-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B5cEcncz9mDtU3K5FTaeQET+d4rXzBi1oDsr47guu/nv1rXhwJS66b/4iIHsgvlO 6ijKUQ3woEBS+7EYrSFztQ== 0000950137-97-002842.txt : 19970818 0000950137-97-002842.hdr.sgml : 19970818 ACCESSION NUMBER: 0000950137-97-002842 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970815 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENERAL BINDING CORP CENTRAL INDEX KEY: 0000040461 STANDARD INDUSTRIAL CLASSIFICATION: OFFICE MACHINES, NEC [3579] IRS NUMBER: 360887470 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-02604 FILM NUMBER: 97665303 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/A 1 AMENDMENT #1 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 Amendment #1 to 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 June 30, 1997 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: (847) 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 July 31, 1997 - ------------------------------------------ ----------------------------- Common Stock $.125 par value 13,358,002 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 - 1 June 30, 1997 and December 31, 1996 Consolidated Condensed Statements of Income - 2 Three and Six Months Ended June 30, 1997 and 1996 Consolidated Condensed Statements of Cash Flows - 3 Six Months Ended June 30, 1997 and 1996 Notes to Consolidated Condensed 4 Financial Statements Management's Discussion and Analysis of 7 Financial Condition and Results of Operations PART II. Other Information 10 Signature 11
3 - 1- PART I. FINANCIAL INFORMATION GENERAL BINDING CORPORATION AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (000 OMITTED)
June 30, December 31, 1997 1996 (unaudited) ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 9,100 $ 6,721 Receivables, net 146,963 115,865 Inventories - Raw materials 38,225 21,198 Work in process 12,462 7,410 Finished goods 91,691 68,126 --------- --------- Total inventories 142,378 96,734 Deferred tax assets 12,673 11,453 Other 11,452 6,441 --------- --------- Total current assets 322,566 237,214 --------- --------- Property, plant and equipment 189,968 140,951 Less - accumulated depreciation and amortization (77,891) (71,940) --------- --------- Net property, plant and equipment 112,077 69,011 --------- --------- Other long-term assets: Cost in excess of fair value of assets of acquired companies, net of amortization 197,237 43,510 Other 47,976 43,971 --------- --------- Total other long-term assets 245,213 87,481 --------- --------- Total assets $ 679,856 $ 393,706 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 50,279 $ 31,700 Current maturities of long-term obligations 625 483 Accounts payable 35,906 28,506 Accrued liabilities 64,390 51,440 --------- --------- Total current liabilities 151,200 112,129 --------- --------- Long-term debt 323,731 87,029 Other long-term liabilities 10,612 10,229 Deferred tax liabilities 12,045 12,187 Stockholders' equity: Common stock 1,962 1,962 Class B common stock 300 300 Additional paid-in capital 9,037 8,564 Cumulative translation adjustments (3,434) (3,035) Retained earnings 197,176 186,663 --------- --------- 205,041 194,454 Less - Treasury stock (22,773) (22,322) --------- --------- Total stockholders' equity 182,268 172,132 --------- --------- Total liabilities and stockholders' equity $ 679,856 $ 393,706 ========= =========
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 SIX MONTHS ENDED JUNE 30 JUNE 30 1997 1996 1997 1996 -------- -------- -------- -------- Sales $187,436 $135,338 $367,937 $261,684 Costs and expenses: Cost of sales, including research, development and engineering 106,289 79,766 210,853 155,443 Selling, service and administrative 60,652 42,287 117,987 81,433 Interest expense 6,193 1,533 11,421 2,863 Other expense, net 2,284 682 4,372 697 -------- -------- -------- -------- Total costs and expenses 175,418 124,268 344,633 240,436 -------- -------- -------- -------- Income before taxes 12,018 11,070 23,304 21,248 Income taxes 4,807 4,539 9,321 8,712 -------- -------- -------- -------- Net income $ 7,211 $ 6,531 $ 13,983 $ 12,536 ======== ======== ======== ======== Net income per common share $ .46 $ .42 $ .89 $ .80 ======== ======== ======== ======== Dividends per common share $ .11 $ .105 $ .22 $ .21 ======== ======== ======== ======== Average common shares outstanding 15,764 15,743 15,762 15,741 ======== ======== ======== ========
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)
SIX MONTHS ENDED JUNE 30 1997 1996 --------- --------- Cash flows from operating activities: Net income $ 13,982 $ 12,536 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 13,740 6,986 (Decrease) increase in noncurrent deferred tax liabilities (142) 258 Provision for doubtful accounts 1,247 954 Decrease (increase) in other long-term assets (3,353) (1,511) Other 2,921 (551) Changes in current assets and liabilities: (Increase) in receivables (10,827) (19,773) (Increase) in inventories (21,812) (4,917) (Increase) decrease in deferred tax assets (1,386) (450) (Increase) decrease in other current assets (4,273) (2,997) Increase (decrease) in accounts payable and accrued expenses 4,779 6,723 Increase in taxes on income 860 1,037 Increase (decrease) in deferred income on service agreements 97 (26) --------- --------- Net cash provided by (used in) operating activities (4,167) (1,731) --------- --------- Cash flows from investing activities: Purchase of acquisitions, net of cash acquired (232,381) (18,933) Capital expenditures (13,353) (14,834) Proceeds from sale of plant and equipment - 927 --------- --------- Net cash (used