<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995 Commission file number 1-7088
-------------------- --------
AMERICAN BUSINESS PRODUCTS, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1030529
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No)
2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia 30328
- --------------------------------------------------------------------------------
(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
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Common Stock, $2.00 par value 16,368,247 shares
----------------------------- -----------------------------------
(Class) (Outstanding at September 30, 1995)
Exhibit Index on Page 6
1
<PAGE> 2
PART I
FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
The Consolidated Balance Sheets of the Company as of September 30, 1995, and
December 31, 1994, and the Consolidated Income Statements of the Company for
the three months and nine months ended September 30, 1995, and 1994, are
incorporated herein by reference to the Company's Quarterly Report to
Shareholders for the nine months ended September 30, 1995, attached hereto as
Exhibit 19. Set forth below are the Condensed Consolidated Statements of Cash
Flows of the Company for the nine months ended September 30, 1995 and 1994.
AMERICAN BUSINESS PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
-----------------------------------------------------------------
(Dollars in Thousands)
----------------------
<TABLE>
<CAPTION>
1995 1994
----- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Income from operations $17,905 $12,523
Adjustments to reconcile net income to net
cash (used in) provided by operating activities -168 7,015
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Net cash provided by operating activities 17,737 19,538
CASH FLOWS USED IN INVESTING ACTIVITIES
- ---------------------------------------
Acquisition, net of cash acquired -3,357
Decrease in cash value of life insurance 382 864
Additions to plant and equipment -10,470 -10,297
Other 847 197
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Net cash used in investing activities -12,598 -9,236
CASH FLOWS USED BY FINANCING ACTIVITIES
- ---------------------------------------
(Decrease) in long-term debt -8,693 -9,654
Dividends paid -6,792 -6,411
Other 668 129
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Net cash used in financing activities -14,817 -15,936
Net (decrease) in cash and cash equivalents -9,678 -5,634
Cash and cash equivalents at beginning of period 25,997 30,151
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Cash and cash equivalents at end of period $16,319 $24,517
======= =======
</TABLE>
Supplemental information about noncash transactions:
During the nine months ended September 30, 1995, the Company issued
approximately 323,000 shares with a value of $6,000,000 in connection
with the acquisition of a business.
2
<PAGE> 3
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: 16,137,287 and 16,028,151 for the
nine month periods and 16,361,655 and 16,034,874 for the third quarter
ended September 30, 1995 and September 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 ($000's)
Inventories consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Products finished or in process $29,373 $25,685
Raw materials 28,894 25,560
Supplies 775 684
------- -------
Total $59,042 $51,929
======= =======
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
1. Liquidity and Capital Resources
The current ratio of 2.4 to 1 at September 30, 1995, is unchanged from
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 third quarter and first nine months of 1995 increased
by 13.7% and 12.6% over sales for the same period of 1994. Most of the
increase resulted from more favorable pricing.
Cost of goods sold, expressed as a percentage of sales, for the third
quarter and first nine months of 1995 increased slightly to 70.6% and
70.4% from 70.3% and 70.2% for the comparable periods in 1994. As a
result of the Company's continuing efforts to reduce costs, selling and
administrative expenses, expressed as a percentage of sales, decreased
to 21.8% for the third quarter and to 22.0% for the first nine months of
1995 compared to 23.0% and 23.1% for the same periods in 1994. Interest
expense decreased to 1.3% of sales for the third quarter and to 1.4% for
the first nine months of 1995 compared to 1.7% for comparable periods of
1994, principally as a result of lower debt levels.
The effective income tax rates for the third quarter and first nine
months of 1995 were 40.5% and 40.3% respectively, compared to 40.5% and
41.0% for 1994.
4
<PAGE> 5
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits attached hereto and incorporated herein by reference:
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
10.1 Executive Compensation Plans and Arrangements:
(a) Special Nonqualified Deferred Compensation Plan and
related trust agreement.
19 Quarterly Report to Shareholders
for the nine months ended September 30, 1995.
27 Financial Data Schedules for Third Quarter 1995 10-Q
(For SEC use only)
b. Reports on Form 8-K.
None
</TABLE>
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.
--------------------------------
(Registrant)
DATE: November 8, 1995 /S/ W. C. Downer
--------------------------------
W. C. Downer,
Vice President - Finance
(Chief Financial and Accounting
Officer and Duly Authorized Officer)
5
<PAGE> 6
AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Number Description Page Number
- ------ ----------- -----------
<S> <C> <C>
10.1 Executive Compensation Plans and Arrangements: 7
(a) Special Nonqualified Deferred Compensation Plan
and related trust agreement.
19 Quarterly Report to Shareholders for the nine months ended
September 30, 1995. 18
27 Financial Data Schedules for Third Quarter 1995 10-Q
(For SEC use only) 20
</TABLE>
6
<PAGE> 1
EXHIBIT 10.1(a)
AMERICAN BUSINESS PRODUCTS, INC.
DEFERRED COMPENSATION PLAN
INTRODUCTION
We are pleased to introduce the American Business Products, Inc. Special
Non-Qualified Deferred Compensation Plan.
This plan, which will go into effect on February 1, 1995 has been developed to
provide you with an opportunity to shelter some of your compensation and
protect your earnings from tax erosion.
Under this new plan, utilizing the Merrill Lynch FutureComp(sm) Service, you
may elect to defer up to 90% of the cash compensation (including commissions
and bonuses) payable to you in a given year. Your election form must be signed
and returned to R. A. LeFeber, Plan Administrator, no later than January 25,
1995.
The amount you elect to defer will be held on your behalf in trust with the
Merrill Lynch Trust Companies. You will be taxed on the deferred amount only
when the amount is paid to you. You will receive comprehensive statements on a
quarterly basis summarizing your account activity.
You may change your deferral election once a year (by November 30th, for
January 1st of the following year).
Through Merrill Lynch you will enjoy the benefit of having your deferred
compensation invested in a wide variety of investment options, including:
Merrill Lynch Corporate Bond Fund - High Income Portfolio
Merrill Lynch Global Allocation Fund
Merrill Lynch Basic Value Fund
Merrill Lynch Developing Capital Markets Fund
Investment of deferred amounts will be done via the enclosed Eligible Employee
Election Form.
