-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JlPlRkK9b6/lW2iw+OXpYjF6rtvyhr3woa/dduXjKwErjNZEh2dUeLCzIzpyPQVR LwSCekMQbDCq1QLsP8vcQA== 0000950124-94-000991.txt : 19940520 0000950124-94-000991.hdr.sgml : 19940520 ACCESSION NUMBER: 0000950124-94-000991 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL BINDING CORP CENTRAL INDEX KEY: 0000040461 STANDARD INDUSTRIAL CLASSIFICATION: 3579 IRS NUMBER: 360887470 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02604 FILM NUMBER: 94527675 BUSINESS ADDRESS: STREET 1: ONE GBC PLZ CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 7082723700 MAIL ADDRESS: STREET 1: ONE GBC PLZ CITY: NORHBROOK STATE: IL ZIP: 60062 10-Q 1 FORM 10-Q DATED 3/31/94 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1994 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-2604 GENERAL BINDING CORPORATION -------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 36-0887470 - - - ------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) One GBC Plaza, Northbrook, Illinois 60062 - - - -------------------------------------- -------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (708) 272-3700 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the latest practicable date. Class Outstanding at April 30, 1994 - - - ------------------------------- ---------------------------------- Common Stock $.125 par value 13,368,214 shares Class B - Common Stock $.125 par value 2,398,275 shares 2 GENERAL BINDING CORPORATION INDEX PART I. Financial Information: Page No. ------------ Consolidated Condensed Balance Sheets - March 31, 1994 and December 31, 1993 1 Consolidated Condensed Statements of Income - Three Months Ended March 31, 1994 and 1993 2 Consolidated Condensed Statements of Cash Flows - Three Months Ended March 31, 1994 and 1993 3 Notes to Consolidated Condensed Financial Statements 4 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 PART II. Other Information 8 Signature - - - --------- 9 3 - 1 - PART I. FINANCIAL INFORMATION GENERAL BINDING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (000 Omitted)
March 31, 1994 December 31, ASSETS (unaudited) 1993 - - - ------ ----------------- --------------- Current assets: Cash and cash equivalents $ 4,128 $ 4,462 Receivables, net 68,668 63,701 Inventories - Raw materials 19,817 19,912 Work in process 4,223 4,176 Finished goods 48,130 41,548 -------- --------- Total inventories 72,170 65,636 Deferred tax assets 7,885 7,756 Other 4,644 3,796 -------- -------- Total current assets 157,495 145,351 -------- -------- Property, plant and equipment 125,397 124,599 Less - accumulated depreciation and amortization (64,164) (62,504) -------- -------- Net property, plant and equipment 61,233 62,095 -------- -------- Other long-term assets Cost in excess of fair value of assets of acquired companies, net of amortization 29,945 29,912 Other 13,821 13,751 -------- -------- Total other long-term assets 43,766 43,663 -------- -------- Total assets $262,494 $251,109 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY - - - ------------------------------------ Current liabilities: Notes payable $ 14,564 $ 9,625 Current maturities of long-term obligations 431 433 Accounts payable 22,631 22,124 Accrued liabilities 33,492 32,511 Taxes on income 1,778 67 -------- -------- Total current liabilities 72,896 64,760 -------- -------- Long-term obligations, less current maturities: Long-term debt 38,350 38,350 Capital leases 147 214 -------- -------- Total long-term obligations 38,497 38,564 Other long-term liabilities 8,783 8,252 Deferred tax liabilities 6,148 6,002 Stockholders' equity: Common stock 1,962 1,962 Class B common stock 300 300 Additional paid-in capital 6,192 6,133 Cumulative translation adjustments (35) 101 Retained earnings 146,788 144,011 -------- -------- 155,207 152,507 Less - Treasury stock (19,037) (18,976) -------- -------- Total stockholders' equity 136,170 133,531 -------- -------- Total liabilities and stockholders' equity $262,494 $251,109 -------- -------- -------- --------
The accompanying notes to consolidated condensed financial statements are an integral part of these statements. 4 - 2 - GENERAL BINDING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited) (000 Omitted Except Per Share Data)
THREE MONTHS ENDED MARCH 31 ----------------------- 1994 1993 -------- ---------- Sales $96,227 $89,158 Costs and expenses: Cost of sales, including research, development and engineering 53,121 48,403 Selling, service and administrative 34,505 33,229 Interest expense 762 936 Other expense, net 554 407 ------- -------- Total costs and expenses 88,942 82,975 Income before taxes 7,285 6,183 Income taxes 2,932 2,473 Net income $ 4,353 $ 3,710 ------- -------- ------- -------- Net income per common share $ .28 $ .24 ------- -------- ------- -------- Dividends per common share $ .10 $ .10 ------- -------- ------- -------- Average common shares outstanding 15,764 15,782 ------- -------- ------- --------