in) investing activities (245,734) (32,840) --------- --------- Cash flows from financing activities: Increase (reduction) in notes payable 19,274 17,451 Increase (reduction) in current portion of long-term obligations 164 - Increase in long-term obligations 237,086 20,565 Dividends paid (3,468) (3,306) Purchases of treasury stock (524) (1,338) Proceeds from the exercise of stock options 546 1,090 --------- --------- Net cash provided by (used in) financing activities 253,078 34,462 --------- --------- Effect of exchange rates on cash (798) (37) --------- --------- Net increase (decrease) in cash and cash equivalents 2,379 (146) Cash and cash equivalents at beginning of the year 6,721 6,864 --------- --------- Cash and cash equivalents at June 30 $ 9,100 $ 6,718 ========= ========= Supplemental Disclosure of Cash Flow Information Cash Paid During the Period for: Interest $ 8,838 $ 2,097 Income taxes, net of refunds 7,764 6,538
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 consolidated 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 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. The Company believes that the disclosures included in these consolidated condensed financial statements are adequate to make the information presented not misleading. It is suggested that these consolidated condensed financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's 1996 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 June 30, 1997 and December 31, 1996, and the results of their operations for the six months ended June 30, 1997 and 1996 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 June 30, 1997 $ (32,000) ========= Three months ended June 30, 1996 $ 116,000 ========= Six months ended June 30, 1997 $(108,000) ========= Six months ended June 30, 1996 $ 230,000 =========
(a) Foreign currency transaction gains/losses are subject to income taxes at the respective country's effective tax rate. (3) Other Expense Included in other expense is amortization of goodwill. Such amortization for the second quarter and the first six months of 1997 were $1,669K and $3,264K compared to $474K and $780K for 1996. 7 - 5 - (4) Long-Term Debt
Long-term debt consists of the following: (000 OMITTED) JUNE 30, DECEMBER 31, 1997 1996 --------- ---------- Revolving Credit Agreement-portion classified as long-term on the basis of the Company's intention to refinance these borrowings (weighted average interest rate 6.47% at June 30, 1997 and 6.08% at December 31, 1996) $ 306,101 $ 70,700 Note Payable, due monthly from November, 1994 to October, 2004 (interest rate 8.85% at June 30, 1997 and December 31, 1996) 2,222 2,637 Term Loan, maturity date June, 2000 (interest rate 7.05% at June 30, 1997 and at December 31, 1996) 1,693 1,883 Industrial Revenue Bond, due annually from July, 1994 to July 2008 (floating interest rate 4.20% at June 30, 1997 and 4.00% at December 31, 1996) 2,050 2,050 Industrial Revenue Bond, due annually from June, 2002 to June, 2007 (floating interest rate 4.20% at June 30, 1997 and 4.35% at December 31, 1996) 1,050 1,050 Industrial Revenue Bond, maturity date, March, 2026 (floating interest rate 4.25% at June 30, 1997 and 4.30% at December 31, 1996) 7,510 5,724 Industrial Revenue Bond, semi-annual payments October, 1987 to October 1999 (interest rate 6.88% at June 30, 1997) 500 ---- International Australia Revolving Credit Agreement (floating interest rate 6.80% at June 30, 1997 and 7.85% at December 31, 1996) 3,230 3,468 --------- --------- 324,356 87,512 Less current maturities (625) (483) --------- --------- Total Long-Term Debt $ 323,731 $ 87,029 ========= =========
8 - 6 - (5) Net Income per Common Share Net 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. (6) Subsequent Events On April 23, 1997, the Company announced it has completed the purchase of Baker School Specialty Co., Inc. for an undisclosed amount of cash. Located in Orange, Massachusetts, Baker manufactures and distributes office and school supplies. The Company expects to leverage Baker's distribution capabilities to further strengthen its position in the office products market. Baker's sales in 1996 were approximately $17 million. (7) Amendment to the Certificate of Incorporation On May 13, 1997 the Company's shareholders approved an amendment to the Company's Certificate of Incorporation changing our authorized share capital. The Company now is authorized to issue up to 40,000,000 Common Shares and 4,796,550 Class B Common Stock. 9 - 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Sales The Company's sales for the second quarter and six month periods increased 38% and 41%, respectively, when compared to the same periods in the prior year. Excluding the acquisitions of Quartet and Baker, the Company's sales increased 9% and 10%, respectively. Revenues increased in nearly all of the Company's operations during both periods. Revenue increases were as follows:
Three month Six month period period ----------- --------- Domestic binding and laminating products 4% 4% America's (Canadian Direct, Mexican, and Latin American Operations) 33% 31% International (European and Far East Subsidiaries and Export) 9% 5% Film Products Division 9% 8% Office Products Division (excluding Quartet and Baker acquisitions) 21% 31%