To facilitate your understanding of the program, we have engaged the services
of Jere Goldsmith, First Vice President and Bert Ponder, Vice President at
Merrill Lynch. Jere and Bert are available for consultation during regular
business hours at 1-404-264-2072 or 1-800-937-0453.
Enclosed is a Summary of the Special Non-Qualified Deferred Compensation Plan
as well as Election and Beneficiary Designation Forms which must be returned to
R. A. LeFeber, ABP headquarters. If you have any questions regarding this new
plan, please do not hesitate to call.
<PAGE> 2
AMERICAN BUSINESS PRODUCTS, INC.
DEFERRED COMPENSATION PLAN
SUMMARY OF ELECTIVE DEFERRAL PROVISIONS
THIS SUMMARY PROVIDES ONLY GENERAL INFORMATION ABOUT THE PLAN. THE COMPLETE
PLAN DOCUMENT IS AVAILABLE UPON REQUEST.
OVERVIEW
A non-qualified deferred compensation plan is an agreement between an employer
and a select group of employees in which the company agrees to pay those
employees on some future date. A non-qualified deferred compensation
arrangement allows highly compensated employees to:
-- Defer current federal income taxes on an unlimited amount of
compensation.
-- Enjoy the benefit of having the deferred amounts invested in a
diversified manner.
-- Defer current federal income taxes on all earnings from such
investments until disbursement.
PURPOSE OF PLAN
American Business Products, Inc. has adopted the ABP Special Non-Qualified
Deferred Compensation Plan (The Plan) to provide a means by which certain
employees may elect to defer receipt of designated percentages or amounts of
their compensation.
On a discretionary basis, American Business Products will provide a special
Profit Sharing bonus to eligible employees utilizing the same formula used in
the ABP Profit Sharing Plan for amounts over $150,000 in compensation.
STATUS OF THE PLAN
The plan is unfunded and maintained primarily for the purpose of providing
deferred compensation for a select group of management or highly compensated
employees within the meaning of Sections 201(2) and 301(a)(3) of ERISA and
shall be interpreted and administered to the extent possible in a manner
consistent with that intent.
A grantor trust has been established by the company for The Plan. All elective
deferrals will become assets of the Trust and will be subject to the claims of
ABP's general creditors in the event of company insolvency until paid to Plan
participants and their beneficiaries in such a manner and at such times as
specified below.
<PAGE> 3
PARTICIPATION
Any eligible individual who elects to defer part of his/her compensation in
accordance with the plan shall become a participant and shall continue to be a
participant so long as any amount remains credited to his/her account.
ELECTIVE DEFERRALS
Participants may elect to reduce their compensation and to have elective
deferrals credited to their accounts by making an election under The Plan.
(Said elections may be changed each year for later plan years). No participant
may defer more than 90% of his/her base compensation for a plan year.
You may elect to defer this special Profit Sharing bonus into the new plan or
receive it in cash. If you elect to defer this special bonus, you must already
be deferring some of your regular compensation and it must be split in the same
manner your regular deferred compensation is split.
VESTING
A participant shall be immediately vested in all elective deferrals, and all
income and gain attributable thereto, credited to his or her individual
account.
PAYMENTS
At the time of his deferral election, a participant shall elect the date at
which and the form which the elective deferrals will commence to be paid.
Payments will be made in either a single lump sum or annual installments over a
period elected by the participant up to 10 years.
Such elections will be effective for the plan year for which it is made and
succeeding plan years unless changed, in writing, by the participant. Any
change will be effective only for Elective Deferrals made for the first plan
year beginning after the date on which the Election Form containing the change
is filed with the Plan Administrator.
As soon as possible following a change of control of the employer, as the term
is defined in The Plan, each participant shall be paid his/her account balance
in a single lump sum.
Upon termination of a participants employment, for any reason other than death,
and prior to age 59 1/2 (Retirement Age), the participants accounts shall be
paid to the participant in a single lump sum as soon as practicable following
the date of such termination.
If a participant dies prior to the complete distribution of his/her account,
the balance of the account shall be paid as soon as practicable to the
participant's designated beneficiary or beneficiaries in either a lump sum
payment or annual installments, as elected by the participant.
<PAGE> 4
UNFORESEEN EMERGENCY
If a participant suffers an unforeseen emergency, the Plan Administrator, in
its sole discretion, may pay the participant the portion of his/her account
which the Plan Administrator determines is necessary to satisfy the emergency
need, including any amount necessary to pay any federal, state, or local income
taxes reasonably anticipated to result from the distribution.
For purposes of The Plan, "unforeseen emergency" means an immediate and heavy
financial need resulting from any of the following:
a. Expenses which are not covered by insurance and which the
Participant or his or her spouse or dependent has incurred as a result
of, or is required to incur in order to receive, medical care.
b. The need to prevent eviction of a Participant from his or her
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
c. Any other circumstances that is determined by the Plan
Administrator in its sole discretion to constitute an unforeseen
emergency which is not covered by insurance and which cannot
reasonably be relieved by the liquidation of the Participant's assets.
PLAN AMENDMENT AND TERMINATION
The Board of Directors of American Business Products reserves the right to
amend The Plan at any time in its sole discretion. No amendment or termination
of The Plan shall adversely affect the rights of any participant with respect
to amounts that have been credited to his/her account prior to the date of such
amendment or termination.
<PAGE> 5
[LOGO] The Merrill Lynch Non-Qualified Deferred
Compensation Plan Trust Agreement
(Areas highlighted in grey will be completed
by Merrill Lynch Trust Companies.)
TRUST UNDER:
________________________________________________________________________________
DEFERRED COMPENSATION PLAN(1)
This Agreement made this day of December 20, 1994, by and between American
Business Products, Inc. (Company) and Merrill Lynch Trust Company of Florida a
Florida corporation (Trustee);
WHEREAS, Company has adopted the Non-Qualified Deferred Compensation Plan
identified above and such other Plan(s) as are listed in Appendix A.
WHEREAS, Company has incurred or expects to incur liability under the terms of
such Plan(s) with respect to the individuals participating in such Plan(s).
