<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 1997 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 of Incorporation) (IRS Employer 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 16,431,580 shares
- ----------------------------- -----------------
(Class) (Outstanding at September 30, 1997)
Page 1 of 13
Exhibit Index on Page 13
<PAGE> 2
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN BUSINESS PRODUCTS, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended September 30, 1997 1996
- -------------------------------- --------------- --------------
<S> <C> <C>
NET SALES $ 124,269 $ 157,993
--------------- --------------
COST AND EXPENSES
Cost of goods sold 88,125 109,856
Selling and administrative expenses 29,004 35,860
Restructuring and other charges - 1,498
--------------- --------------
117,129 147,214
--------------- --------------
OPERATING INCOME 7,140 10,779
OTHER INCOME (EXPENSE)
Interest expense (1,322) (1,774)
Miscellaneous - net 1,896 1,645
--------------- --------------
574 (129)
--------------- --------------
INCOME BEFORE INCOME TAXES 7,714 10,650
PROVISION FOR INCOME TAXES 3,070 4,271
--------------- --------------
NET INCOME $ 4,644 $ 6,379
=============== ==============
EARNINGS PER COMMON SHARE $ 0.28 $ 0.39
DIVIDENDS PER COMMON SHARE $ 0.155 $ 0.145
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 16,427,313 16,399,943
<CAPTION>
Nine Months Ended September 30, 1997 1996
- ------------------------------- --------------- --------------
<S> <C> <C>
NET SALES $ 379,385 $ 472,394
--------------- --------------
COST AND EXPENSES
Cost of goods sold 268,517 332,032
Selling and administrative expenses 85,345 106,205
Restructuring and other charges - 5,799
--------------- --------------
353,862 444,036
--------------- --------------
OPERATING INCOME 25,523 28,358
OTHER INCOME (EXPENSE)
Interest expense (4,588) (5,452)
Miscellaneous - net 8,550 3,679
--------------- --------------
3,962 (1,773)
--------------- --------------
INCOME BEFORE INCOME TAXES 29,485 26,585
PROVISION FOR INCOME TAXES 11,396 10,412
--------------- --------------
NET INCOME $ 18,089 $ 16,173
=============== ==============
EARNINGS PER COMMON SHARE $ 1.10 $ 0.99
DIVIDENDS PER COMMON SHARE $ 0.465 $ 0.435
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 16,416,565 16,392,705
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
2
<PAGE> 3
AMERICAN BUSINESS PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---------------- --------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 53,639 $ 82,516
Short-term investments 31,409 -
Accounts receivable, less allowances of
$2,024 and $1,885 56,757 60,082
Inventories 34,766 38,911
Other 9,401 12,046
--------------- --------------
Total Current Assets 185,972 193,555
PROPERTY, PLANT AND EQUIPMENT - AT COST
Land 2,998 3,114
Buildings and improvements 43,499 37,476
Machinery, equipment and software 108,756 97,796
Construction in progress 7,584 10,952
--------------- --------------
162,837 149,338
Less accumulated depreciation 73,373 67,409
--------------- --------------
89,464 81,929
INTANGIBLE ASSETS FROM ACQUISITIONS
Goodwill, less amortization of $4,747 and $4,077 27,455 28,125
Other, less amortization of $4,865 and $4,586 1,083 1,362
--------------- --------------
28,538 29,487
DEFERRED INCOME TAXES 12,369 12,987
OTHER ASSETS 20,830 22,533
--------------- --------------
TOTAL ASSETS $ 337,173 $ 340,491
=============== ==============
CURRENT LIABILITIES
Accounts payable $ 41,137 $ 49,142
Salaries and wages 8,352 11,957
Profit sharing contributions 1,980 3,717
Current maturities of long-term debt 12,078 12,047
--------------- --------------
Total Current Liabilities 63,547 76,863
LONG-TERM DEBT 54,559 54,958
SUPPLEMENTAL RETIREMENT BENEFITS 17,789 18,492
POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS 17,580 17,187
STOCKHOLDERS' EQUITY
Common stock - $2 par value; authorized 50,000,000 shares,
issued 16,667,039 and 16,620,848 shares 33,334 33,242
Additional paid-in capital 6,849 6,118
Retained earnings 146,458 136,003
Foreign currency translation adjustment 615 651
--------------- --------------
187,256 176,014
Less 235,459 and 213,256 shares of common
stock in treasury - at cost 3,558 3,023
--------------- --------------
183,698 172,991
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 337,173 $ 340,491
=============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
AMERICAN BUSINESS PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996
--------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 18,089 $ 16,173
