<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission file number 1-7088
----------------------- ------
AMERICAN BUSINESS PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-1030529
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No)
2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia 30328
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 953-8300
-----------------------------
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
--- ---
Common Stock, $2.00 par value 16,355,598 shares
----------------------------- ------------------------------
(Class) (Outstanding at June 30, 1995)
Page 1 of 9
Exhibit Index on Page 7
1
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PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The Consolidated Balance Sheets of the Company as of June 30, 1995, and
December 31, 1994 and the Consolidated Income Statements of the Company for the
three months and six months ended June 30, 1995, and 1994, are incorporated
herein by reference to the Company's Quarterly Report to Shareholders for the
six months ended June 30, 1995, attached hereto as Exhibit 19. Set forth below
are the Condensed Consolidated Statements of Cash Flows of the Company for the
six months ended June 30, 1995, and 1994.
AMERICAN BUSINESS PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995, AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income from operations $ 11,886 $ 8,060
Adjustments to reconcile net income to net cash
provided by operating activities -3,289 1,876
-------- -------
Net cash provided by operating activities 8,597 9,936
CASH FLOWS USED IN INVESTING ACTIVITIES
Acquisitions, net of cash acquired -9,000
Decrease in cash value of life insurance 776 1,261
Additions to plant and equipment -7,927 -6,152
Other 511 52
-------- -------
Net cash used in investing activities -15,640 -4,839
CASH FLOWS USED BY FINANCING ACTIVITIES
(Decrease) in long-term debt -621 -790
Dividends paid -4,501 -4,273
Other 6,570 97
-------- -------
Net cash (used) provided by financing activities 1,448 -4,966
Net (decrease) increase in cash and cash equivalents -5,595 131
Cash and cash equivalents at beginning of year 25,997 30,151
-------- -------
Cash and cash equivalents at end of period $ 20,402 $30,282
======== =======
</TABLE>
2
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AMERICAN BUSINESS PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Consolidated Financial Statements
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles which in certain
instances requires the use of management's estimates.
The information contained in these consolidated financial statements
and notes is unaudited, but in the opinion of management, all
adjustments necessary for a fair presentation of such information have
been made. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to
applicable rules and regulations of the Securities and Exchange
Commission. The consolidated financial statements included herein
should be read in conjunction with the audited financial statements
and notes thereto contained in the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
2. Consolidation Policy
The consolidated financial statements include the accounts of the
Company and its subsidiaries, all of which are wholly-owned.
Intercompany balances and transactions have been eliminated.
3. Nature of Operations
The Company manufactures and markets envelope products, business
forms, labels and other supplies for business and industry;
manufactures and distributes hardcover and softcover books for the
publishing industry; and markets extrusion coating and laminating of
papers, films, and nonwoven fabrics for use in medical, industrial and
consumer packaging. The markets for these products are located
principally throughout the continental United States.
4. Net Income Per Share
Net income per common share is based upon the weighted average number
of shares outstanding during each period: 16,023,243 and 16,024,732
for the six month periods and 16,051,944 and 16,025,851 for the second
quarter ended June 30, 1995, and June 30, 1994, respectively.
Weighted average number of shares outstanding have been restated to
reflect a three-for-two stock split in June, 1995.
3
<PAGE> 4
5. Inventories
Inventories consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
June 30,1995 December 31,1994
------------ ----------------
<S> <C> <C>
Products finished or in process $ 27,974 25,685
Raw materials 27,711 25,560
Supplies 818 684
-------- --------
Total $ 56,503 $ 51,929
======== ========
</TABLE>
6. Stock Split
On April 26, 1995 the Board of Directors authorized a three-for-two
stock split of the Company's common shares payable on June 15, 1995 in
the form of a 50% stock dividend to stockholders of record June 1,
1995. The par value of the additional shares of common stock issued
was credited to common stock. Fractional shares were paid in cash
based on the closing price on the record date adjusted for the stock
split. All share and per share data have been adjusted to reflect the
stock split.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
1. Liquidity and Capital Resources
The current ratio increased to 2.6 to 1 at June 30, 1995, from 2.4 to
1 at December 31, 1994.