WHEREAS, Company wishes to establish a trust (the "Trust") and to contribute to
the Trust assets that shall be held therein, subject to the claims of Company's
creditors in the event of the Company's insolvency, as herein defined, until
paid to Plan participants and their beneficiaries in such manner and at such
times as specified in the Plan(s);
WHEREAS, it is the intention of the parties that this Trust shall constitute an
unfunded arrangement and shall not affect the status of the Plan(s) as an
unfunded plan maintained for the purpose of providing deferred compensation for
a select group of management or highly compensated employees for purpose of
Title I of the Employee Retirement Income Security Act of 1974.
WHEREAS, it is the intention of Company to make contributions to the Trust to
provide itself with a source of funds to assist it in the meeting of its
liabilities under the Plan(s);
NOW, THEREFORE, the parties do hereby establish the Trust and agree that the
Trust shall be comprised, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST.
(a) Company hereby deposits with Trustee in trust such cash and/or marketable
securities, if any, listed in Appendix B, which shall become the principal of
the Trust to be held administered and disposed of by Trustee as provided in
this Trust Agreement.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which Company is the
grantor, within the meaning of sub part E, part 1, subchapter J, chapter 1,
subtitle A of the Internal Revenue Code of 1986, as amended, and shall be
construed accordingly.
(d) The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of Company and shall be used exclusively
for the uses and purposes of Plan participants and general creditors as herein
set forth. Plan participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Plan(s) and this Trust Agreement shall be mere
unsecured contractual rights of Plan participants and their beneficiaries
against Company. Any assets held by the Trust will be subject to the claims of
Company's general creditors under federal and state law in the event of
insolvency, as defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or from time to time,
make additional deposits of cash or other property in trust with Trustee to
augment the principal to be held, administered and disposed of by Trustee as
provided in this Trust Agreement. Neither Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.
(f) Trustee shall not be obligated to receive such cash and/or property unless
prior thereto Trustee has agreed that such cash and/or property is acceptable
to Trustee and Trustee has received such reconciliation, allocation, investment
or other information concerning, or representation within respect to, the cash
and/or property as Trustee may require, Trustee shall have no duty or authority
to (a) require any deposits to be made under the Plan or to Trustee; (b)
compute any amount to be deposited under the Plan to Trustee; or(c) determine
whether amounts received by Trustee comply with the Plan. Assets of the Trust
may, in Trustee's discretion, be held in an account with an affiliate of
Trustee.
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES.
(a) With respect to each Plan participant, Company shall deliver to Trustee a
schedule (the "Payment Schedule") that indicates the amounts payable in respect
of the participant(and his or her beneficiaries), that provides a formula or
other instructions acceptable to Trustee for determining the amounts so
payable, the form in which such amount is to be paid (as provided for or
available under the Plan(s)), and the time of commencement for payment of such
amounts. The Payment Schedule shall be delivered to Trustee not more than [30]
business days nor fewer than [15] business days prior to the first date on
which a payment is to be made to the Plan participant. Any change to a Payment
Schedule shall be delivered to Trustee not more than [30] days nor fewer than
[15] days prior to the date on which the first payment is to be made in
accordance with the changed Payment Schedule. Except as otherwise provided
herein, Trustee shall make payments to Plan participants and their
beneficiaries in accordance with such Payment Schedule. The Trustee shall make
provisions for the reporting and withholding of any federal, state or local
taxes that
(1) THIS TRUST IS INTENDED TO COMPLY WITH THE MODEL GRANTOR TRUST REQUIREMENT
OF REVENUE PROCEDURE 92-64. WHILE MERRILL LYNCH BELIEVES THAT THIS TRUST
AGREEMENT COMPLIES WITH THE REVENUE PROCEDURE, IT PROVIDES NO ASSURANCE THAT
MODIFICATIONS TO THE ADDITIONAL TERMS CONTAINED HEREIN WOULD NOT BE REQUIRED BY
THE INTERNAL REVENUE SERVICE DURING THE REVIEW PROCESS IN THE EVENT THE COMPANY
WERE TO APPLY FOR A RULING AS TO THE TAX CONSEQUENCES OF ITS PLAN AND THIS
TRUST. IF THE COMPANY DESIRES TO OBTAIN SUCH A RULING FROM THE INTERNAL REVENUE
SERVICE, A COPY OF THIS TRUST AGREEMENT WITH ALL SUBSTITUTED OR ADDITIONAL
LANGUAGE UNDERLINED AS REQUIRED BY THE REVENUE PROCEDURE IS AVAILABLE THROUGH
YOUR MERRILL LYNCH FINANCIAL CONSULTANT.
11-F
<PAGE> 6
continued
may be required to be withheld with respect to the payment of benefits pursuant
to the terms of the Plan(s)and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been reported, withheld
and paid by Company, it being understood among the parties hereto that (1)
Company shall on a timely basis provide Trustee specific information as to the
amount of taxes to be withheld and (2) Company shall be obligated to receive
such withheld taxes from Trustee and properly pay and report such amounts to
the appropriate taxing authorities.
(b) The entitlement of a Plan participant or his or her beneficiaries to
benefits under the Plan(s) shall be determined by Company or such party as it
shall designate under the Plan(s), and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan(s).
(c) Company may make payment of benefits directly to Plan participants or their
beneficiaries as they become due under the terms of the Plan(s). Company shall
notify Trustee of its decision to make payment of benefits directly prior to
the time amounts are payable to participants or their beneficiaries. In
addition, if the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the terms of the
Plan(s), Company shall make the balance of each payment as it falls due.
Trustee shall notify Company where principal and earnings are not sufficient.
(d) Trustee shall have no responsibility to determine whether the Trust is
sufficient to meet the liabilities under the Plan(s), and shall not be liable
for payments or Plan(s) liabilities in excess of the value of the Trust's
assets.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants and their
beneficiaries if the Company is insolvent. Company shall be
considered "insolvent" for purposes of this Trust Agreement if (i) Company is
unable to pay its debts as they become due, or (ii) Company is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in Section
1(d)hereof, the principal and income of the Trust shall be subject to claims of
general creditors of Company under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive Officer of Company
(or, if there is no Chief Executive Officer, the highest ranking officer) shall
have the duty to inform Trustee in writing of Company's insolvency. If a person
claiming to be a creditor of Company alleges in writing to Trustee that Company
has become insolvent, Trustee shall determine whether Company is insolvent and,
pending such determination, Trustee shall discontinue payment of benefits to
Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of Company's insolvency, or
has received notice from Company or a person claiming to be a creditor alleging
that Company is insolvent, Trustee shall have no duty to inquire whether
Company is insolvent. Trustee may in all events rely on such evidence
concerning Company's solvency as may be furnished to Trustee and that provides
Trustee with a reasonable basis for making a determination concerning Company's
solvency.
