
increased $10.9 million during the first half of 1999 compared to 1998.
Excluding the impact of Ibico, sales for the Office Products Group
decreased approximately $10.0 million. The primary reason for the
decrease was a sharp decline in sales of personal shredders during the
first three months of 1999 compared to 1998.
17
<PAGE> 19
Gross Margin, Costs and Expenses
The Company's overall gross profit margin declined to 42.5% in the
first half of 1999 compared to 43.1% in 1998. Both the Films and Office
Products Groups experienced lower gross profit margins in the first
half of 1999 compared to 1998, while margins in the Document Finishing
Group were relatively flat. Gross profit margins declined in the Films
Group primarily due to price competition. The Office Products Group
gross profit margin was unfavorably impacted as a result of lower
margins on Ibico during the first three months of 1999 compared to 1998
along with higher than expected levels of customer returns and
plan-o-gram changes at the Group's retail customers.
Selling, service and administrative expenses increased $11.9 million in
the first half of 1999 compared to 1998. As a percentage of sales,
operating expenses were 35.4% in the first half of 1999 compared to
33.0% in 1998. The increase in selling, service and administrative
expenses was primarily due to higher costs in the Office Products
Group. The increased costs resulted from higher rebate programs, higher
distribution expenses associated with servicing certain Ibico
customers, costs associated with integrating the Group's operations in
the United Kingdom, and the implementation of new distribution systems.
Amortization of goodwill and related intangibles increased to $5.5
million in the first half of 1999 compared to $5.3 million in the first
half of 1998, primarily as a result of the Ibico acquisition.
Interest expense for the first half of 1999 increased to $20.8 million
compared to $17.4 million in 1998. The primary reasons for the increase
were higher average debt levels as a result of the financing of the
Ibico acquisition and higher interest expense associated with the
Senior Subordinated Notes.
During June 1998, GBC recognized a loss of $3.5 million from the sale
of US RingBinder.
Other income and expense
Other income was $.7 million in the first half of 1999 compared to an
expense of $.2 million in 1998. The primary reason for the change was
foreign currency transaction gains in 1999 compared to losses in 1998.
Income Taxes
GBC's overall effective income tax rate was 40.5% for the first half of
1999 compared to 41.3% in 1998. The mix of income and losses in certain
of GBC's international operations.
Net Loss
As a result of the factors described above, GBC recorded a net loss of
$(3.0) million for the first half of 1999, or $(.19) per diluted share,
compared to net income of $10.8 million,
18
<PAGE> 20
or $0.68 per diluted share in the first half of 1998. Excluding the
impact of the $6.9 million after-tax restructuring charge, net income
was $3.8 million or, $.24 per diluted share. Excluding the effects
of U.S. RingBinder, net income for the six months ended June 30, 1998
was $12.0 million, or $.78 per diluted share.
LIQUIDITY AND CAPITAL RESOURCES
GBC's cash requirements for operations and capital expenditures during
the first half of 1999 were financed by internally-generated cash flow
and borrowings under GBC's revolving credit facilities and other
short-term facilities from banks.
Despite sharply lower earnings, net cash provided by operating
activities was $19.6 million for the first six months of 1999 compared
to $6.3 million in the first half of 1998.
Capital expenditures during the first six months of 1999 were $9.3
million compared to $12.6 million during the first six months of 1998.
Cash dividends paid during the first six months of both 1999 and 1998
were $.24 and $0.22 per share, respectively.
As of June 30, 1999, GBC had access to various U.S. and international
credit facilities, including a multicurrency revolving credit facility
(the "Revolving Credit Facility") with a group of international banks
providing for up to $475.0 million of unsecured revolving credit
borrowings through January 2002. The Revolving Credit Facility,
established on January 13, 1997 contains, among other things, certain
restrictive covenants which require GBC to maintain certain ratios
regarding current assets and liabilities, leverage and interest
coverage.
As of June 30, 1999, GBC had the equivalent of $293.2 million of
borrowings outstanding under the Revolving Credit Facility.
On August 6, 1999, GBC decreased its quarterly dividend from $.12 per
share to $.06 per share. GBC's Board of Directors has elected to reduce
the dividend payout rate to increase the cash available for value
enhancing investments.
GBC is currently negotiating with its primary lending group to amend
the Revolving Credit Facility. The proposed amendment would provide
GBC with the liquidity that management believes is necessary to meet
currently-anticipated capital and operating requirements. Management
expects that the amendment will be effective by September 30, 1999;
however, there can be no assurances that a satisfactory amendment will
be completed. The proposed amendment would, among other things, relax
certain of the most restrictive financial covenants that GBC would be
required to meet. The amended facility will likely require GBC to incur
higher interest expense on outstanding borrowings in the future.
19
<PAGE> 21
YEAR 2000 COMPLIANCE
In 1997 GBC began identifying issues and formulating plans to address
Year 2000 matters that might impact its operations. The Year 2000
problem consists of shortcomings in certain electronic data processing
systems that make them unable to process year-date data accurately
beyond the year 1999. Essentially, certain systems were designed to
abbreviate dates by eliminating the first two digits of the year under
the assumption that these digits would always be 19. As a result, such
applications could fail or create erroneous results if they recognize
"00" as the year 1900 rather than 2000.
GBC's State of Readiness
In early 1998, GBC established a Year 2000 Task Force which is directed
by GBC's Vice President of Business Technology. The Task Force has
identified and reviewed GBC's hardware and software systems, embedded
technological systems, GBC's product offerings, and material third
party relationships. GBC's state of readiness is as follows:
- Substantially all of its hardware systems are Year 2000
compliant.
- Certain software systems are being modified or replaced to
become Year 2000 compliant.
- Surveys have been sent to more than 380 material third party
suppliers. Approximately 84% of the surveys have been returned
and are currently being assessed by management of GBC's
Business Units to determine if the failure of any material
supplier to have its products or services compliant could have
a materially adverse affect on the results of GBC's business
or operations.
- The significant projects currently in process are summarized
below:
20
<PAGE> 22
<TABLE>
<CAPTION>
Operating Function Project Current Status Target Completion
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
North American Document Remediate order processing, Completed Completed
Finishing and Films distribution and financial systems
Replace manufacturing systems at Implemented at four September 1999
five sites of five sites
North American Office Remediate order processing, Completed Completed
Products distribution and financial systems
European Document Replace order processing, Implemented at 11 December 1999
Finishing and Office manufacturing, distribution and of 13 sites
Products financial systems
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Costs to Address the Company's Year 2000 Issues
The total cost of GBC's Year 2000 projects is estimated to be
approximately $3.0 million (a majority of the expenditures are in North
America). Such costs include new software purchased and outside
consultants hired to remediate non-compliant systems. GBC's estimated
Year 2000 costs do not include efforts to replace certain systems, as
those projects were not accelerated to ensure Year 2000 compliance; nor
does GBC's estimate include the costs of company employees that may
devote a portion of their efforts towards Year 2000 remediation
projects. These costs have not had, nor are expected to have, a
material effect on GBC's financial position, results of operations or
cash flows in any of the years in which spending has or will occur.
This expectation assumes that GBC will not be obligated to incur
significant Year 2000 related costs on behalf of its customers or
suppliers.