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 10,523 12,804
Gain on disposition of plant and equipment (3,753) (1,881)
Amortization of discount on short-term investments (1,271) -
Change in assets and liabilities:
Decrease in accounts receivable 3,325 7,410
Decrease in inventories 4,145 5,105
Increase in other current assets (139) (3,470)
Decease in intangible and other assets 198 15
(Decrease) increase in accounts payable (8,005) 518
Decrease in other current liabilities (5,342) (3,766)
(Decrease) increase in supplemental retirement benefits
and postemployment benefits (310) 1,456
Decrease (increase) in deferred income taxes 618 (1,164)
--------------- --------------
Total adjustments (11) 17,027
Net cash provided by operating activities 18,078 33,200
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of short-term investment (47,344) -
Proceeds from sale of short-term investment 17,206 -
Decrease (increase) in cash value of life insurance 1,590 (214)
Additions to plant and equipment (17,499) (21,063)
Proceeds from disposition of plant and equipment 6,806 3,709
--------------- --------------
Net cash used in investing activities (39,241) (17,568)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt - 6,460
Reductions of long-term debt (368) (3,221)
Sales and exchanges of common stock 288 249
Dividends paid (7,634) (7,131)
--------------- --------------
Net cash used by financing activities (7,714) (3,643)
Net (decrease) increase in cash and cash equivalents (28,877) 11,989
Cash and cash equivalents at beginning of period 82,516 29,023
--------------- --------------
Cash and cash equivalents at end of period $ 53,639 $ 41,012
=============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
AMERICAN BUSINESS PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Unaudited Condensed Consolidated Financial Statements
The condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles which in
certain instances require the use of management's estimates. The
information contained in these condensed consolidated financial
statements and notes for the three and nine month periods ended
September 30, 1997 and 1996 is unaudited but, in the opinion of
management, all adjustments necessary for a fair presentation of such
information have been made. All such adjustments are of a normal
recurring nature. Reclassifications of certain 1996 amounts have been
made to conform with the 1997 presentation. 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 condensed 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,
1996.
2. Consolidation Policy
The condensed 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. New Accounting Standard
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per
Share" ("SFAS No. 128"). This Statement establishes new standards for
computing and presenting earnings per share ("EPS") information. SFAS
No. 128 simplifies the computation of earnings per share currently
required by ABP Opinion No. 15 and its related interpretations. The new
Statement replaces the presentation of "primary" (and when required
"fully diluted") earnings per share with "basic" and "diluted" earnings
per share. This Statement is effective for financial statements issued
for periods ending after December 15, 1997, including interim periods;
earlier application is not permitted. The Company's computation of
basic EPS under SFAS No. 128 for 1997, 1996, and 1995 will not be
materially different than EPS previously reported.
4. Nature of Operations
The Company markets envelope products, business forms, labels and other
supplies for business and industry and, except for business forms,
manufactures such supplies; manufactures and distributes hardcover and
softcover books for the publishing industry; and provides 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.
5. Net Income Per Share
Net income per common share is based upon the weighted average number
of shares outstanding during each period: 16,427,313 and 16,399,943 for
the three month periods ended September 30, 1997 and 1996,
respectively, and 16,416,565 and 16,392,705 for the nine month periods
ended September 30, 1997 and 1996, respectively.
5
<PAGE> 6
6. Short-Term Investments
Short-term investments consist of Federal Agency notes with original
maturities at date of purchase of less than one year but greater than
90 days. These investments are readily purchased or sold using
established markets. Such short-term investments are stated at cost
plus accrued income, which approximates fair value.