(3) If at any time Trustee has determined that Company is insolvent,
Trustee shall discontinue payments to Plan participants or their beneficiaries
and shall hold the assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any way diminish any rights
of Plan participants or their beneficiaries to pursue their rights as general
creditors of Company with respect to benefits due under the Plan(s) or
otherwise.
(4) Trustee shall resume the payment of benefits to Plan participants
or their beneficiaries in accordance with Section 2 of this Trust Agreement
only after Trustee has determined the Company is not insolvent (or is no longer
insolvent).
(c) Provided that there are sufficient assets, if Trustee discontinues the
payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the terms of the Plan(s) for the
period of such discontinuance, less the aggregate amount of any payments made
to Plan participants provided for hereunder during any such period of
discontinuance; provided that Company has given Trustee the information with
respect to such payments made during the period of discontinuance prior to
resumption of payments by Trustee.
SECTION 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, since the Trust is irrevocable
in accordance with Section 1(b) hereof, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of the Trust
assets before all payment of benefits have been made to Plan participants and
their beneficiaries pursuant to the terms of the Plan(s).
SECTION 5. INVESTMENT AUTHORITY.
(a) Trustee may invest in securities (including stock or rights to acquire
stock) or obligations issued by Company. All rights associated with assets of
the Trust shall be exercised by Trustee or the person designated by Trustee,
and shall in no event be exercised by or rest with Plan participants, except
that voting rights with respect to Trust assets will be exercised by Company
unless an investment adviser has been appointed pursuant to Section 5(c) and
voting authority has been delegated to such investment adviser.
(b) Company shall have the right at any time, and from time to time in its sole
discretion, to substitute assets of equal fair market value for any asset held
by the Trust. This right is exercised by Company in a nonfiduciary capacity
without the approval or consent of any person in a fiduciary capacity.
(c) Trustee may appoint one or more investment advisers who are registered as
investment advisers under the Investment Advisers Act of 1940, who may be
affiliates of Trustee, to provide investment advice on a discretionary or
nondiscretionary basis with respect to all or a specified portion of the assets
of the Trust.
(d) Trustee, or Trustee's designee, is authorized and empowered:
(1) To invest and reinvest Trust assets, together with the income
therefrom, in common stock, preferred stock, convertible preferred stock,
bonds, debentures, convertible debentures and bonds, mortgages, notes,
commercial paper and other evidences of indebtedness (including those issued by
Trustee), shares of mutual funds (which funds may be sponsored, managed or
offered by an affiliate of Trustee), guaranteed investment contracts, bank
investment contracts, other securities, policies of life insurance, annuity
contracts, options, options to buy or sell securities or other assets, and all
other property of any type (personal, real or mixed, and tangible or
intangible);
(2) To deposit or invest all or any part of the assets of the Trust in
savings accounts or certificates of deposit or other deposits in a bank or
savings and loan association or other depository institution, including Trustee
or any of its affiliates, provided with respect to such deposits with Trustee
or an affiliate the deposits bear a reasonable interest rate;
12-F
<PAGE> 7
continued
(3) To hold, manage, improve, repair and control all property, real or
personal, forming part of the Trust; to sell, convey, transfer, exchange,
partition, lease for any term, even extending beyond the duration of this
Trust, and otherwise dispose of the same from time to time;
(4) To hold in cash, without liability for interest, such portion of
the Trust as is pending investments, or payment of expenses, or the
distribution of benefits;
(5) To take such actions as may be necessary or desirable to protect
the Trust from loss due to the default on mortgages held in the Trust including
the appointment of agents or trustees in such other jurisdictions as may seem
desirable, to transfer property to such agents or trustees, to grant to such
agents such powers as are necessary or desirable to protect the Trust, to
direct such agent or trustee, or to delegate such power to direct, and to
remove such agent or trustee;
(6) To settle, compromise or abandon all claims and demands in favor
of or against the Trust;
(7) To exercise all of the further rights, powers, options and
privileges granted, provided for, or vested in trustees generally under the
laws of the state in which Trustee is incorporated as set forth above, so that
the powers conferred upon Trustee herein shall not be in limitation of any
authority conferred by law, but shall be in addition thereto;
(8) To borrow money from any source and to execute promissory notes,
mortgages or other obligations and to pledge or mortgage any trust assets as
security; and
(9) To maintain accounts at, execute transactions through, and lend on
an adequately secured basis stocks, bonds or other securities to, any brokerage
or other firm, including any firm which is an affiliate of Trustee.
SECTION 6. ADDITIONAL POWERS OF TRUSTEE.
To the extent necessary or which it deems appropriate to implement its
powers under Section 5 or otherwise to fulfill any of its duties and
responsibilities as Trustee of the Trust, Trustee shall have the following
additional powers and authority:
(a) To register securities, or any other property, in its name or in
the name of any nominee, including the name of any affiliate or the nominee
name designated by any affiliate, with or without indication of the capacity in
which property shall be held, or to hold securities in bearer form and to
deposit any securities or other property in a depository or clearing
corporation;
(b) To designate and engage the services of, and to delegate powers
and responsibilities to, such agents, representatives, advisers, counsel and
accountants as Trustee considers necessary or appropriate, any of whom may be
an affiliate of Trustee or a person who renders services to such an affiliate,
and, as a part of its expenses under this Trust Agreement, to pay their
reasonable expenses and compensation;
(c) To make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other instruments in
writing necessary or appropriate for the accomplishment of any of the powers
listed in this Trust Agreement; and
(d) Generally to do all other acts which Trustee deems necessary or
appropriate for the protection of the Trust.
SECTION 7. DISPOSITION OF INCOME.