The Company does not anticipate incurring significant additional debt
and internal cash flows should be sufficient to generate funds for
normal operations.
2. Results of Operations
Sales during the second quarter and first six months of 1995 increased
by 12.2% and 12.0% over sales for the same periods of 1994. Most of
the increase resulted from more favorable pricing.
Cost of goods sold expressed as a percentage of sales for the second
quarter and first six months of 1995 increased slightly to 70.6% and
70.4% from 70.2% for the comparable periods in 1994. Selling and
administrative expenses decreased to 22.0% for the second quarter and
to 22.1% for the first six months of 1995 compared to 23.0% and 23.1%
for the same periods in 1994. Interest expense decreased to 1.4% of
sales for both the second quarter and first six months of 1995
compared to 1.7% for 1994 principally as a result of lesser debt
levels.
The effective tax rates for the second quarter and first six months of
1995 were 39.7% and 40.2% respectively, compared to
4
<PAGE> 5
43.2% and 41.3% for 1994. The decrease in the effective rates result
from several factors, including increased levels of non-taxable income
and decreased provisions for state income taxes.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The 1995 Annual Meeting of Shareholders of the Company was held on April 26,
1995, and proxies were solicited under Regulation 14A of the Securities
Exchange Act of 1934.
The following nominees for director were elected to serve as director until the
1998 Annual Meeting of Shareholders:
<TABLE>
<CAPTION>
VOTED BROKER
FOR WITHHELD NON-VOTE
--------- -------- --------
<S> <C> <C> <C>
Thomas R. Carmody 9,110,476 144,706 0
Robert W. Gundeck 9,127,100 128,082 0
Hollis L. Harris 9,123,435 131,747 0
W. Stell Huie 9,130,312 124,870 0
</TABLE>
The following directors continued in office as directors after the 1995 Annual
Meeting for the following terms:
<TABLE>
<CAPTION>
DIRECTOR TERM EXPIRES
-------- ------------
<S> <C>
W. Joseph Biggers 1996
Henry Curtis VII 1996
Herbert J. Dickson 1996
G. Harold Northrop 1996
F. Duane Ackerman 1997
John E. Aderhold 1997
Thomas F. Keller 1997
Rex A. McClelland 1997
</TABLE>
A proposal to amend the 1991 Stock Option Plan was approved as follows:
<TABLE>
<CAPTION>
BROKER
FOR AGAINST ABSTAIN NON-VOTE
--- ------- ------- --------
<S> <C> <C> <C>
8,393,951 775,735 85,496 0
</TABLE>
The other matter which was voted upon and approved during the 1995 Annual
Meeting was a proposal to ratify the appointment of Deloitte & Touche LLP as
independent accountants of the Company for the 1995 fiscal year.
<TABLE>
<CAPTION>
BROKER
AFFIRMATIVE NEGATIVE ABSTENTIONS NON-VOTES
----------- -------- ----------- ---------
<S> <C> <C> <C>
9,199,021 32,379 23,782 0
</TABLE>
5
<PAGE> 6
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits attached hereto:
Number Description
----- -----------
19 Quarterly Report to Shareholders
for the three-month and six-month periods ended
June 30, 1995.
27 Financial Data Schedules for Second Quarter 1995 10-Q
(for SEC use only)
b. Reports on Form 8-K.
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BUSINESS PRODUCTS, INC.