7. Inventories ($000's)
Inventories consisted of the following at the dates indicated:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Products finished or in process $18,589 $15,825
Raw materials 16,070 22,413
Supplies 107 673
------- -------
Total $34,766 $38,911
======= =======
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the third quarter of 1997 were $124,269,000, a 21.3% decrease from
the $157,993,000 of net sales for the third quarter of 1996. Net sales for the
nine months ended September 30, 1997 were $379,385,000, a decrease of 19.7% from
the $472,394,000 of net sales for the nine months ended September 30, 1996.
Included in the results for 1996 were net sales of $32,437,000 and $98,961,000
for the three month and nine month periods, respectively, related to Vanier
Graphics Corporation ("Vanier"), which operated the Company's former business
forms manufacturing business which was sold on December 31, 1996. Exclusive of
Vanier's revenue, the Company's net sales for the third quarter 1997 decreased
1.0% from net sales in the third quarter of 1996 due primarily to lower sales at
the Company's principal printed business supplies subsidiary, Curtis 1000 Inc.
("Curtis") and its book manufacturing subsidiary, BookCrafters USA, Inc.
("BookCrafters"). Exclusive of Vanier's revenue, the Company's net sales for the
nine months ended September 30, 1997 increased 1.6% over the nine months ended
September 30, 1996 due to higher sales at the Company's other printed business
supplies subsidiaries, Discount Labels, Inc. and International Envelope, Inc.
and its extrusion coating and laminating subsidiary, Jen-Coat, Inc.
("Jen-Coat").
Cost of goods sold, expressed as a percentage of sales, for the third quarter of
1997 was 70.9% compared to 69.5% for the third quarter of 1996. Cost of goods
sold, expressed as a percentage of sales, for the nine months ended September
30, 1997 was 70.8% compared to 70.3% for the nine months ended September 30,
1996. Included in the results for 1996 were cost of goods sold of $22,871,000
and $70,573,000 for the three month and nine month periods, respectively,
related to Vanier. Exclusive of the Vanier portion, the Company's cost of goods
sold, expressed as a percentage of sales, for the third quarter of 1996 was
69.3% and cost of goods sold, expressed as a percentage of sales, for the nine
months ended September 30, 1996 was 70.0%. The increases resulted primarily from
lower sales at Curtis and BookCrafters, and during the third quarter of 1997, a
less favorable sales mix at Jen-Coat.
Selling and administrative expenses for the third quarter of 1997 were 23.3% of
sales, compared to 22.7% for the third quarter of 1996. Selling and
administrative expenses for the nine months ended September 30, 1997 were 22.5%
of sales compared to 22.5% for the nine months ended September 30, 1996.
Included in the results for 1996 were selling and administrative expenses of
$8,044,000 and $23,777,000 for the three and nine month periods, respectively,
related to Vanier. Exclusive of the Vanier portion, the Company's selling and
administrative expenses for the third quarter of 1996 were 22.2% of sales and
22.1% of sales for the nine months ended September 30,
6
<PAGE> 7
1996. The increased selling and administrative expense resulted primarily from
the costs of consulting services, retained in the third quarter of 1997 to
address issues, including the reduced sales and margins at Curtis and
BookCrafters.
The Company had pre-tax restructuring charges in the third quarter of 1996 of
$1,498,000 and $5,799,000 for the nine months ended September 30, 1996, related
mainly to the major plant consolidation program completed in early 1997 at
Curtis. While the Company has not recorded restructuring charges during the
first nine months of 1997, costs and processing bottlenecks related to the plant
consolidation program had an adverse impact on the Company's revenues and income
during the third quarter of 1997 and the first nine months of 1997. Although the
Company's plant consolidation program includes actions intended to reduce these
adverse impacts, to improve customer service, to reduce costs, and to realize
the value of realty rendered redundant by the plant consolidation program, the
timing and magnitude of the effects of such actions is subject to uncertainty.
Interest expense for the third quarter of 1997 was $1,322,000, a decrease of
25.5% from the $1,774,000 for the third quarter of 1996. Interest expense for
the nine months ended September 30, 1997 was $4,588,000, a 15.8% decrease from
the $5,452,000 for the nine months ended September 30, 1996. Interest expense
related to Vanier was not material for either period. The decreased interest
expense resulted primarily from interest capitalized in conjunction with capital
projects and reduced long term debt.
Miscellaneous net income for the third quarter of 1997 was $1,896,000, an
increase of 15.3% from the $1,645,000 for the third quarter of 1996.