(a) During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
SECTION 8. ACCOUNTING BY TRUSTEE.
(a) Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee. Within 90 days following the close of each calendar year
and within 90 days after removal or resignation of Trustee, Trustee shall
deliver to Company a written account of its administration of the Trust during
such year or during the period from the close of the last preceding year to the
date of such removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a description of
all securities and investments purchased and sold with the cost or net proceeds
of such purchases or sales (accrued interest paid or receivable being shown
separately), and showing all cash, securities and other property held in the
Trust at the end of such year or as of the date of such removal or resignation,
as the case may be. Trustee may satisfy its obligation under this Section 8 by
rendering to Company monthly statements setting forth the information required
by this Section separately for the month covered by the statement.
SECTION 9. RESPONSIBILITY AND INDEMNITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in like capacity and
familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee shall incur no
liability to any person for any action taken pursuant to a direction, request
or approval given by Company which is contemplated by, and in conformity with,
the terms of the Plan(s) and this Trust and is given in writing by Company.
Trustee shall also incur no liability to any person for any failure to act in
the absence of direction, request or approval from Company which is contemplated
by, and in conformity with, the terms of this Trust. In the event of a dispute
between Company and a party, Trustee may apply to a court of competent
jurisdiction to resolve the dispute.
(b) Company hereby indemnifies Trustee and each of its affiliates
(collectively, the "Indemnified Parties") against, and shall hold them harmless
from, any and all loss, claims, liability, and expense, including reasonable
attorneys' fees, imposed upon or incurred by any Indemnified Party as a result
of any acts taken, or any failure to act, in accordance with the directions
from Company or any designee of Company, or by reason of the Indemnified
Party's good faith execution of its duties with respect to the Trust,
including, but not limited to, its holding of assets of the Trust, Company's
obligations in the foregoing regard to be satisfied promptly by Company,
provided that in the event the loss, claim, liability or expense involved is
determined by a no longer appealable final judgment entered in a lawsuit or
proceeding to have resulted from the gross negligence or willful misconduct of
Trustee, Trustee shall promptly on request thereafter return to Company any
amount previously received by Trustee under this Section with respect to such
loss, claim, liability or expense. If Company does not pay such costs, expenses
and liabilities in a reasonably timely manner, Trustee may obtain payment from
the Trust without direction from Company.
(c) Trustee may consult with legal counsel (who may also be counsel for Company
generally) with respect to any of its duties or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries, investment advisers,
financial consultants or other professionals to assist it in performing any of
its duties or obligations hereunder.
(e) Trustee shall have, without exclusion, all powers conferred on Trustee by
applicable law, unless expressly provided otherwise herein, provided, however,
that if an insurance policy is held as an asset of the Trust, Trustee shall
have no power to name a beneficiary of the policy other than the Trust, to
assign the policy (as distinct from conversion of the policy to a different
form) other than to a successor Trustee, or to loan to any person the proceeds
of any borrowing against such policy.
13-F
<PAGE> 8
continued
(f) However, notwithstanding the provisions of Section 9(e) above, Trustee may
loan to Company the proceeds of any borrowing against an insurance policy held
as an asset of the Trust.
(g) Notwithstanding any powers to Trustee pursuant to this Trust Agreement or
to applicable law, Trustee shall not have any power that could give this Trust
the objective of carrying on a business and dividing the gains therefrom,
within the meaning of section 301.7701-2 of the Procedure and Administrative
Regulations promulgated pursuant to the Internal Revenue Code.
SECTION 10. COMPENSATION AND EXPENSES OF TRUSTEE.
Trustee is authorized, unless otherwise agreed by Trustee, to withdraw
from the Trust without direction from Company the amount of its fees in
accordance with the fee schedule agreed to by Company and Trustee. Company
shall pay all administrative expenses, but if not so paid, the expenses shall
be paid from the Trust.
SECTION 11. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to Company, which shall be
effective 30 days after receipt of such notice unless Company and Trustee agree
otherwise.
(b) Trustee may be removed by Company on 30 days notice or upon shorter notice
accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a successor
Trustee, all assets shall subsequently be transferred to the successor
Trustee. The transfer shall be completed within 60 days after receipt of notice
of resignation, removal or transfer, unless Company extends the time limit,
provided that Trustee is provided assurance by Company satisfactory to Trustee
that all fees and expenses reasonably anticipated will be paid.
(d) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 12 hereof, by the effective date of resignation or
removal under paragraph(s) (a) or (b)of this section. If no such appointment
has been made, Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All expenses of Trustee in
connection with the proceeding shall be allowed as administrative expenses of
the Trust.
(e) Upon settlement of the account and transfer of the Trust assets to the
successor Trustee, all rights and privileges under this Trust Agreement shall
vest in the successor Trustee and all responsibility and liability of Trustee
with respect to the Trust and assets thereof shall terminate subject only to
the requirement that Trustee execute all necessary documents to transfer the
Trust assets to the successor Trustee.
SECTION 12. APPOINTMENT OF SUCCESSOR.
(a) If Trustee resigns or is removed in accordance with Section 11 (a) or
(b)hereof, Company may appoint any third party, such as a bank trust department
or other party that may be granted corporate trustee powers under state law, as
a successor to replace Trustee upon resignation or removal. The appointment
shall be effective when accepted in writing by the new Trustee, who shall have
all of the rights and powers of the former Trustee, including ownership rights
in the Trust assets. The former Trustee shall execute any instrument necessary
or reasonably requested by Company or the successor Trustee to evidence the
transfer.
(b) The successor Trustee need not examine the records and acts of any prior
Trustee and may retain or dispose of existing Trust assets, subject to Sections
7 and 8 hereof. The successor Trustee shall not be responsible for and Company
shall indemnify and defend the successor Trustee from any claim or liability
resulting from any action or inaction of any prior Trustee or from any other
past event, or any condition existing at the time it becomes successor Trustee.
SECTION 13. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written instrument executed by
Trustee and Company. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan(s) or shall make the Trust revocable since
the Trust is irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on which Plan participants and
their beneficiaries are no longer entitled to benefits pursuant to the terms of
the Plan(s). Upon termination of the Trust any assets remaining in the Trust
shall be returned to Company.