The accompanying notes to consolidated condensed financial statements are an integral part of these statements. 5 - 3 - GENERAL BINDING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (000 Omitted)
THREE MONTHS ENDED MARCH 31 ------------------------------ 1994 1993 ------- ------- Cash flows from operating activities: Net income $4,353 $3,710 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,923 2,683 Increase (decrease) in non-current deferred tax liabilities 224 (17) Provision for doubtful accounts 381 410 (Increase) in other long-term assets (676) (1,246) Other 763 203 Changes in current assets and liabilities: (Increase) in receivables (5,434) (3,972) (Increase) decrease in inventories (6,627) 1,385 (Increase) in deferred tax assets (141) (150) (Increase) in other current assets (847) (733) Increase (decrease) in accounts payable and accrued expenses 291 (1,187) Increase in taxes on income 1,696 363 ------- ------- Net cash (used in) provided by operating activities (3,094) 1,449 ------- ------- Cash flows from investing activities: Capital expenditures (2,633) (2,375) Proceeds from sale of plant and equipment 2,185 41 ------- ------- Net cash (used in) investing activities (448) (2,334) ------- ------- Cash flows from financing activities: Increase (reduction) in notes payable 4,829 (4,838) (Reduction) in current portion of long-term obligations (2) (12) (Reduction) in long-term obligations (66) (53) Dividends paid (1,576) (1,578) Purchases of treasury stock (83) (25) Proceeds from the exercise of stock options 69 19 ------- ------- Net cash provided by (used in) financing activities 3,171 (6,487) ------- ------- Effect of exchange rates on cash 37 (86) ------- ------- Net (decrease) in cash and cash equivalents (334) (7,458) Cash and cash equivalents at beginning of the year 4,462 10,769 ------- ------- Cash and cash equivalents at March 31 $ 4,128 $ 3,311 ------- ------- ------- ------- Supplemental Disclosure of Cash Flow Information: Cash Paid During the Period for: Interest $ 786 $ 889 Income taxes, net of refunds 1,212 2,292
The accompanying notes to consolidated condensed financial statements are an integral part of these statements. 6 - 4 - GENERAL BINDING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) (1) Basis of Presentation The condensed financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's 1993 annual report on Form 10-K. In the opinion of the Company, all adjustments necessary to present fairly the financial position of General Binding Corporation and Subsidiaries as of March 31, 1994 and December 31, 1993, and the results of their operations for the three months ended March 31, 1994 and 1993 have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year. (2) Foreign Currency Exchange and Translation Foreign currency translation adjustments have been excluded from the Consolidated Condensed Statements of Income and are recorded in a cumulative translation adjustment account as a separate component of stockholders' equity. The accompanying Consolidated Condensed Statements of Income include net gains and losses on foreign currency transactions which are reported as other income/expense and summarized as follows: Foreign Currency Transaction Gain/(Loss) (a) --------------- Three months ended March 31, 1994 $ (92,000) Three months ended March 31, 1993 $ 57,000 --------- --------- (a) Foreign currency transaction gains/losses are subject to income taxes at the respective country's effective tax rate. 7 - 5 -
(3) Long-Term Debt (000 OMITTED) Long-term debt consists of the following: MARCH 31, DECEMBER 31, 1994 1993 --------------- --------------- Revolving Credit Agreement (portion classified as long-term on the basis of the Company's intention to refinance these borrowings: interest rate 3.8% at March 31, 1994 and 3.9% at December 31, 1993) $ 36,000 $ 36,000 Industrial Revenue Bond, due annually from July 1, 1994 to July 1, 2008 (floating interest rate 2.1% at March 31, 1994 and 3.0% at December 31, 1993) 2,530 2,530 -------- -------- 38,530 38,530 Less current maturities (180) (180) -------- -------- $ 38,350 $ 38,350 -------- -------- -------- --------