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(Registrant)
DATE: August 4, 1995 /s/ W. C. Downer
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W. C. Downer, Vice President-Finance
(Chief Financial and Accounting
Officer and Duly Authorized Officer)
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AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Number Description Page Number
------ ----------- -----------
<S> <C> <C>
19 Quarterly Report to Shareholders Page 8 & 9
for the three-month and six-month
periods ended June 30, 1995
27 Financial Data Schedules for Second Quarter
1995 10-Q (for SEC use only)
</TABLE>
7
<PAGE> 1
EXHIBIT 19
AMERICAN BUSINESS PRODUCTS, INC.
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(LOGO)
TO OUR SHAREHOLDERS:
American Business Products, Inc. kept up its record-breaking growth in the
second quarter as sales increased by more than 12% and net income gained almost
35%.
For the quarter, sales advanced to a record $156.4 million, up 12.2% over the
second quarter of 1994. Net income for the quarter rose 34.9% to a record $5.9
million, or $.37 per share, adjusted for the 3-for-2 stock split paid June 15,
1995. This compares with $4.4 million, or $.27 per share for the second quarter
last year, adjusted for the stock split.
First half sales increased 12% to a record $313.8 million. Income was a record
$11.9 million, or $.74 per share, up 37.2% over $8.7 million, or $.54 per share,
adjusted for the stock split, before the 1994 accounting changes.
This strong performance resulted from across-the-board growth in our core
business supplies segment and our book manufacturing and extrusion coating
segments.
The Board of Directors has declared a regular quarterly dividend of $.14 per
share, as adjusted for the 3-for-2 stock split, payable September 15 to
shareholders of record September 1.
On June 23, ABP acquired certain assets of Electronic Form Systems, Inc., a
developer and provider of electronic forms, automation and electronic
distribution systems for businesses. EFS will operate as a division of Vanier,
positioning the company to penetrate the $25 billion market for software,
communications and workflow automation. We believe this acquisition offers
exciting opportunities for growth in the future.
We anticipate continuing progress in the second half of 1995.
<TABLE>
<S> <C>
Thomas R. Carmody Robert W. Gundeck
Chairman and President and
Chief Executive Officer Chief Operating Officer
</TABLE>
July 26, 1995
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (DOLLARS IN THOUSANDS) SECOND QUARTER SIX MONTHS
PERIOD ENDED JUNE 30 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $156,425 $139,370 $313,809 $280,084
Income before cumulative effect of changes in
accounting principles 5,937 4,400 11,886 8,665
Income per common share before cumulative effect
of changes in accounting principles .37 .27 .74 .54
Net income 5,937 4,400 11,886 8,060
Net income per common share .37 .27 .74 .50
Dividends per common share .14 .133 .28 .267
</TABLE>
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<PAGE> 2
CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
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<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
QUARTER ENDED JUNE 30,
Net Sales.................................................. $ 156,425 $ 139,370
------------ ------------
Cost of Goods Sold......................................... 110,464 97,832
Selling and Administrative Expenses........................ 34,435 32,021
------------ ------------
144,899 129,853
------------ ------------
Operating Income........................................... 11,526 9,517
Other Income (Expense):
Interest expense......................................... (2,197) (2,268)
Miscellaneous -- net..................................... 520 498
------------ ------------
Income Before Income Taxes................................. 9,849 7,747
Provision for Income Taxes................................. 3,912 3,347
------------ ------------
Net Income................................................. $ 5,937 $ 4,400
============= =============
Earnings Per Common Share.................................. $ .37 $ .27
Dividends Per Common Share................................. .14 .133
Average Number of Common Shares Outstanding................ 16,051,944 16,025,851
SIX MONTHS ENDED JUNE 30,
Net Sales.................................................. $ 313,809 $ 280,084
------------ ------------
Cost of Goods Sold......................................... 220,832 196,622
Selling and Administrative Expenses........................ 69,359 64,794
------------ ------------
290,191 261,416
------------ ------------
Operating Income........................................... 23,618 18,668