(c) Upon written approval of participants or beneficiaries entitled to payment
of benefits pursuant to the terms of the Plan(s), Company may terminate this
Trust prior to the time all benefit payments under the Plan(s) have been made.
All assets in the Trust at termination shall be returned to Company.
SECTION 14. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in accordance with
the laws of the state in which Trustee is incorporated as set forth above.
(d) The provisions of Sections 2(d), 3(b)(3), 9(b) and 15 of this Agreement
shall survive termination of this Agreement.
(e) The rights, duties, responsibilities obligations and liabilities of Trustee
are as set forth in this Trust Agreement, and no provision of the Plan(s) or any
other documents shall affect such rights, responsibilities, obligations and
liabilities. If there is a conflict between provisions of the Plan(s) and this
Trust Agreement with respect to any subject involving Trustee, including but
not limited to the responsibility, authority or powers of Trustee, the
provisions of this Trust Agreement shall be controlling.
(f) For purposes of this Trust, Change of Control shall mean: The purchase or
other acquisition by any person, entity or group of persons, within the meaning
of section 13(d) or 14(d) of the Securities Exchange Act of 1934 ("Act"), or
any comparable successor provisions, of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of 30 percent or more of
either the outstanding shares of common stock or the combined voting power of
Company's then outstanding voting securities entitled to vote generally, or the
approval by the stockholders of Company of a reorganization, merger, or
consolidation, in each case, with respect to which persons who were
stockholders of Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 50 percent of the
combined voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated Company's then outstanding
securities, or a liquidation or dissolution of Company or of the sale of all or
substantially all of Company's assets.
SECTION 15. ARBITRATION.
- - ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
14-F
______
<PAGE> 9
[LOGO] The Merrill Lynch Special Non-Qualified Deferred
Compensation Plan Adoption Agreement
Please complete the information requested in the Adoption agreement to
establish the specific provisions of your plan. You do not have to provide a
copy to your Financial Consultant. (Only the Merrill Lynch account opening
agreements and an original executed copy of the associated Trust Agreement need
to be returned to Merrill Lynch at the address printed on those forms.) This
document and the Merrill Lynch Special Non-Qualified Deferred Compensation Plan
for Select Employees govern the rights of the plan participants and should,
therefore, be disclosed to participants and retained as part of your permanent
records.
1. EMPLOYER INFORMATION
A. Name of Plan: ABP Deferred Comp Plan
----------------------
B. Name and Address of employer sponsoring the Plan. Please provide
employer's business name.
American Business Products, Inc.
- --------------------------------
Business Name
- --------------------------------
2100 RiverEdge Pky - Suite 1200
- --------------------------------
Address
- --------------------------------
Atlanta
- --------------------------------
City
- --------------------------------
GA 30328
- --------------------------------
State Zip Code
C. Provide employer's primary contact for the Plan and telephone and FAX
numbers. Also include the employer's Tax Identification Number.
R.A. LeFeber
- --------------------------------
Primary Contact
- --------------------------------
V.P. Comm Investor Relations
- --------------------------------
Title
- --------------------------------
404/953-8300
- --------------------------------
Telephone
- --------------------------------
404/952-2343
- --------------------------------
FAX
- --------------------------------
58-1030529
- --------------------------------
Employer Tax Identification Number
D. Give the first day of the 12-month period for which the employer pays
taxes: 1/1
---
2. PLAN INFORMATION
A. What is the effective date of the Plan?
2/1/95
- -------------------------------------------------------------------------------
B. Plan Year Ends. Your "Plan Year" is the 12-consecutive-month period
for which you credit elective and matching deferrals and keep Plan records.
Enter the last day of your Plan Year. For example, if you use the calendar year
as your plan year, enter "December 31." If you use a different 12-month period
- -- for instance if your business is on a fiscal year -- enter the last day of
your fiscal year, e.g. "July 31."
December 31
- -------------------------------------------------------------------------------
3. ELIGIBLE EMPLOYEES
The following persons or classes of persons shall be Participants (enter the
names or positions of individuals eligible to participate or the criteria used
to identify Participants. e.g., "Those key employees of the Company selected by
the Compensation Committee of the Board of Directors").
All Employees whose Total salary or wages paid by ABP during the plan year
- --------------------------------------------------------------------------
exceed $150,000.00
- ------------------
4. COMPENSATION
Compensation is used to determine the amount of Elective Deferrals a
Participant can elect. Compensation under the Plan is defined as (select one):
[ ] the Participant's wages, salaries, fees for professional services and
other amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment with
the Employer or an Affiliate to the extent that the amounts are includable in
gross income, including but not limited to commissions paid to salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, reimbursements, and
expense allowances, but not including those items excludable from the
definition of compensation under Treas. Reg. section 1.415-2(d)(3).
[ ] the regular or base salary payable to the individual by the Employer
or an Affiliate, excluding commissions and bonuses.
[X] the cash compensation payable to the individual by the Employer or an
Affiliate, including any commissions and bonuses.
[ ] the cash bonuses payable to the individual by the Employer or an
Affiliate.
For purposes of the Plan, Compensation will be determined before giving effect
to Elective Deferrals and other salary reduction amounts which are not included
in the Participant's gross income under Code section 125, 401(k), 402(h) or
403(b).
5. CONTRIBUTIONS
A. Elective Deferrals. Participants may elect to reduce their
Compensation and to have Elective Deferrals credited to their Accounts by
making an election under the Plan (which may be changed each year for later
Plan Years as described in the plan), but no Participant may defer more than
90% (1%-100%) of his or her Compensation for the Plan Year.
B. Matching Deferrals. If the Employer elects to match Elective
Deferrals, specify the matching rate and indicate the amount of the
Participant's Elective Deferrals that will be matched. You may also elect to
decide each year whether Matching Deferrals will be made and, if so, what that
year's matching rate will be.
For example, the Employer may decide to credit a Matching Deferral of, for
example, 50 cents for each dollar of a Participant's Elective Deferrals, but
limit the match to the first 5% of Compensation deferred by the Participant. If
you want to set a maximum dollar amount on the amount of Elective Deferrals
that will be matched, insert the dollar amount and interval over which that
amount is to be measured. For example, you could say that you will not match
Elective Deferrals in excess of $1,000 per month. Matching Deferrals can be
made after each payroll period, monthly, quarterly, or annually, at the
Employer's discretion. Matching Deferrals will be subject to the vesting
schedule selected in Item 6A (select one):
[X] No Matching Deferrals will be credited.