(4) Net Income per Common Share Income per common share is based on the weighted average number of common shares outstanding during the period. Assuming exercise of all outstanding options pursuant to the Company's stock option plans for key employees, net income per common share would not be materially different from net income per common share as reported. 8 - 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The Company's 1994 first quarter sales increased 8% when compared to the same period in 1993. Results were positively impacted by the acquisition of Bates Manufacturing (Bates) in July of 1993 which accounted for approximately 60% of the quarter increase. The Company's worldwide film products division also recorded significant increases in sales resulting from continued growth in its European, Canadian, and Domestic markets. Other modest increases in sales were recorded in the Company's international operations, despite the negative effect of weaker foreign currencies, and in the Company's domestic branch/telemarketing sales operations, and domestic OEM and ringmetals businesses. The Company believes international results will improve if the worldwide economies continue to improve. Future results should also be favorably impacted by the planned introduction of new products in the latter half of 1994, most notably in the Bates and VeloBind product lines. On a worldwide basis, sales of the Company's equipment product lines increased 7% in the first quarter of 1994 over the same period last year, while sales of supplies and service (which for discussion purposes, include the Company's ringmetals business) increased 8%. Without the impact of Bates, equipment sales decreased 4%, while supplies sales increased 5%. Worldwide gross profit margins for the first quarter of 1994 decreased 1 point when compared to the first quarter of 1993. Without the impact of Bates, gross profit margins remained flat . An erosion in margins experienced by the Company's international operations was offset by an improvement in margins in the worldwide film products and ringmetals divisions. Worldwide competitive pressures and weaker foreign currencies continued to affect the international operations. Selling, service and administrative expenses for the 1994 first quarter increased 4% when compared to the same period in 1993. The primary reason for the increase was the addition of Bates which accounted for approximately 70% of this quarter's increase. In addition, higher expenses were recorded in the Company's worldwide film products and domestic office products divisions. These were partially offset by lower expenses in the Company's international operations which partially resulted from weaker foreign currencies. Interest expense for the first quarter of 1994 decreased 19% when compared to the first quarter of 1993. This decrease was primarily due to lower debt levels in the Company's Mexican subsidiary and significantly lower effective interest rates in its Company's international operations. 9 - 7 - Other income and expense for the first quarter of 1994 was $554,000 of expense compared to $407,000 of expense for the same period in 1993. The increase was primarily due to an unfavorable change in currency transaction gains/losses of $149,000 and lower interest income of $43,000, partially offset by a $68,000 decrease in losses recorded by the Company relating to its investments in joint ventures. The company's effective tax rate for the first quarter of 1994 was 40.3% compared to 40.0% for the same period in 1993. The increase was primarily attributed to an increase in the statutory Federal income tax rate as a result of the enactment of the Omnibus Budget Reconciliation Act of 1993 and an increase in state income taxes due to higher domestic income. Partially offsetting this was a decrease in foreign income taxes due to lower foreign earnings. LIQUIDITY AND CAPITAL RESOURCES The Company's working capital totaled $85 million at March 31, 1994, an increase of $4.0 million from December 31, 1993. The company's current ratio at March 31, 1994 and December 31, 1993 was 2.2 to 1.0. Cash dividends of $.10 per share were paid during the first quarter of 1994 and fourth quarter of 1993. Total plant and equipment expenditures for the first quarter of 1994 were $2,633,000 compared to $2,375,000 for the same period in 1993. As of March 31, 1994, the Company had access to $61.7 million in short-term credit lines and had $14.6 million in outstanding borrowings against these lines. The Company also had access to a $62.5 million credit agreement to fund both working capital and acquisition requirements. As of March 31, 1994, the Company had $36 million in borrowings against this agreement classified as long-term debt on the balance sheet. The Company believes that funds generated from operations combined with existing credit facilities are more than sufficient to meet currently anticipated needs along with foreseeable acquisition requirements. 10 - 8 - PART II. OTHER INFORMATION Item 6: Exhibits (a) Exhibits: None (b) Reports on Form 8-K: No reports on Form 8-K were filed by the Registrant during the first quarter ended March 31, 1994. 11 - 9 - SIGNATURE 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. GENERAL BINDING CORPORATION AND SUBSIDIARIES By EDWARD J. MCNULTY ---------------------- Edward J. McNulty Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----