Miscellaneous net income for the nine months ended September 30, 1997 was
$8,550,000, an increase of 132.4% over the $3,679,000 for the nine months ended
September 30, 1996. Included in the 1996 results were miscellaneous net expense
of $168,000 and miscellaneous net income of $408,000 for the three and nine
month periods, respectively, related to Vanier. Exclusive of Vanier,
miscellaneous net income for the third quarter of 1996 and nine months ended
September 30, 1996, would have been $1,813,000 and $3,271,000, respectively. The
third quarter increase resulted primarily from interest earned on the investment
of funds from the sale of Vanier. The year to date increase resulted primarily
from interest earned on the investment of funds from the sale of Vanier as well
as pre-tax gains of $2,846,000 on the sale of realty.
The Company's effective tax rate was 39.8% and 40.1% for the third quarter of
1997 and third quarter of 1996, respectively. The effective tax rate was 38.7%
and 39.2% for the nine month periods ending September 30, 1997 and September 30,
1996, respectively. Exclusive of Vanier, the effective tax rate was 39.7% and
38.7% for the third quarter of 1996 and nine months ended September 30, 1996,
respectively.
Financial Condition
The current ratio increased to 2.9 to 1.0 at September 30, 1997 from 2.5 to 1.0
at December 31, 1996.
The Company believes its liquid current assets, internal cash flow, availability
of additional borrowing under its existing loan agreements, and to the extent
necessary, additional external financing, should adequately meet the Company's
needs for the foreseeable future.
Investing activities in 1997 included capital expenditures of $17,499,000 and
the purchase of short term investments, net of redemptions, of $30,138,000. In
addition, the Company paid $7,634,000 in dividends through September 30, 1997
and reduced long-term debt by $368,000.
The Company maintains a revolving credit agreement (the "Credit Agreement") with
a bank providing for loans up to $35,000,000 at per annum interest rates related
to prime and Eurocurrency rates. At September 30, 1997 there were no borrowings
under this Credit Agreement. During 1997 the term of the Credit Agreement was
extended until April 22, 2000. Curtis has borrowed approximately $6.5 million
through a variable interest rate industrial revenue bond (the "Bond") due May 1,
2031. The interest rate on the Bond was 4.25% at September 30, 1997. The Bond is
supported by a letter of credit issued pursuant to the Credit Agreement which
commensurately reduces the balance available to the Company under the Credit
Agreement.
7
<PAGE> 8
Pro Forma Financial Information
The accompanying unaudited pro forma condensed consolidated financial statements
give effect to the Vanier sale as if the transaction occurred on December 31,
1995. The pro forma condensed consolidated financial statements of the Company
are presented for informational purposes only and their inclusion in this report
is not intended to intimate that the pro forma information is a more meaningful
indicator of the results of operations than the Company's reported financial
results. Further, the pro forma information may not reflect the Company's future
results of operations or what the results of operations of the Company would
have been had the Vanier sale occurred at the date indicated.
8
<PAGE> 9
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended September 30, 1997 1996
- -------------------------------- --------------- --------------
<S> <C> <C>
NET SALES $ 124,269 $ 125,556
--------------- --------------
COST AND EXPENSES
Cost of goods sold 88,125 86,985
Selling and administrative expenses 29,004 27,816
Restructuring and other charges - 1,129
--------------- --------------
117,129 115,930
--------------- --------------
OPERATING INCOME 7,140 9,626
OTHER INCOME (EXPENSES)
Interest expense (1,322) (1,720)
Miscellaneous-net 1,896 1,813 (1)
--------------- --------------
574 93
--------------- --------------
INCOME BEFORE INCOME TAXES 7,714 9,719
PROVISION FOR INCOME TAXES 3,070 3,855
--------------- --------------
NET INCOME $ 4,644 $ 5,864
=============== ==============
EARNINGS PER COMMON SHARE $ 0.28 $ 0.36
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 16,427,313 16,399,943
<CAPTION>
Nine Months Ended September 30, 1997 1996
- ------------------------------- --------------- --------------
<S> <C> <C>
NET SALES $ 379,385 $ 373,433
--------------- --------------
COST AND EXPENSES
Cost of goods sold 268,517 261,459
Selling and administrative expenses 85,345 82,428
Restructuring and other charges - 4,472
--------------- --------------
353,862 348,359
--------------- --------------
OPERATING INCOME 25,523 25,074
OTHER INCOME (EXPENSES)
Interest expense (4,588) (5,195)
Miscellaneous-net 8,550 3,271 (1)
--------------- --------------
3,962 (1,924)
--------------- ---------------
INCOME BEFORE INCOME TAXES 29,485 23,150
PROVISION FOR INCOME TAXES 11,396 8,951
--------------- --------------
NET INCOME $ 18,089 $ 14,199
=============== ==============
EARNINGS PER COMMON SHARE $ 1.10 $ 0.87
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 16,416,565 16,392,705
</TABLE>
9
<PAGE> 10
(1) Does not include interest income of approximately $526 and
$1,550 for the three and nine months ended September 30, 1996,
respectively, which the Company would have received had the
net proceeds of the Vanier Sale been invested in money market
instruments throughout the first, second, and third quarters
of 1996.