[ ] The Employer will credit Matching Deferrals for each
Participant equal to ___% of the first ___% of the Participant's Compensation
which is elected as an Elective Deferral, but no Matching Deferral will be made
on Elective Deferrals in excess of $__________ per (specify time period if
applicable).
_____________________________________________________________________________
[ ] The Employer will decide from year to year whether Matching Deferrals
will be made and will notify Participants annually of the manner in which
Matching Deferrals will be calculated for the subsequent year.
"MERRILL LYNCH TRUST COMPANIES"
15
______________
<PAGE> 10
continued
- - THE PARTIES WAIVE THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING THE
RIGHT TO JURY TRIAL.
- - PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT
FROM COURT PROCEEDINGS.
- - THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEVEL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR SEEK MODIFICATION OF RULINGS
BY THE ARBITRATORS IS STRICTLY LIMITED.
- - THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF
ARBITRATORS WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
COMPANY AGREES THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN COMPANY
AND EITHER OR BOTH THE TRUSTEE AND ITS AFFILIATE MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED ("MLPF&S") IN CONNECTION WITH THE TRUST, INCLUDING, BUT NOT
LIMITED TO, THOSE INVOLVING ANY TRANSACTIONS, OR THE CONSTRUCTION, PERFORMANCE,
OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN COMPANY AND EITHER OR BOTH THE
TRUSTEE AND MLPF&S, WHETHER ENTERED INTO PRIOR, ON, OR SUBSEQUENT TO THE DATE
HEREOF, SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS
AGREEMENT SHALL BE CONDUCTED ONLY BEFORE THE NEW YORK STOCK EXCHANGE, INC., THE
AMERICAN STOCK EXCHANGE, INC., OR ARBITRATION FACILITY PROVIDED BY ANY OTHER
EXCHANGE OF WHICH MLPF&S IS A MEMBER, THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC., OR THE MUNICIPAL SECURITIES RULEMAKING BOARD, AND IN ACCORDANCE
WITH ITS ARBITRATION RULES THEN IN FORCE. COMPANY MAY ELECT IN THE FIRST
INSTANCE WHETHER ARBITRATION SHALL BE CONDUCTED BEFORE THE NEW YORK STOCK
EXCHANGE, INC., THE AMERICAN STOCK EXCHANGE,INC., OTHER EXCHANGE OF WHICH
MLPF&S IS A MEMBER, THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC., OR THE
MUNICIPAL SECURITIES RULEMAKING BOARD, BUT IF COMPANY FAILS TO MAKE SUCH
ELECTION, BY REGISTERED LETTER OR TELEGRAM ADDRESSED TO MERRILL LYNCH TRUST
COMPANIES, EMPLOYEE BENEFIT TRUST OPERATIONS, P.O. BOX 30532, NEW BRUNSWICK,
NEW JERSEY 08989-0532, BEFORE THE EXPIRATION OF FIVE DAYS AFTER RECEIPT OF A
WRITTEN REQUEST FROM MLPF&S AND/OR THE TRUSTEE TO MAKE SUCH ELECTION, THEN
MLPF&S AND/OR THE TRUSTEE MAY MAKE SUCH ELECTION. JUDGMENT UPON THE AWARD OF
ARBITRATORS MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING JURISDICTION.
NO PERSON SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR
SEEK TO ENFORCE ANY PRE-DISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO
HAS INITIATED IN COURT A PUTATIVE CLASS ACTION; WHO IS A MEMBER OF PUTATIVE
CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH RESPECT TO ANY CLAIMS ENCOMPASSED
BY THE PUTATIVE CLASS ACTION UNTIL:
(i) THE CLASS CERTIFICATION IS DENIED;
(ii) THE CLASS IS DECERTIFIED; OR
(iii) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH FORBEARANCE
TO ENFORCE AN AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY
RIGHTS UNDER THIS AGREEMENT EXCEPT TO THE EXTENT STATED HEREIN.
SECTION 16. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be Feb. 1, 1995.
IN WITNESS WHEREOF, Company and the Trustee have executed this Trust Agreement
each by action of a duly authorized person.
By signing this Agreement, the undersigned Company acknowledges (1)
that, in accordance with Section 15 of this Agreement, Company is agreeing in
advance to arbitrate any controversies which may arise with either or both the
Trustee or MLPF&S and (2) receipt of a copy of this Agreement.
American Business Products
- ---------------------------------
(Company)
By: /s/ Thomas R. Carmody
-----------------------------
(Signature)
Name/Title: /s/ Thomas R. Carmody
---------------------
Chairman and CEO
- ---------------------------------
Add second signature if required:
By: /s/ R. A. LeFeber
-----------------------------
(Signature)
Name/Title: R. A. LeFeber
---------------------
Vice President
- ---------------------------------
- ---------------------------------
(Trustee)
By: /s/ Chris Rosin
-----------------------------
(Signature)
Name/Title: Chris Rosin
---------------------
Trust Officer
APPENDIX A
Name of Non-Qualified Deferred
Compensation Plan(s):
Plan
- ----------------------------------
Plan
- ----------------------------------
APPENDIX B
Deposit of cash and/or marketable securities to the Trust:
Cash: $
----------------------------------------------------
Marketable Securities:
-------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
"MERRILL LYNCH TRUST COMPANIES COPY"
17-F
_____
<PAGE> 1
EXHIBIT 19
AMERICAN BUSINESS PRODUCTS, INC.
- --------------------------------------------------------------------------------
(LOGO)
TO OUR SHAREHOLDERS:
Record sales and earnings were achieved for both the third quarter and the first
nine months of 1995. Net income increased 35% for the quarter as sales gained
almost 14%. For the nine months, net income rose 43% and sales increased nearly
13%.