The Risks of the Company's Year 2000 Issues and Contingency Plans
GBC believes that any Year 2000 issues that could significantly impact
its operations have been identified and that replacement or remediation
efforts will be implemented on time. GBC has prioritized its European
implementation project focusing on early readiness for its most
significant European operations. GBC believes that non-compliance of
any European operation on January 1, 2000 will not cause any material
disruption to its business or operations as a whole and that, in such
event, contingency plans will have been implemented to bridge any
period of non-compliance. GBC has not determined the most likely
worst-case scenarios related to Year 2000 issues, but continues to
monitor the projects in process and will develop contingency plans, if
necessary, to ensure that it will be able to operate critical areas of
the business.
21
<PAGE> 23
PART II. OTHER INFORMATION
Item 6: Exhibits
(a) Exhibit No. 10 Material Contracts:
Second Amendment to the Multicurrency Credit
Agreement, dated as of the March 31, 1999 among the
Issuer, each of the guarantors party thereto, the
lenders party thereto in their capacities as lenders
there under and Harris Trust and Savings Bank, as
administrative agent.
Exhibits: Exhibit No. 27 Financial Data Schedule
(b) Reports on Form 8-K: None
22
<PAGE> 24
SIGNATURE
Pursuant to the requirements of Section 13 or 19(d) 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
By: /s/ William R. Chambers, Jr.
----------------------------
William R. Chambers, Jr.
Vice President and Chief
Financial Officer
August 16, 1999
23
<PAGE> 1
EXHIBIT 10
GENERAL BINDING CORPORATION
THIRD AMENDMENT TO MULTICURRENCY CREDIT AGREEMENT
This Third Amendment to Multicurrency Credit Agreement (herein, the
"Amendment") is entered into as of March 31, 1999, between General Binding
Corporation, a Delaware corporation (the "Company"), each Borrowing Subsidiary
party to the Credit Agreement (as such term is defined below), each of the Banks
party to such Credit Agreement, Harris Trust and Savings Bank, as a Bank and in
its capacity as agent under the Credit Agreement (the "Administrative Agent")
and LaSalle National Bank, The First National Bank of Chicago, The Bank of New
York and Credit Agricole Indosuez, each as a Bank and in their respective
capacities as Co-Agents under the Credit Agreement.
PRELIMINARY STATEMENTS
A. The Company and the Banks entered into a certain Multicurrency
Credit Agreement, dated as of January 13, 1997 (as amended, the "Credit
Agreement"). All capitalized terms used herein without definition shall have the
same meanings herein as such terms have in the Credit Agreement.
B. The Company has requested that the Banks consent to an increase in
the Domestic Swing Line Commitment and the Multicurrency Swing Line Commitment,
amend certain covenants, add and amend certain definitions and make certain
other amendments to the Credit Agreement, and the Banks are willing to do so
under the terms and conditions set forth in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS.
Subject to the satisfaction of the conditions precedent set forth in
Section 2 below, the Credit Agreement shall be and hereby is amended as follows:
(a) The definition of Eurocurrency Margin appearing in
Section 1.3(b) of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Eurocurrency Margin" means (a) for each Eurocurrency Bid Loan
the percentage agreed to pursuant to Section 2.4 hereof and
(b) for each Committed Eurocurrency Loan, 1.150% per annum
from and including the Third Amendment Effective Date until
the next Pricing Date and thereafter from, and including, one
Pricing Date to, but not including, the next a rate per annum
determined in accordance with the following schedule:
<PAGE> 2
Level: Eurocurrency Margin:
Level I 0.525%
Level II 0.575%
Level III 0.625%
Level IV 0.825%
Level V 0.950%
Level VI 1.150%
Level VII 1.350%
Level VIII 1.375%
The Company acknowledges that a Leverage Ratio within
Level VIII constitutes an Event of Default.
(b) Section 5.2 of the Credit Agreement shall be amended
and restated in its entirety to read as follows:
"Section 5.2. Minimum Borrowing Amount. Each
Borrowing of Domestic Rate Loans (other than a Borrowing of
Domestic Swing Line Loans) shall be in an amount not less than
$3,000,000 and in integral multiples of $100,000. Each
Borrowing of Domestic Swing Line Loans shall be in a minimum
amount of $100,000. Each Borrowing of Eurocurrency Loans
(other than a Borrowing of Multicurrency Swing Line Loans)
shall be (x) if denominated in U.S. Dollars, in an amount not
less than $10,000,000 and in integral multiples of $100,000
and (y) if denominated in an Alternative Currency, in an
amount not less than an Original Dollar Amount of $5,000,000
and in integral multiples of 100,000 units of the relevant
currency. Each Borrowing of Multicurrency Swing Line Loans
shall be in an amount not less than an Original Dollar Amount
of $500,000. Each Borrowing of Bid Loans shall be in an amount
not less than an Original Dollar Amount of $3,000,000. There
is no requirement that Borrowings of Swing Line Loans or Bid
Loans which exceed such minimum amounts be in any particular
multiple."
(c) The following definitions appearing in Section 8 of the
Credit Agreement shall be amended in their entirety and as so amended
shall be restated to read as follows:
"Alternative Currency" means (i) any of Euros,
Belgian Francs, Deutsche Marks, Dutch Guilders, Japanese Yen,
Pounds Sterling, Spanish Pesetas, Australian Dollars, Canadian
Dollars, French Francs, Italian Lira, Swiss Francs, Austrian
Shillings, New Zealand Dollars, Singapore Dollars, Swedish
Krona, Irish Punts and Portuguese Escudos (collectively, the
"Designated Alternative Currencies") and (ii) any other
currency available to each Bank
-2-
<PAGE> 3
(each such other non-designated currency being hereinafter
referred to as an "Other Alternative Currency"), in each case
for so long as such Designated Alternative Currency and Other
Alternative Currency, as the case may be, is freely
transferable and freely convertible to U.S. Dollars and the
Dow Jones Telerate Service or Reuters monitor Money Rates
Service (or any successor to either) reports a LIBOR for such
currency for interest periods of one, two, three and six
calendar months; provided, however, that availability of each
Other Alternative Currency is subject to the additional
conditions that (a) the Company has made written request on
the Administrative Agent to add such currency as an Other
Alternative Currency (the Administrative Agent to promptly
notify the Banks of each such request and the proposed
effective date of such currency's inclusion as an Other
Alternative Currency), (b) such currency shall, subject to the
other provisions of this definition, constitute an Other
Alternative Currency effective on the date ten (10) Business
Days following such notice by the Administrative Agent to the
Banks of the Company's request for such new currency, (c) such
amendments, modifications or supplements are made to this
Agreement as the Administrative Agent determines are necessary
or appropriate (if any) to give effect to the borrowing and
funding of Loans in such Other Alternative Currency and (d)
such additional currency shall no longer be available if any
of the Banks notifies the Administrative Agent that in the
judgment of such Bank, it is impossible, illegal or
impracticable for such Bank to make or participate in Loans in
such Other Alternative Currency or that in the judgment of
such Bank, additional costs or expenses will be incurred by
such Bank or additional taxes, charges or other impositions
will be imposed on such Bank (such as withholding taxes of the
type described in Section 17.1(a) hereof) as a result of
making or participating in Loans in such Other Alternative
Currency disbursed or payable in the United States or any
Approved Jurisdiction.