Results for the third quarter of 1997 included gains of $317,000 after
tax, or $0.02 per share, on the disposal of realty rendered redundant
to operating needs by the Company's plant consolidation program which
commenced in the first quarter of 1996 and concluded with the final
planned plant closing in the first quarter of 1997. Without this gain
the third quarter of 1997 would have shown net income of $4,326,000 or
$0.26 per share. Results for the third quarter of 1996 included a
restructuring charge of $893,000 after tax, or $0.05 per share, and
realty gains of $651,000 after tax, or $0.04 per share, related to the
plant consolidation program. Also, the Company's former business forms
manufacturing business which the Company sold on December 31, 1996,
provided revenues of $32,437,000 and after tax earnings contribution
(net of interest income that would have been earned had the sale
proceeds instead been invested in money market instruments throughout
the quarter) of $584,000, or $0.04 per share, for the third quarter of
1996. Without the restructuring charge, the related realty gain and the
business forms manufacturing businesses' revenues and earnings
contribution, the third quarter of 1996 would have shown revenues of
$125,556,000 and net income of $6,037,000 or $0.37 per share.
Results for the nine months ended September 30, 1997 included after tax
gains of $1,696,000, or $0.10 per share, on the disposal of realty
rendered redundant to operating needs by the Company's plant
consolidation program. Without the realty gains, the Company would have
shown net income of $16,393,000, or $1.00 per share, for the nine
months. Results for the nine months ended September 30, 1996 included a
restructuring charge of $3,439,000 after tax, or $0.21 per share,
related to the plant consolidation program and gains of $838,000 after
tax or $0.05 per share upon sales of realty rendered redundant by the
plant consolidation program. Also, the Company's former business forms
manufacturing business which the Company sold on December 31, 1996,
provided revenues of $98,961,000 and after tax earnings contribution
(net of interest income that would have been earned had the sale
proceeds instead been invested in money market instruments throughout
the first nine months of 1996) of $1,674,000, or $0.11 per share, for
the first nine months of 1996. Without the restructuring charge, the
related realty gains and the business forms manufacturing businesses'
revenues and earnings contribution, the first nine months of 1996 would
have shown revenues of $373,433,000 and net income of $17,100,000 or
$1.04 per share.
Risks and Uncertainties
As a result of lower revenues at BookCrafters and Curtis and
difficulties reducing costs and processing bottlenecks at Curtis,
particularly during the third quarter of 1997, the Company is
investigating and considering taking additional actions to address
these problems. Certain of these actions, if implemented, would result
in future charges to earnings. A decision is expected to be made during
the fourth quarter.
Curtis is a party to an agreement with the purchaser of Vanier's former
business forms manufacturing business whereby Curtis agreed to buy and
the purchaser agreed to sell to Curtis from April 1, 1997 until
September 30, 1999, certain products and services. The agreement
provides that Curtis will pay a penalty to the purchaser in the event
Curtis buys less than the agreed quantities from the purchaser. During
the period from April 1, 1997 until September 30, 1997, the rate of
Curtis' purchases fell short of the rate required in the agreement due
to reduced sales by Curtis to its own customers and Curtis' purchases
from other suppliers of certain comparable products and services at
costs lower than if such products and services had been purchased
pursuant to the agreement. As a result, the Company has incurred
expense and may incur additional future expense on account of
purchasing shortfall penalties under the agreement.