Our quarterly sales reached a record $157.2 million, up 13.7% over the third
quarter last year. Net income increased 34.9% to $6.0 million, or $.37 per share
versus $.28 per share for the quarter last year, adjusted for the 3-for-2 stock
split paid on June 15, 1995.
Sales for the first nine months advanced 12.6% to a record $471.0 million. Net
income increased 43% to a record $17.9 million, or $1.11 per share compared with
$.78 per share for the period last year.
These record results, along with improved margins, are all the more significant
since our profits were affected by costs associated with closing three
facilities of our business supplies operations and consolidating them into other
plants as part of our ongoing re-engineering program.
Pursuant to our longstanding plan of succession, Thomas R. Carmody, ABP Chairman
and Chief Executive Officer, announced today on his fortieth anniversary with
the Company, that he will relinquish the CEO position, effective December 31,
1995, and continue as Chairman. The Board of Directors appointed Robert W.
Gundeck, President and Chief Operating Officer, to the CEO position, effective
January 1, 1996.
We are confident these changes will continue ABP's history of growing the
business and building value for shareholders. Our company is well positioned for
continuing growth in the balance of this year and the future.
<TABLE>
<S> <C>
Thomas R. Carmody Robert W. Gundeck
Chairman and President and
Chief Executive Officer Chief Operating Officer
</TABLE>
October 25, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (DOLLARS IN THOUSANDS) THIRD QUARTER NINE MONTHS
PERIOD ENDED SEPTEMBER 30 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net sales $157,169 $138,186 $470,978 $418,270
Income before cumulative effect of change in
accounting principles 6,019 4,463 17,905 13,128
Income per common share before cumulative effect
of change in accounting principles .37 .28 1.11 .82
Net income 6,019 4,463 17,905 12,523
Net income per common share .37 .28 1.11 .78
Dividends per common share .14 .133 .42 .40
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 2
CONSOLIDATED INCOME STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
QUARTER ENDED SEPTEMBER 30,
Net Sales.................................................. $ 157,169 $ 138,186
------------ ------------
Cost of Goods Sold......................................... 110,901 97,171
Selling and Administrative Expenses........................ 34,309 31,825
------------ ------------
145,210 128,996
------------ ------------
Operating Income........................................... 11,959 9,190
Other Income (Expense):
Interest expense......................................... (2,116) (2,366)
Miscellaneous -- net..................................... 269 672
------------ ------------
Income Before Income Taxes................................. 10,112 7,496
Provision for Income Taxes................................. 4,093 3,033
------------ ------------
Net Income................................................. $ 6,019 $ 4,463
============= =============
Earnings Per Common Share.................................. $ .37 $ .28
Dividends Per Common Share................................. .14 .133
Average Number of Common Shares Outstanding................ 16,361,655 16,034,874
NINE MONTHS ENDED SEPTEMBER 30,
Net Sales.................................................. $ 470,978 $ 418,270
------------ ------------
Cost of Goods Sold......................................... 331,733 293,793
Selling and Administrative Expenses........................ 103,668 96,619
------------ ------------
435,401 390,412
------------ ------------
Operating Income........................................... 35,577 27,858
Other Income (Expense)
Interest expense......................................... (6,474) (7,000)
Miscellaneous -- net..................................... 886 1,407
------------ ------------
Income Before Income Taxes and Cumulative Effect of Change
in Accounting Principles................................. 29,989 22,265
Provision for Income Taxes................................. 12,084 9,137
------------ ------------
Income Before Cumulative Effect of Change in Accounting
Principles............................................... 17,905 13,128
Cumulative Effect of Change in Accounting Principles....... (605)
------------ ------------
Net Income................................................. $ 17,905 $ 12,523
============= =============
Per Common Share:
Income before cumulative effect of change in accounting
principles............................................ $ 1.11 $ .82
Net income............................................... $ 1.11 $ .78
Dividends Per Common Share................................. 0.42 0.40
Average Number of Common Shares Outstanding................ 16,137,287 16,028,151
</TABLE>
(Unaudited)
- --------------------------------------------------------------------------------
<PAGE> 3
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
Current Assets
Cash and cash equivalents.............................. $ 16,319 $ 25,997
Accounts receivable, less allowances of $2,628 and
$2,379.............................................. 82,921 72,536
Inventories............................................ 59,042 51,929
Other.................................................. 2,555 2,250
------------- ------------
Total Current Assets........................... 160,837 152,712
Plant And Equipment -- At Cost
Land................................................... 5,752 5,983
Buildings and improvements............................. 55,314 52,011
Machinery and equipment................................ 131,987 127,645
------------- ------------
193,053 185,639
Less accumulated depreciation.......................... 102,308 93,199
------------- ------------
90,745 92,440
Intangible Assets From Acquisitions
Goodwill, less amortization of $3,534 and $2,605....... 37,071 31,528
Other, less amortization of $4,574 and $3,973.......... 1,853 2,449
------------- ------------
38,924 33,977
Deferred Income Taxes.................................... 10,045 10,495
Other Assets............................................. 26,004 22,477
------------- ------------
$ 326,555 $312,101
============== =============
Current Liabilities
Accounts payable....................................... $ 43,657 $ 41,674
Salaries and wages..................................... 11,991 9,771
Profit sharing contributions........................... 4,986 4,397
Income taxes........................................... 1,340
Current maturities of long-term debt................... 6,201 6,237
------------- ------------
Total Current Liabilities...................... 66,835 63,419
Long-Term Debt........................................... 66,486 75,144
Supplemental Retirement Benefits......................... 15,281 13,609
Postretirement and Postemployment Benefits............... 22,577 22,448
Stockholders' Equity
Common stock -- $2 par value; authorized 50,000,000
shares, issued 16,561,641 and 10,784,229 shares..... 33,123 21,569
Additional paid-in capital............................. 5,493 118
Retained earnings...................................... 119,151 118,095
Foreign currency translation adjustment................ 179 64
------------- ------------
157,946 139,846
Less 193,394 and 121,478 shares of Common Stock in
treasury -- at cost................................. 2,570 2,365
------------- ------------
155,376 137,481
------------- ------------
$ 326,555 $312,101
============== =============
</TABLE>
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN BUSINESS PRODUCTS INC. FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
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<PERIOD-END> SEP-30-1995
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0
0
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</TABLE>