"Alternative Swing Line Currency" means any of Euros,
Deutsche Marks, Dutch Guilders, Pounds Sterling, French
Francs, Swiss Francs and Austrian Shillings, in each case for
so long as such currency constitutes an Alternative Currency;
provided, however, that availability of each Alternative Swing
Line Currency is subject to the additional conditions that (a)
the Multicurrency Swing Line Bank has not notified the
Administrative Agent that in the judgment of the Multicurrency
Swing Line Bank, it is impossible, illegal or impracticable
for such Bank to make Multicurrency Swing Line Loans in such
Alternative Swing Line Currency or that in the judgment of the
Multicurrency Swing Line Bank, additional costs or expenses
will be incurred by such Bank
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<PAGE> 4
or additional taxes, charges or other impositions will be
imposed on such Bank (such as withholding taxes of the type
described in Section 17.1(a) hereof) as a result of making
Multicurrency Swing Line Loans in such Alternative Swing Line
Currency disbursed or payable in the United States or any
Approved Jurisdiction and (b) such amendments, modifications
or supplements are made to this Agreement as the
Administrative Agent and Multicurrency Swing Line Bank
determine are necessary or appropriate (if any) to give effect
to the borrowing and funding of Multicurrency Swing Line Loans
in such Alternative Swing Line Currency.
"Approved Jurisdictions" means Austria, Australia,
Belgium, Canada, Germany, Holland, the Republic of Ireland,
Italy, Japan, New Zealand, Singapore, Sweden, Portugal, Spain,
Switzerland and the United Kingdom and such other
jurisdictions as the Company requests from time to time in
writing; provided, however, that the addition of any Approved
Jurisdiction not specifically listed above in this sentence is
subject to the additional conditions that (a) the Company has
made written request on the Administrative Agent to add such
jurisdiction as an Approved Jurisdiction (the Administrative
Agent to promptly notify the Banks of each such request and
the proposed effective date of such jurisdiction's inclusion
as an Approved Jurisdiction), (b) such jurisdiction shall,
subject to the other provisions of this definition, constitute
an Approved Jurisdiction effective on the date ten (10)
Business Days following such notice by the Administrative
Agent to the Banks of the Company's request for such new
jurisdiction, (c) such amendments, modifications or
supplements are made to this Agreement as the Administrative
Agent determines are necessary or appropriate (if any) to give
effect to the addition of such Approved Jurisdiction and (d)
such additional jurisdiction shall no longer be an Approved
Jurisdiction if any of the Banks notifies the Administrative
Agent that in the judgment of such Bank, it is impossible,
illegal or impracticable for such Bank to make or participate
in Loans disbursed or payable in such Approved Jurisdiction or
that in the judgment of such Bank, additional costs or
expenses will be incurred by such Bank or additional taxes,
charges or other impositions will be imposed on such Bank
(such as withholding taxes of the type described in Section
17.1(a) hereof) as a result of making or participating in
Loans disbursed or payable in such Approved Jurisdiction.
"Business Day" means any day other than a Saturday or
Sunday on which banks are not authorized or required to close
in Chicago, Illinois and, if the applicable Business Day
relates to the borrowing or payment of a Eurocurrency Loan
denominated in
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<PAGE> 5
U.S. Dollars, on which banks are dealing in U.S. Dollar
deposits or the relevant Alternative Currency in the interbank
market in London, England and, if the applicable Business Day
relates to the borrowing or payment of a Eurocurrency Loan
denominated in an Alternative Currency (other than Euros), on
which banks and foreign exchange markets are open for business
in the city where disbursements of or payments on such Loan
are to be made and, if the applicable Business Day relates to
the borrowing or payment of a Eurocurrency Loan denominated in
Euros, on which banks and foreign exchange markets are open
for business in the city where disbursements of or payments on
such Loan are to be made which is a TARGET Day.
"Consolidated EBITDA" means, for any period,
determined on a consolidated basis for the Company and its
Subsidiaries in accordance with GAAP, (i) earnings before
income taxes for such period, plus (ii) Consolidated Interest
Expense for such period, plus (iii) the amount of all
depreciation and amortization expense deducted in determining
earnings for such period, minus (iv) net earnings for such
period of any unconsolidated Person in which the Company or
any Subsidiary has an ownership interest, unless such earnings
are received in cash pursuant to a dividend distribution (or
equivalent distribution in the event of one made by a Person
other than a corporation) received by the Company, any
Borrower or any Guarantor, plus (v) net losses for such period
of any unconsolidated Person in which the Company or any
Subsidiary has an ownership interest to the extent such losses
are deducted in determining earnings for such period in an
amount in excess of any increase during such period in
Investments of the Company and its Subsidiaries in such
Person; provided, however, that notwithstanding anything in
this definition to the contrary: (a) non-cash gains and
non-cash losses on sales or other dispositions of assets of
the Company and its Subsidiaries outside the ordinary course
of their business shall be given no effect in determining
Consolidated EBITDA; and (b) if an Acquisition or Divestiture
occurs at any time during such period, Consolidated EBITDA
shall be calculated on a proforma basis to include (in the
case of an Acquisition) or exclude (in the case of a
Divestiture) earnings reasonably allocable to the acquired (or
divested) Person or business, as the case may be, for the
entire period as if such Acquisition or Divestiture had taken
place on the first day of such period, all as reasonably
calculated by the Company based on historical operations
(including, but not limited to, operations conducted during
such quarter) and reasonably calculated adjustments due to
anticipated operational changes. Notwithstanding anything
contained herein to the contrary, to the
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<PAGE> 6
extent deducted in computing Consolidated EBITDA for any
period, the Fiscal Year 1999 Charges shall be added back to
each such computation of Consolidated EBITDA for the relevant
period.
"Domestic Swing Line Commitment" means $35,000,000,
as such amount may be reduced pursuant to Section 5.7 hereof.
"Leverage Ratio" means, as of any time the same is to
be determined, the ratio of (a) the amount (but in no event
less than $1) by which (i) Consolidated Debt at such time
exceeds (ii) the lesser of (A) the amount of Permitted Cash
Equivalents then on hand in excess of $7,000,000 or (B)
$18,000,000 to (b) Consolidated EBITDA for the four then most
recently completed fiscal quarters of the Company.
"Multicurrency Swing Line Commitment" means
$35,000,000, as such amount may be reduced pursuant to Section
5.7 hereof.
(d) Section 5.4 of the Credit Agreement shall be amended by
adding new subsections (d) and (e) at the end thereof which shall be
stated to read as follows:
"(d) Additional Mandatory Prepayment. If the
aggregate U.S. Dollar Equivalent or Original Dollar Amount of
outstanding Loans and L/C Obligations in each case denominated
in the same Alternative Currency less in each case the
aggregate amount cash held by the Administrative Agent in the
cash collateral account described in Section 5.4(e) below (to
the extent in excess of any amount so held as cash collateral
pursuant to Section 5.4(e) below with respect to any other
Alternative Currency) shall at any time for any reason exceed
the Foreign Currency Sub-Limit (if any) for such Alternative
Currency (any such excess being herein referred to as the
"Foreign Currency Excess"), the Company shall, within two (2)
Business Days, pay the amount of such Foreign Currency Excess
to the Administrative Agent for the ratable benefit of the
Banks as a prepayment of such Loans (to be applied to such
Loans as the Company shall direct at the time of such payment)
and, if necessary, a prefunding of such Letters of Credit.