10
<PAGE> 11
Except for historical information contained herein, the matters set
forth in this report including statements regarding the Company's
expectations, hopes, intentions or strategies regarding the future, are
forward looking statements that involve certain risks and uncertainties
that could cause actual results to differ materially from those in the
forward looking statements. The Company assumes no obligation to update
any such forward looking statements. The Company's expectations
respecting future sales and profits assume, among other things
reasonable continued growth in the general economy which affects demand
for the Company's products. The costs and benefits of the Company's
plant consolidation and order processing redesign programs remain
uncertain and may vary from the Company's expectations due to factors
such as: the extent of management's ability to control and ultimately
eliminate duplication of costs, inefficiencies, overheads, and
operational bottlenecks associated with transferring production from
closing to continuing plants; the speed with which new employees can be
hired, trained and deployed productively at the Company's new and
enlarged continuing manufacturing plants; sale prices realized upon
future disposal of redundant assets, particularly real property which
is subject to future supply and demand conditions in various local real
estate markets; the Company's ability to implement order processing
redesign programs within expected time and cost constraints; and the
difficulties inherent in forecasting the operating results of an
operating mode different from that which exists at the time the
forecast is made.
11
<PAGE> 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits attached hereto:
NUMBER DESCRIPTION
10.1 Executive Compensation Plans
(a) Second Amendment to the American Business Products, Inc.
Supplemental Retirement Income Plan.
(b) Second Amendment to the American Business Products, Inc.
Deferred Compensation Investment Plan (Executives).
27 Financial Data Schedules for Third Quarter 1997 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.
(Registrant)
Date: November 3, 1997 /S/ Richard G. Smith
--------------------
Richard G. Smith
Vice President - Finance
and Chief Financial Officer
(principal financial officer)
Date: November 3, 1997 /S/ Raymond J. Wilson
----------------------
Raymond J. Wilson
Corporate Controller
(principal accounting officer)
12
<PAGE> 13
AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION PAGE
- ------ ----------- ----
<S> <C> <C>
10.1(a) Second Amendment to the American Business Products, Inc.
Supplemental Retirement Income Plan
10.1(b) Second Amendment to the American Business Products, Inc.
Deferred Compensation Plan (Executives)
27 Financial Data Schedules for Third Quarter 1997 10-Q
(for SEC use only)
</TABLE>
13
<PAGE> 1
EXHIBIT 10.1(A)
SECOND AMENDMENT TO THE
AMERICAN BUSINESS PRODUCTS, INC.
SUPPLEMENTAL RETIREMENT INCOME PLAN
This SECOND AMENDMENT to the AMERICAN BUSINESS PRODUCTS, INC. SUPPLEMENTAL
RETIREMENT INCOME PLAN (the "Plan") is made by American Business Products, Inc.
(the "Company") on this 23 rd day of July, 1997.
W I T N E S S E T H:
WHEREAS, the Company has previously made promises regarding survivor
benefits to certain of its executives; and
WHEREAS, at its meeting on July 23, 1997, the Board of Directors of the
Company authorized this Second Amendment to the Plan to document those promises;
and
WHEREAS, Article XIII of the Plan permits the Board to amend the Plan at
any time;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1.
Effective as of July 23, 1997, a new section 5. shall be added to Article
V.A. of the Plan to read as follows:
"5. Notwithstanding the foregoing Article V.A., Sections 3. and 4.,
each of the Plan Participants Richard A. LeFeber, Neil Ludvigson,
John McKinney, William Nuffer and David Stafford shall receive an
unreduced monthly benefit for the greater of his lifetime or 180
monthly payments. In the event of his death prior to the
expiration of the 180-month period, the remaining of the 180
payments shall be paid to his Beneficiary. After the last of the
180 monthly payments have been made (whether to the Participant
or his Beneficiary), or if the Participant dies after the 180-
month period, his surviving spouse, if any, shall receive a
monthly survivor benefit for her lifetime in an amount equal to a
percentage of the Participant's monthly benefit, calculated
individually based on the applicable Actuarial Assumptions."