The rate of growth of sales for the Office Products Division is less in the second quarter of 1997 due to the seasonal nature of personal shredder sales. Gross Profits Gross profit margins increased 1.8 and 1.9 percentage points, respectively. Excluding the acquisitions of Quartet and Baker, gross profit margins increased less than .5 percent for both periods. Increased gross profit margins in the Company's core Domestic businesses, the America's and the Office Product Division were offset by lower gross margins in the Film Product Division. Gross profit margins in the Company's International operations were negatively impacted by the strength of the U.S. Dollar compared to foreign currencies. The Film Products Division encountered severe competitive pricing pressures, resulting in significantly lower gross profit margins. Selling, Service, and Administrative Expenses Expenses increased 43.4% and 44.9% for the three and six month periods, respectively. The primary reason for the increase was higher sales volumes and the inclusion of Quartet and Baker. Expenses as a percentage of sales increased 1.2 percentage points for the three month period and were flat for the six month period. The primary reasons for the increase were expenses associated with the implementation of the Company's Domestic business information system and higher operating expenses in the Film Products Division. The expense growth in the Film Products Division has been caused by increasing unit sales at lower prices. As a result, expense growth has exceeded revenue growth. 10 - 8 - Interest Expense Interest expense for the second quarter and six months period of 1997 were $6.2 million and $11.4 million compared to $1.5 million and $2.9 million for 1996. The primary reasons for the increase were higher average debt levels as a result of the financing of the acquisitions, and higher levels of receivables and inventories. Other Expense Other expense for the second quarter was $2,284,000 compared to $682,000 in 1996. The primary factors affecting the change were: a) increased amortization of goodwill as a result of the Quartet and Baker acquisitions and b) currency losses in 1997 compared to gains in 1996. Other expense for the six month period was $4,372,000 compared to $697,000 in 1996. The unfavorable impact was due to the costs associated with the acquisitions and the currency losses compared to the gains in 1996. Further, the Company's 1996 results were positively impacted by a gain on the sale of a parcel of land in Japan. Income Taxes The Company's overall effective income tax rate for the three and six month periods in 1997 was 40.0% compared to 41.0% in the prior year. The decrease in the effective rate resulted from international tax strategies which effectively lowered the Company's rate. The impact of the tax strategies was negatively impacted by losses in certain European subsidiaries for which the Company receives no tax benefits. 11 - 9 - LIQUIDITY AND CAPITAL RESOURCES Cash used in operating activities was $4.2 million compared to $1.7 million in 1996. The use of cash in 1997 primarily resulted from overall higher levels of receivables and inventories, including those generated by Quartet and Baker since the dates of acquisition. In addition, cash was used for advances on product purchased from overseas vendors. Net cash flows used in investing activities amounted to $245.7 million through the second quarter of 1997. Capital expenditures for the second quarter and the first six months of 1997 were $7.1 million and $13.4 million, respectively, compared to $7.9 million and $14.9 million, respectively, for the same periods in 1996. Major expenditures in 1997 include the continued development of the company's domestic business information system, the development of a European business information system, construction of facilities to support the integration of the GBC Office Product business into Quartet, and construction of the Company's new Midwest supplies facility in Wisconsin. Cash dividends paid during the second quarter and the first six months of 1997 were $.110 and $.220 per share while dividends for the comparable periods in 1996 were $.105 and $.210 per share, respectively. As of June 30, 1997, the Company had access to a $400 million revolving credit facility as well as various other smaller, short-term international and domestic lines of credit. The revolving credit facility was established on January 13, 1997 with a group of domestic and international banks and contains, among other things, certain restrictive covenants which require the Company to maintain certain ratios regarding current assets and liabilities, leverage and interest coverage. As of June 30, 1997, the Company had $312.9 million and $43.2 million outstanding under the revolving facility and the short-term lines of credit, respectively. The Company believes that funds generated from operations combined with its credit facilities are sufficient to meet currently anticipated capital and operating requirements. 12 - 10 - PART II. OTHER INFORMATION Item 5: Exhibits (a) Exhibits: None (b) Reports on Form 8-K: None 13 - 11 - 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 /s/ William R. Chambers, Jr. ---------------------------- William R. Chambers, Jr. Vice President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from General Binding Corporation's Form 10-Q for the quarter ended June 30, 1997 and is qualified in its entirety by reference to such financial statements. 1 6-MOS DEC-31-1996 JUN-30-1997 9,100 0 146,963 7,185 142,378 322,566 189,968 77,891 679,856 151,200 323,731 0 0 2,262 180,006 679,856 367,937 367,937 210,853 210,853 0 1,247 11,421 23,304 9,321 13,983 0 0 0 13,983 0.89 0.89 Notes and accounts recivable-trade are stated net of allowances for doubtful accounts and sales returns.
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