Immediately upon determining the need to make any such
prepayment, the Company shall notify the Administrative Agent
of such required prepayment. Each such prepayment shall be
accompanied by a
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<PAGE> 7
payment of all accrued and unpaid interest on the Loans
prepaid and shall be subject to Section 5.8.
(e) Cash Collateral Option. Notwithstanding the
foregoing, if and so long as no Default or Event of Default
has occurred and is continuing, if and to the extent a
mandatory prepayment required under this Section 5.4 would
otherwise be applied against any Eurocurrency Loan denominated
in an Alternative Currency, the Company may, in lieu of making
such prepayment, remit to the Administrative Agent an amount
in U.S. Dollars which is the then U.S. Dollar Equivalent of
such prepayment, which remittance shall be held in a cash
collateral account maintained by the Company with the
Administrative Agent (such account to be analogous to the
Account identified and defined in Section 13.4(b) hereof
except that the Administrative Agent shall purchase, on the
last day of the Interest Period then applicable to such
Eurocurrency Loan (or if earlier and the Administrative Agent
so elects, the first Business Day immediately following the
occurrence of any Default or Event of Default) the greatest
amount of Alternative Currency (but in no event greater than
the amount necessary to make such prepayment) which the
Administrative Agent can, in accordance with its normal
banking procedures, purchase (after any premium and costs of
exchange) with the cash so held in such cash collateral
account, for delivery on the date of such purchase and apply
the amount of Alternative Currency so purchased to reduce the
principal of such Eurocurrency Loan. Notwithstanding anything
herein to the contrary, to the extent the Company has so
provided cash collateral to the Administrative Agent in lieu
of making a prepayment required under Section 5.4(d) above on
a Eurocurrency Loan denominated in an Alternative Currency, if
at any time prior to the aforesaid conversion of such sum to
such Alternative Currency and the application of such sum in
reduction of such Eurocurrency Loan, the Administrative Agent
determines that no Foreign Currency Excess exists (whether by
virtue of exchange rate fluctuation or a payment on the
relevant Eurocurrency Loans), the Administrative Agent shall
release such cash from the cash collateral account upon the
Company's request to the extent that after giving effect to
such release, no Foreign Currency Excess, Default or Event of
Default would exist.
(e) The following definitions shall be added to Section 8 of
the Credit Agreement in the appropriate alphabetical locations:
"Divestiture" means any transaction or series of
related transactions, by which the Company or any of the
Subsidiaries
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<PAGE> 8
sells or otherwise disposes of (i) any going business, line of
business or all or substantially all of the assets of any
Subsidiary or (ii) any Subsidiary.
"EMU" means economic and monetary union as
contemplated in the Treaty on European Union.
"EMU Commencement" means January 1, 1999 (the date of
commencement of the third stage of EMU).
"EMU Legislation" means legislative measures of the
European Council for the introduction of, changeover to or
operation of a single or unified European currency (whether
known as the "euro", "euros" or otherwise), being in part the
implementation of the third stage of EMU.
"Euro" means the single currency of Euro Members of
the European Union.
"Euro Member" means each state described as a
"participating member state" in any EMU Legislation.
"Euro Unit" means the currency unit of Euros.
"Fiscal Year 1999 Charges" means up to $7,500,000
attributable to those certain non-recurring non-cash charges
and up to $15,000,000 attributable to those certain
non-recurring cash charges, in each case incurred under the
expense reduction/restructuring program of the Company in the
relevant period during the Company's fiscal year ended
December 31, 1999. Any foregoing cash and non-cash charges not
classified as "restructuring charges" in accordance with GAAP
must be one-time expenses reasonably deemed to have been
incurred as a result of such expense reduction/restructuring
program, and such expenses must be reported by the Company in
reasonable detail in separate schedules accompanying the
Compliance Certificates required by Section 12.6 hereof for
each of the fiscal quarters in which such expenses are
incurred.
"Foreign Currency Sub-Limit" means $15,000,000 with
respect to New Zealand Dollars and $15,000,000 with respect to
Portuguese Escudos or any amount set by the Required Banks for
any Other Alternative Currency in a written notice from the
Administrative Agent to the Company.
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<PAGE> 9
"Hedging Liability" means the liabilities of one or
more of the Borrowers or one or more of the Subsidiaries to
the Banks or any of them or to any of their Affiliates arising
in connection with any one or more interest rate swaps,
interest rate caps, interest rate collars or other interest
rate hedging arrangements from time to time entered into by
any Borrower or any Subsidiary with any Bank or any Affiliate
of any Bank. Unless and until the amount of the Hedging
Liability is fixed and determined, the Hedging Liability shall
be deemed to be the market value of the hedge from the date of
computation to the date the hedge expires.
"Net Equity Proceeds" means the proceeds received in
consideration of the issuance and sale of equity securities by
the Company or any Subsidiary, net of reasonable underwriting
discounts and commissions and other reasonable costs directly
incurred and payable as a result thereof.
"Permitted Cash Equivalents" means, to the extent
held in accounts within the United States: debt securities
which constitute direct obligations of any government,
commercial paper, certificates of deposit, banker's
acceptances, repurchase agreements with respect to government
securities and any other investments that would reasonably be
considered cash equivalents of like kind and nature.
"TARGET Day" means any day on which the
Trans-European Automated Realtime Gross Settlement Express
Transfer system is operating.
"Third Amendment Effective Date" means March 31,
1999.
"Treaty on European Union" means the Treaty of Rome
of March 25, 1957, as amended by the Single European Act of
1986 and the Maastricht Treaty (which was signed at Maastricht
on February 7, 1992, and came into force on November 1, 1993,
as amended from time to time).
"Year 2000 Problem" means any significant risk that
computer hardware, software, or equipment containing embedded
microchips essential to the business or operations of the
Company or any of its Subsidiaries will not, in the case of
dates or time periods occurring after December 31, 1999,
function at least as efficiently and reliably as in the case
of times or time periods occurring before January 1, 2000,
including the making of accurate leap year calculations.
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<PAGE> 10
(f) Section 9 of the Credit Agreement shall be amended by
adding thereto a new Section 9.16 which reads as follows:
"Section 9.16. Year 2000 Compliance. The Company is
conducting a comprehensive review and assessment of all areas
within its and each of its Subsidiaries' business and
operations (including, to the extent the Company deems
appropriate, those areas affected by suppliers, vendors and
customers) reasonably expected to be affected by any defect in
computer software, data bases, hardware, controls and
peripherals related to the occurrence of the year 2000 or the
use at any time of any date which is before, on and after
December 31, 1999, in connection therewith. Based on the
foregoing review, assessment and inquiry, the Company believes
that no such defect could reasonably be expected to have a
Material Adverse Effect."