<PAGE> 2
2.
Effective as of July 23, 1997, Article V.B.2. of the Plan shall be amended
by adding the following language at the end thereof:
"Notwithstanding the foregoing sentence, upon the death of any
of Plan Participants Richard A. LeFeber, Neil Ludvigson, John
McKinney, William Nuffer and David Stafford, benefits shall be
payable pursuant to the provisions of Article V.A.5."
3.
Except as specifically amended hereby, the Plan shall remain in full force
and effect.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this amendment and to affix its corporate seal hereto, all as of the
date first above written.
AMERICAN BUSINESS PRODUCTS, INC.
By: /S/ Robert W. Gundeck
----------------------
Robert W. Gundeck
President and Chief Executive Officer
Page 2
<PAGE> 1
EXHIBIT 10.1(b)
SECOND AMENDMENT TO THE
AMERICAN BUSINESS PRODUCTS, INC.
DEFERRED COMPENSATION INVESTMENT PLAN (EXECUTIVES)
This SECOND AMENDMENT to the AMERICAN BUSINESS PRODUCTS, INC. DEFERRED
COMPENSATION INVESTMENT PLAN (EXECUTIVES) (the "Plan") is made by American
Business Products, Inc. (the "Company") on this 23 rd day of July, 1997.
W I T N E S S E T H:
WHEREAS, the Company has previously made promises regarding survivor
benefits to certain of its executives; and
WHEREAS, at its meeting on July 23, 1997, the Board of Directors of the
Company authorized this Second Amendment to the Plan to document those promises;
and
WHEREAS, Article XIII of the Plan permits the Board to amend the Plan at
any time;
NOW, THEREFORE, the Company hereby amends the Plan as follows:
1.
Effective as of July 23, 1997, a new section 4.i. shall be added to Article
V.A. of the Plan to read as follows:
"4.i. Notwithstanding the foregoing Article V.A, Sections 3. and
4., each of the Plan Participants Richard A. LeFeber, Neil
Ludvigson, John McKinney, William Nuffer and David Stafford
shall receive an unreduced monthly benefit for the greater
of his lifetime or 180 monthly payments. In the event of his
death prior to the expiration of the 180-month period, the
remaining of the 180 payments shall be paid to his
Beneficiary. After the last of the 180 monthly payments have
been made (whether to the Participant or his Beneficiary),
or if the Participant dies after the 180-month period, his
surviving spouse, if any, shall receive a monthly survivor
benefit for her lifetime in an amount equal to a percentage
of the Participant's monthly benefit, calculated
individually based on the applicable Actuarial Assumptions."
<PAGE> 2
2.
Effective as of July 23, 1997, Article V.B.2. of the Plan shall be amended
by adding the following language at the end thereof:
"Notwithstanding the foregoing sentence, upon the death of any
of Plan Participants Richard A. LeFeber, Neil Ludvigson, John
McKinney, William Nuffer and David Stafford, benefits shall be
payable pursuant to the provisions of Article V.A.4.i."
3.
Except as specifically amended hereby, the Plan shall remain in full force
and effect.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Second Amendment and to affix its corporate seal hereto, all as of
the date first above written.
AMERICAN BUSINESS PRODUCTS, INC.
By: /S/ Robert W. Gundeck
---------------------
Robert W. Gundeck
President and Chief Executive Officer
Page 2
<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, 1997 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-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 53,639
<SECURITIES> 31,409
<RECEIVABLES> 58,781
<ALLOWANCES> 2,024
<INVENTORY> 34,766
<CURRENT-ASSETS> 185,972
<PP&E> 162,837
<DEPRECIATION> 73,373
<TOTAL-ASSETS> 337,173
<CURRENT-LIABILITIES> 63,547
<BONDS> 0
0
0
<COMMON> 33,334
<OTHER-SE> 150,364
<TOTAL-LIABILITY-AND-EQUITY> 337,173
<SALES> 379,385
<TOTAL-REVENUES> 387,935
<CGS> 268,517
<TOTAL-COSTS> 353,862
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,588
<INCOME-PRETAX> 29,485
<INCOME-TAX> 11,396
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,089
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 0
</TABLE>