Other Income (Expense)
Interest expense......................................... (4,358) (4,634)
Miscellaneous -- net..................................... 617 735
------------ ------------
Income Before Income Taxes and Cumulative Effect of Changes
in Accounting Principles................................. 19,877 14,769
Provision for Income Taxes................................. 7,991 6,104
------------ ------------
Income Before Cumulative Effect of Changes in Accounting
Principles............................................... 11,886 8,665
Cumulative Effect of Changes in Accounting Principles...... (605)
------------ ------------
Net Income (Loss).......................................... $ 11,886 $ 8,060
============= =============
Per Common Share:
Income before cumulative effect of changes in accounting
principles............................................ $ .74 $ .54
Net Income............................................... $ .74 $ .50
Dividends Per Common Share................................. .28 .267
Average Number of Common Shares Outstanding................ 16,023,243 16,024,732
</TABLE>
(Unaudited)
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<PAGE> 3
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
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<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
-------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents................................... $ 20,402 $ 25,997
Accounts receivable, less allowances of $2,622 and $2,379... 78,968 72,536
Inventories................................................. 56,503 51,929
Other....................................................... 1,425 2,250
-------- ------------
Total Current Assets................................ 157,298 152,712
Plant And Equipment -- At Cost
Land........................................................ 5,743 5,983
Buildings and improvements.................................. 55,205 52,011
Machinery and equipment..................................... 132,192 127,645
-------- ------------
193,140 185,639
Less accumulated depreciation............................... 99,269 93,199
-------- ------------
93,871 92,440
Intangible Assets From Acquisitions
Goodwill, less amortization of $3,124 and $2,605............ 38,102 31,528
Other, less amortization of $4,357 and $3,973............... 2,054 2,449
-------- ------------
40,156 33,977
Deferred Income Taxes......................................... 10,195 10,495
Other Assets.................................................. 22,640 22,477
-------- ------------
$324,160 $312,101
========= =============
Current Liabilities
Accounts payable............................................ $ 39,986 $ 41,674
Salaries and wages.......................................... 10,606 9,771
Profit sharing contributions................................ 3,505 4,397
Income taxes................................................ 1,340
Current maturities of long-term debt........................ 6,158 6,237
-------- ------------
Total Current Liabilities........................... 60,255 63,419
Long-Term Debt................................................ 74,602 75,144
Supplemental Retirement Benefits.............................. 15,096 13,609
Postretirement and Postemployment Benefits.................... 22,505 22,448
Stockholders' Equity
Common stock -- $2 par value; authorized 50,000,000 shares,
issued 16,545,130 and 10,784,229 shares.................. 33,090 21,569
Additional paid-in capital.................................. 5,354 118
Retained earnings........................................... 115,488 118,095
Foreign currency translation adjustment..................... 267 64
-------- ------------
154,199 139,846
Less 189,532 and 121,478 shares of Common Stock in
treasury -- at cost...................................... 2,497 2,365
-------- ------------
151,702 137,481
-------- ------------
$324,160 $312,101
========= =============
</TABLE>
(Unaudited)
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN BUSINESS PRODUCTS, INC. FOR THE SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 20,402
<SECURITIES> 0
<RECEIVABLES> 81,590
<ALLOWANCES> 2,622
<INVENTORY> 56,503
<CURRENT-ASSETS> 157,298
<PP&E> 193,140
<DEPRECIATION> 99,269
<TOTAL-ASSETS> 324,160
<CURRENT-LIABILITIES> 60,255
<BONDS> 74,602
<COMMON> 33,090
0
0
<OTHER-SE> 118,612
<TOTAL-LIABILITY-AND-EQUITY> 324,160
<SALES> 313,809
<TOTAL-REVENUES> 313,809
<CGS> 220,832
<TOTAL-COSTS> 220,832
<OTHER-EXPENSES> 69,359
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,358
<INCOME-PRETAX> 19,877
<INCOME-TAX> 7,991
<INCOME-CONTINUING> 11,886
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,886
<EPS-PRIMARY> .74
<EPS-DILUTED> .74
</TABLE>