(g) Section 11.2(d) of the Credit Agreement shall be amended
by (i) deleting the reference to "and" appearing at the end of
subsection (iv) thereof, (ii) renumbering subsection (v) thereof to new
subsection (vi) and (iii) insert a new subsection (v) which shall be
stated to read as follows:
"(v) neither the Original Dollar Amount nor the U.S.
Dollar Equivalent of all Loans and L/C Obligations denominated
in an Alternative Currency and outstanding hereunder shall
exceed the Foreign Currency Sub-Limit (if any) for such
Alternative Currency,"
(h) Section 12.15 of the Credit Agreement shall be amended in
its entirety and as so amended shall be restated to read as follows:
"Section 12.15. Consolidated Shareholder's Equity.
The Company will, as of the close of each fiscal quarter of
the Company, maintain a Consolidated Shareholder's Equity of
not less than the Minimum Required Amount. For purposes of
this section, the "Minimum Required Amount" shall mean
$134,114,000 and shall increase (but not decrease) (x) as of
December 31, 1996 and each fiscal quarter thereafter, by an
amount equal to 50% of the cumulative positive Consolidated
Net Income earned for the fiscal quarter of the Company then
ended (but with each such fiscal quarter taken separately,
without reduction in the Minimum Required Amount for any
negative Consolidated Net Income for any fiscal quarter) and
(y) as of each issuance and sale of any equity securities by
the Company or any Subsidiary, by an amount equal to 80% of
the Net Equity Proceeds generated from such sale. For purposes
of this Section, Consolidated Shareholder's Equity shall be
determined exclusive
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<PAGE> 11
of changes from and after September 30, 1996 in the foreign
currency translation adjustment under Financial Accounting
Standards Board Statement No. 52 as in effect from time to
time."
(i) Sections 12.17 and 12.18 of the Credit Agreement
shall be amended in their entirety to be and to read as follows:
"Section 12.17. Leverage Ratios. (a) Leverage Ratio.
The Company shall not, as of the close of any fiscal quarter
of the Company set forth below, permit the Leverage Ratio to
be more than the amount set forth to the right of such closing
date:
As of Close of Each Fiscal Quarter Ending During Period:
<TABLE>
<CAPTION>
Leverage Ratio Shall
From and Including To and Including Not be More Than:
------------------ ---------------- -----------------
<S> <C> <C>
1st fiscal quarter of 4th fiscal quarter of 5.00 to 1
fiscal year 1999 fiscal year 1999
1st fiscal quarter of 4th fiscal quarter of 4.50 to 1
fiscal year 2000 fiscal year 2000
1st fiscal quarter of each fiscal quarter 4.25 to 1
fiscal year 2001 thereafter
</TABLE>
(b) Senior Leverage Ratio. The Company shall not, as
of the close of any fiscal quarter of the Company set forth
below, permit the Senior Leverage Ratio to be more than the
amount set forth to the right of such closing date:
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<PAGE> 12
As of Close of Each Fiscal Quarter Ending During Period:
<TABLE>
<CAPTION>
Leverage Ratio Shall
From and Including To and Including Not be More Than:
------------------ ---------------- -----------------
<S> <C> <C>
1st fiscal quarter of 4th fiscal quarter of 3.75 to 1
fiscal year 1999 fiscal year 1999
1st fiscal quarter of 4th fiscal quarter of 3.25 to 1
fiscal year 2000 fiscal year 2000
1st fiscal quarter each fiscal quarter 3.00 to 1
of fiscal year 2001 thereafter
</TABLE>
Section 12.18. Interest Coverage Ratio. The Company
shall not, as of the close of any fiscal quarter of the
Company set forth below, permit the Interest Coverage Ratio to
be less than the amount set forth to the right of such closing
date:
As of Close of each Fiscal Quarter Ending During Period:
<TABLE>
<CAPTION>
Interest Coverage Ratio
Shall
From and Including To and Including Not be Less Than:
------------------ ---------------- -----------------
<S> <C> <C>
1st fiscal quarter of 4th fiscal quarter of 2.50 to 1
fiscal year 1999 fiscal
year 2000
1st fiscal quarter of each fiscal quarter 2.75 to 1
fiscal year 2001 thereafter
</TABLE>
(j) Section 12 of the Credit Agreement shall be amended by
adding thereto new Sections 12.25 and 12.26 which shall read as
follows:
"Section 12.25. Year 2000 Assessment. The Company
shall complete on a timely basis the review and assessment of
its business and operations referred to in Section 9.16 hereof
and use reasonable efforts to assure that its computer-based
and other systems (and those of all Subsidiaries) are able to
effectively process dates, including dates before, on and
after January 1, 2000, without experiencing any Year 2000
Problem that could
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<PAGE> 13
reasonably be expected to cause a Material Adverse Effect. At
the request of the Administrative Agent, the Company will
provide the Administrative Agent with such written reports and
information (including, but not limited to, the results of
internal or external audit reports prepared in the ordinary
course of business) reasonably acceptable to the
Administrative Agent as to the capability of the Company and
its Subsidiaries to conduct its and their businesses and
operations before, on and after January 1, 2000, without
experiencing a Year 2000 Problem causing a Material Adverse
Effect.
Section 12.26. European Monetary Union. (a) If, as a
result of the EMU Commencement, (i) any Alternative Currency
ceases to be lawful currency of the state issuing the same and
is replaced by Euros or (ii) any Alternative Currency and
Euros are at the same time both recognized by the central bank
or comparable governmental authority of the state issuing such
currency as lawful currency of such state, then any amount
payable hereunder by any party hereto in such Alternative
Currency (including, without limitation, any Loan to be made
under this Agreement) shall instead be payable in Euros and
the amount so payable shall be determined by redenominating or
converting such amount into Euros at the exchange rate
officially fixed by the European Central Bank for the purpose
of implementing the EMU, provided, that to the extent any EMU
Legislation provides that an amount denominated either in
Euros or in the applicable Alternative Currency can be paid
either in Euros or in the applicable Alternative Currency,
each party to this Agreement shall be entitled to pay or repay
such amount in Euros or in the applicable Alternative
Currency. Prior to the occurrence of the event or events
described in clause (i) or (ii) of the preceding sentence,
each amount payable hereunder in any such Alternative Currency
will, except as otherwise provided herein, continue to be
payable only in that Alternative Currency.
(b) The Company (acting on behalf of the Borrowers)
shall from time to time, at the request of the Administrative
Agent, pay to the Administrative Agent for the account of each
Bank the amount of any cost or increased cost incurred by, or
of any reduction in any amount payable to or in the effective
return on its capital to, or of interest or other return
foregone by, such Bank or any holding company of such Bank as
a result of the introduction of, changeover to or operation of
Euros in any applicable state to the extent reasonably
attributable to such Bank's obligations hereunder or for the
credit which is the subject matter hereof; provided, however,
that (a) such Bank shall promptly notify the
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<PAGE> 14
Company of an event which might cause it to seek compensation,
and the Company shall be obligated to pay only such
compensation which is incurred or which arises after the date
ninety (90) days prior to the date such notice is given and
(b) such Bank shall not be entitled to make such a claim for
compensation if the Bank has not generally been making claims
for compensation under similar circumstances from other
borrowers similarly situated under loan agreements with
provisions comparable to this Section entitling the Bank to
make such a claim. In the event any circumstance arises by
virtue of which a Bank is determined to be entitled to a
refund for any amount or amounts which were paid or reimbursed
by the Company to such Bank hereunder, such Bank shall refund
such amount or amounts to the Company without interest. Each
Bank that determines to seek compensation under this Section
12.26(b) shall notify the Company and the Administrative Agent
of the circumstances that entitle the Bank to such
compensation pursuant to this Section 12.26(b) and will
designate a different Lending Office if such designation will
avoid the need for, or reduce the amount of, such compensation
and will not, in the judgment of such Bank, be otherwise
impractical or disadvantageous in any material respect to such
Bank. A certificate of any Bank claiming compensation under
this Section 12.26(b) and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in
the absence of demonstrable error. In determining such amount,
such Bank may use any reasonable averaging and attribution
methods. The protection of this Section 12.26(b) shall be
available to each Bank regardless of any possible contention
of the invalidity or inapplicability of any law, regulation or
other condition which shall give rise to any demand by such
Bank for compensation.
(c) With respect to the payment of any amount
denominated in Euros or in any Alternative Currency, the
Administrative Agent shall not be liable to the Company
(acting on behalf of the Borrowers) or any of the Banks in any
way whatsoever for any delay, or the consequences of any
delay, in the crediting to any account of any amount required
by this Agreement to be paid by the Administrative Agent if
the Administrative Agent shall have taken all relevant steps
to achieve, on the date required by this Agreement, the
payment of such amount in immediately available, freely
transferable, cleared funds (in the Euro Unit or, as the case
may be, in any Alternative Currency) to the account with the
bank in the principal financial center in the Euro Member
which the Company (acting on behalf of the Borrowers) or, as
the case may be, any Bank shall have specified for such
purpose. In this paragraph (c), "all relevant steps" means all
such steps as may
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<PAGE> 15
be prescribed from time to time by the regulations or
operating procedures of such clearing or settlement system as
the Administrative Agent may from time to time determine for
the purpose of clearing or settling payments of Euros.
(d) If the basis of accrual of interest or fees
expressed in this Agreement with respect to the currency of
any state that becomes a Euro Member shall be inconsistent
with any convention or practice in the London interbank market
for the basis of accrual of interest or fees in respect of
Euros, such convention or practice shall replace such
expressed basis effective as of and from the date on which
such state becomes a Euro Member; provided, that if any Loan
in the currency of such state is outstanding immediately prior
to such date, such replacement shall take effect, with respect
to such Loan, at the end of the then current Interest Period.
(e) In addition, the Company (acting on behalf of the
Borrowers) and the Administrative Agent shall enter into
negotiations in good faith, if and to the extent necessary, to
amend this Agreement (including, without limitation, the
definition of Eurocurrency Loan) to reflect such EMU
Commencement and change in currency and to put the Banks and
the Borrowers in the same position, so far as possible, that
they would have been in if such implementation and change in
currency had not occurred. The parties hereto acknowledge and
agree that if, within sixty (60) days of the commencement of
such negotiations, the Company (acting on behalf of the
Borrowers) and the Administrative Agent fail to reach
agreement regarding any such amendments, then the provisions
of Section 14.2 hereof shall be deemed operative and, until
such an agreement is reached, the obligations of the Banks to
make Eurocurrency Loans in Euros or any other Alternative
Currency issued by a Euro Member shall be suspended. Except as
provided in the foregoing provisions of this Section 12.26, no
such implementation or change in currency nor any economic
consequences resulting therefrom shall (i) give rise to any
right to terminate prematurely, contest, cancel, rescind,
alter, modify or renegotiate the provisions of this Agreement
or (ii) discharge, excuse or otherwise affect the performance
of any obligations of the Borrowers under this Agreement, any
Notes or any other Loan Documents."
(k) Section 16.1 of the Credit Agreement shall be amended in
its entirety and as so amended shall be restated to read as follows:
"Section 16.1. The Guarantees. To induce the Banks to
provide the credits described herein and in consideration of
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<PAGE> 16
benefits expected to accrue to each Guarantor by reason of the
Commitments and for other good and valuable consideration,
receipt of which is hereby acknowledged, each Guarantor hereby
unconditionally, irrevocably and jointly and severally
guarantees to each Agent, the Banks, and each other holder of
an obligation hereby guaranteed, the due and punctual payment
of (i) all present and future indebtedness of the Borrowers
and any one or more of them evidenced by or arising out of the
Credit Documents, including, but not limited to, the due and
punctual payment of principal of and interest on the Notes and
the due and punctual payment of all other Obligations now or
hereafter owed by the Borrowers and any one or more of them
under the Credit Documents as and when the same shall become
due and payable, whether at stated maturity, by acceleration
or otherwise, according to the terms hereof and thereof and
(ii) any Hedging Liability. If any Borrower or Guarantor fails
to pay punctually any indebtedness or other obligations
guaranteed hereby, each Guarantor hereby unconditionally
agrees jointly and severally to make such payment or to cause
such payment to be made punctually as and when the same shall
become due and payable, whether at stated maturity, by
acceleration or otherwise, and as if such payment were made by
such Borrower or Guarantor."
(l) Exhibit C to the Credit Agreement shall be and hereby is
amended and as so amended shall be restated in its entirety to read as
set forth on Schedule One hereto.
(m) Schedule 9.2 of the Credit Agreement shall be and hereby
is amended and as so amended shall read as set forth on Schedule Two
attached hereto.
SECTION 2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
(a) Each Borrower, each Guarantor and the Required Banks
shall have executed and delivered this Amendment.
(b) The Administrative Agent shall have received a new
promissory note from the Company and each Borrowing Subsidiary for the
Domestic Swing Line Bank in the form contemplated by the Credit
Agreement after giving effect to this amendment.
(c) All legal matters with respect to this Amendment have
been resolved in a manner reasonably satisfactory to the Administrative
Agent.
Upon the satisfaction of such conditions precedent, this Amendment shall be
effective as of the Third Amendment Effective Date.
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<PAGE> 17
SECTION 3. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment, the
Company hereby represents to each Bank that as of the date hereof, after giving
effect to this Amendment, the representations and warranties set forth in
Section 9 of the Credit Agreement are and shall be and remain true and correct
(except that the representations contained in Section 9.4 shall be deemed to
refer to the most recent financial statements of the Company delivered to the
Administrative Agent) and the Company is in full compliance with all of the
terms and conditions of the Credit Agreement and no Default or Event of Default
has occurred and is continuing under the Credit Agreement.
SECTION 4. MISCELLANEOUS.
(a) Except as specifically amended herein or waived hereby, the Credit
Agreement shall continue in full force and effect in accordance with its
original terms. Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
(b) By executing this Amendment in the place provided for that purpose
below, each Guarantor hereby consents to the Amendment to the Credit Agreement
as set forth herein and confirms that its obligations thereunder remain in full
force and effect. Each Guarantor further agrees that the consent of such
Guarantor to any further amendments to the Credit Agreement shall not be
required as a result of this consent having been obtained.
(c) The Company agrees to pay on demand all reasonable costs and
expenses of or incurred by the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment, as and to
the extent provided in Section 17.15 of the Credit Agreement.
(d) This Amendment may be executed in any number of counterparts, and
by the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
[SIGNATURE PAGES TO FOLLOW]
-17-
<PAGE> 18
GENERAL BINDING CORPORATION
By: /s/ William R. Chambers, Jr.
-------------------------------------
Name: William R. Chambers, Jr.
-----------------------------------
Title: Vice President
----------------------------------
GBC INTERNATIONAL, INC.
By: /s/ William R. Chambers, Jr.
-------------------------------------
Name: William R. Chambers, Jr.
-----------------------------------
Title: Vice President
----------------------------------
VELOBIND, INCORPORATED
By: /s/ William R. Chambers, Jr.
-------------------------------------
Name: William R. Chambers, Jr.
-----------------------------------
Title: Vice President
----------------------------------
GBC GENERAL BINDING (NEDERLAND) B.V.
By:GENERAL BINDING CORPORATION
Its: Attorney-in-Fact
By: /s/ William R. Chambers, Jr.
-------------------------------
Name: William R. Chambers, Jr.
-----------------------------
Title: Vice President
-----------------------------
GBC INDIA HOLDINGS INC.
By: /s/ William R. Chambers, Jr.
-------------------------------------
Name: William R. Chambers, Jr.
-----------------------------------
Title: Vice President
----------------------------------
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK, in its
individual capacity as a Bank and as
Administrative Agent
By: /s/ Raymond Whitacre
-------------------------------------
Name: Raymond Whitacre
-----------------------------------
Title: Managing Director
----------------------------------
-18-
<PAGE> 19
LASALLE NATIONAL BANK, in its individual
capacity as a Bank and as Co-Agent
By: /s/ James M. Minich
---------------------------------------
Name: James M. Minich
--------------------------------------
Title: First Vice President
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO, in its
individual capacity as a Bank, as Co-
Syndication Agent and as Co-Agent
By: /s/ Scott D. Moreen
---------------------------------------
Name: Scott D. Moreen
--------------------------------------
Title: Vice President
-------------------------------------
THE BANK OF NEW YORK, in its individual
capacity as a Bank and as Co-Agent
By: /s/ John Paul Marotta
----------------------------------------
Name: John Paul Marotta
--------------------------------------
Title: Vice President
-------------------------------------
CREDIT AGRICOLE INDOSUEZ
By: /s/ Lynn M. Rosinsky
---------------------------------------
Name: Lynn M. Rosinsky
--------------------------------------
Title: Vice President
-------------------------------------
By: /s/ Raymond A. Falkenberg
---------------------------------------
Name: Raymond A. Falkenberg
--------------------------------------
Title: Vice President, Manager
-------------------------------------
COMERICA BANK
By: /s/ Jeffrey P. Bradley
---------------------------------------
Name: Jeffrey P. Bradley
--------------------------------------
Title: Vice President
-------------------------------------
-19-
<PAGE> 20
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH
By: /s/ Hisashi Miyashiro
--------------------------------------
Name: Hisashi Miyashiro
-----------------------------------
Title: Deputy General Manager
----------------------------------
SUNTRUST BANK, ATLANTA
By: /s/ Charles C. Pick
--------------------------------------
Name: Charles C. Pick
------------------------------------
Title: Vice President
------------------------------------
By: /s/ Margaret A. Jaketic
---------------------------------------
Name: Margaret A. Jaketic
------------------------------------
Title: Vice President
------------------------------------
MERCANTILE BANK NATIONAL ASSOCIATION
By: /s/ Gerald S. Kirk
--------------------------------------
Name: Gerald S. Kirk
------------------------------------
Title: Assistant Vice President
------------------------------------
FIRST UNION NATIONAL BANK (formerly
known as First Union National Bank of
North Carolina)
By: /s/ C. Jeffrey Seaton
--------------------------------------
Name: C. Jeffrey Seaton
------------------------------------
Title: Senior Vice President
------------------------------------
NATIONAL CITY BANK
By: /s/ Richard H. Michalik
--------------------------------------
Name: Richard H. Michalik
------------------------------------
Title: Vice President
------------------------------------
-20-
<PAGE> 21
CREDIT LYONNAIS CHICAGO BRANCH
By:
---------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
--------------------------------------
Name: F.C.H. Ashby
-------------------------------------
Title: Senior Manager Loan Operations
-------------------------------------
SOCIETE GENERALE CHICAGO BRANCH
By: /s/ Joseph A. Philbin
---------------------------------------
Name: Joseph A. Philbin
-------------------------------------
Title: Director
-------------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/ Richard E. Stahl
---------------------------------------
Name: Richard E. Stahl
-------------------------------------
Title: Executive Vice President
-------------------------------------
CIBC, INC.
By: /s/ Ihor Zaluckyj
---------------------------------------
Name: Ihor Zaluckyj
-------------------------------------
Title: Executive Director
-------------------------------------
BANKERS TRUST COMPANY
By: /s/ Robert R. Telesca
---------------------------------------
Name: Robert R. Telesca
-------------------------------------
Title: Assistant Vice President
-------------------------------------
-21-
<PAGE> 22
THE SANWA BANK, LIMITED, CHICAGO BRANCH
By: /s/ Gordon R. Holtby
---------------------------------------
Name: Gordon R. Holtby
------------------------------------
Title: Vice President and Manager
-----------------------------------
-22-
<PAGE> 23
SCHEDULE ONE
EXHIBIT C
DOMESTIC SWING LINE NOTE
$__________________ March ___, 1999
FOR VALUE RECEIVED, the undersigned, [General Binding Corporation]
[Borrowing Subsidiary], a ____________ corporation (the "Borrower"), promises to
pay to the order of Harris Trust and Savings Bank (the "Bank") on the Revolving
Credit Termination Date of the hereinafter defined Credit Agreement, at the
principal office of Harris Trust and Savings Bank, in Chicago, Illinois, the
principal sum of (i) _________________________________________
($______________________), or (ii) such lesser amount as may at the time of the
maturity hereof, whether by acceleration or otherwise, be the aggregate unpaid
principal amount of all Domestic Swing Line Loans owing from the Borrower to the
Bank under the Domestic Swing Line Commitment provided for in the Credit
Agreement.
The Bank shall record on its books or records or on a schedule attached
to this Domestic Swing Line Note, which is a part hereof, each Domestic Swing
Line Loan made by it pursuant to the Credit Agreement, together with all
payments of principal and interest and the principal balances from time to time
outstanding hereon and the interest rates and Interest Period applicable
thereto, provided that prior to the transfer of this Domestic Swing Line Note
all such amounts, interest rates and Interest Periods shall be recorded on a
schedule attached to this Domestic Swing Line Note. The record thereof, whether
shown on such books or records or on a schedule to this Domestic Swing Line
Note, shall be prima facie evidence of the same; provided, however, that the
failure of the Bank to record any of the foregoing or any error in any such
record shall not limit or otherwise affect the obligation of the Borrower to
repay all Domestic Swing Line Loans made to it pursuant to the Credit Agreement
together with accrued interest thereon.
This Domestic Swing Line Note is one of the Domestic Swing Line Notes
referred to in the Credit Agreement dated as of January 13, 1997, among General
Binding Corporation, Harris Trust and Savings Bank, as Administrative Agent, and
the Banks party thereto (as amended, the "Credit Agreement"), and this Domestic
Swing Line Note and the holder hereof are entitled to all the benefits provided
for thereby or referred to therein, to which Credit Agreement reference is
hereby made for a statement thereof. All defined terms used in this Domestic
Swing Line Note, except terms otherwise defined herein, shall have the same
meaning as in the Credit Agreement. This Domestic Swing Line Note shall be
governed by and construed in accordance with the internal laws of the State of
Illinois.
Prepayments may be made hereon and this Domestic Swing Line Note may be
declared due prior to the expressed maturity hereof, all in the events, on the
terms and in the manner as provided for in the Credit Agreement.
<PAGE> 24
The Borrower hereby waives demand, presentment, protest or notice of
any kind hereunder.
[GENERAL BINDING CORPORATION]
[BORROWING SUBSIDIARY]
By
Its________________________________
-2-
<PAGE> 25
SCHEDULE TWO
SCHEDULE 9.2
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Owned Percent Jurisdiction of
Investment By Ownership Organization
---------- ----- --------- ---------------
<S> <C> <C> <C>
Allfax UK, Ltd. Ibico Limited 100 United Kingdom
Allfax Paper Products, Ltd. Ibico Limited 100 United Kingdom
Anillos Plasticos de Mexico S.A. General Binding Corporation 100 Mexico
Compania Papelera Marmo S.V. Grupo GBC S.A. de C.V. 96.44 Mexico
General Binding Corporation 1.78
GBC International, Inc. 0.89
VeloBind, Incorporated 0.89
Federbush de Mexico S.A. GBC Mexicana S.A. de C.V. 100 Mexico
*GBC Australia Pty. Ltd. GBC International, Inc. 100 Australia
GBC Handelsgesellschaft M.b.h. GBC International, Inc. 100 Austria
GBC General Binding (Belgie) N.V. GBC Nederland B.V. 100 Belgium
*GBC Canada, Inc. GBC International, Inc. 100 Canada
GBC Deutschland GmbH General Binding Corporation 100 Germany
*GBC/Fordigraph Pty. Ltd. GBC Australia Pty. Ltd. 100 Australia
GBC France S.A. GBC Schweiz A.G. 100 France
GBC India Holdings Corp. GBC International, Inc. 100 Nevada
</TABLE>
- --------------------
* Denotes Significant Subsidiary
<PAGE> 26
<TABLE>
<CAPTION>
Owned Percent Jurisdiction of
Investment By Ownership Organization
---------- ----- --------- ---------------
<S> <C> <C> <C>
GBC International Export Sales Corp. GBC International, Inc. 100 Barbados
*GBC International, Inc. General Binding Corporation 100 Nevada
GBC International Services S.P.R.L. GBC International, Inc. 99 Belgium
General Binding Corporation 1
*GBC Japan K.K. GBC International, Inc. 100 Japan
GBC Mexicana S.A. de C.V. Grupo GBC S.A. de C.V. 96.44 Mexico
General Binding Corporation 1.78
GBC International, Inc. 0.89
VeloBind, Incorporated 0.89
*GBC Nederland B.V. GBC International, Inc. 100 Netherlands
GBC New Zealand Ltd. GBC Australia Pty. Ltd. 100 New Zealand
GBC Poland GBC International, Inc. 98.75 Poland
General Binding Italia S.p.A. 1.25
GBC Sales & Services GBC International, Inc. 100 Canada
GBC Schweiz A.G. GBC International, Inc. 100 Switzerland
GBC Services PTY Ltd. GBC Australia PTY Ltd. 100 Australia
GBC Singapore Pte. Ltd. GBC International, Inc. 100 Singapore
*GBC United Kingdom Holdings, Ltd. GBC International, Inc. 98.18 United Kingdom
General Binding Corporation 1.82
*GBC United Kingdom, Ltd. Ibico Limited 100 United Kingdom
*General Binding Italia S.p.A. Ibico Italia S.r.l. 100 Italy
Grupo GBC S.A. de C.V. General Binding Corporation 58.972 Mexico
GBC International, Inc. 20.517
VeloBind, Incorporated 20.511
Ibico AG GBC International, Inc. 100 Switzerland
</TABLE>
-2-
<PAGE> 27
<TABLE>
<CAPTION>
Owned Percent Jurisdiction of
Investment By Ownership Organization
---------- ----- --------- ---------------
<S> <C> <C> <C>
Ibico Canada Inc. GBC International, Inc. 100 Canada
Ibico Chile S.A. Ibico GmbH 100 Chile
Ibico Deutschland GmbH Ibico GmbH 100 Germany
Ibico France S.A. Ibico GmbH 100 France
*Ibico GmbH GBC International, Inc. 100 Switzerland
Ibico Holdings Singapore Pte. Ibico GmbH 100 Singapore
Ltd.
Ibico Iberia, S.A. Ibico GmbH 100 Spain
Ibico Italia S.r.l. GBC International, Inc. 99.555 Italy
Ibico GmbH 0.348
General Binding Corporation 0.097
Ibico Limited GBC United Kingdom 94.01 United Kingdom
Holdings, Ltd.
Ibico GmbH 5.99
Ibico Portuguesa Lda. Ibico GmbH 100 Portugal
Ibico Scandinavia AB Ibico GmbH 100 Sweden
Ibico Singapore Pte. Ltd. Ibico Holdings Singapore Pte. Ltd. 100 Singapore
Ibico Trading GmbH Ibico GmbH 100 Switzerland
InterBinding GmbH Ibico GmbH 100 Germany
Mirabeau Contract Sales, Ltd. Ibico Limited 100 United Kingdom
PBB&R S.A de C.V. GBC International, Inc. 97 Mexico
General Binding Corporation 2
VeloBind, Incorporated 1
Plastic Binding Corporation General Binding Corporation 100 Illinois
</TABLE>
-3-
<PAGE> 28
<TABLE>
<CAPTION>
Owned Percent Jurisdiction of
Investment By Ownership Organization
---------- ----- --------- ---------------
<S> <C> <C> <C>
Printing Wire Supplies Limited GBC International, Inc. 100 Ireland
Quartet Manufacturing (1997) Inc. GBC Canada, Inc. 100 Canada
*VeloBind, Incorporated General Binding Corporation 100 Delaware
</TABLE>
-4-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 9,580
<SECURITIES> 0
<RECEIVABLES> 186,767
<ALLOWANCES> (9,361)
<INVENTORY> 164,301
<CURRENT-ASSETS> 388,348
<PP&E> 210,111
<DEPRECIATION> (86,442)
<TOTAL-ASSETS> 865,691
<CURRENT-LIABILITIES> 167,837
<BONDS> 470,566
0
0
<COMMON> 2,262
<OTHER-SE> 191,333
<TOTAL-LIABILITY-AND-EQUITY> 865,691
<SALES> 448,114
<TOTAL-REVENUES> 448,114
<CGS> 257,609
<TOTAL-COSTS> 257,609
<OTHER-EXPENSES> 174,819
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,784
<INCOME-PRETAX> (5,098)
<INCOME-TAX> (2,064)
<INCOME-CONTINUING> (3,034)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,034)
<EPS-BASIC> (0.19)
<EPS-DILUTED> (0.19)
</TABLE>
