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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

For the Fiscal Year Ended February 3, 2001

For the transition period from                to               

Commission File Number: 0-22834

SUCCESSORIES, INC.
(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (630) 820-7200

Securities registered pursuant to Section 12(b) of the Act:

   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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / /

   The aggregate market value of the Registrant's Common Stock held by non-affiliates of the Registrant on 6,108,036, based upon the last reported sale price on that date on the Nasdaq National Market of $1.69 per share, was approximately $10,322,580.

   Registrant had 9,181,196 shares of its Common Stock, outstanding as of March 31, 2001.

DOCUMENTS INCORPORATED BY REFERENCE

   Portions of the Registrant's definitive Proxy Statement for its 2001 Annual Meeting of Shareholders, which will be filed with the Securities and Exchange Commission within 120 days of February 3, 2001, are incorporated by reference into Part III hereof.

SUCCESSORIES, INC.
FORM 10-K
FISCAL YEAR ENDED FEBRUARY 3, 2001

TABLE OF CONTENTS

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PART I

Item 1. Business

General

    Successories, Inc., an Illinois corporation, ("Successories" or the "Company") designs, manufactures and markets a diverse range of motivational and self-improvement products, many of which are the Company's own proprietary designs. The Company's products include distinctive lines of wall decor, desktop accessories, books and stationery, and personalized gifts and awards. In addition, the Company sells other motivational products supplied by third parties. Company personnel create proprietary art work and designs that can be used in conjunction with a wide variety of products. The Company will also customize its products to fulfill customers' special needs.

    The Company's products are marketed primarily under its Successories trade name through direct marketing (catalog, electronic commerce and telemarketing), retail (Company-owned stores), sales to franchisees, and wholesale distribution channels. The Company's products are marketed primarily to businesses.

    The operating subsidiaries (the "Subsidiaries") of the Company commenced operations in 1985. In October 1990, Primus Development Group II Ltd. ("Primus") acquired in excess of 90% of the stock of the Subsidiaries through a share exchange. The Company was formed in October 1990 as a wholly-owned subsidiary of Primus and, in February 1992, Primus merged into the Company. In March 1991 and April 1993, the Company acquired the remaining outstanding stock of the Subsidiaries through share exchanges.

Products

    A majority of the Company's sales are derived from proprietary products that have either been internally developed or designed, or individually customized. The artwork used in the Company's products is obtained from third parties through licensing rights. All products are designed to have a positive motivational or self-improvement theme that can be used by businesses and institutions to reinforce important work themes to motivate and recognize employees, and as gifts at meetings and conventions. The Company's products also appeal to many individuals for both personal and professional motivation and for gifts.

    The Company's proprietary wall decor product line includes dramatic photography and other art developed, designed or customized in-house, and printed on high-quality coated paper stock with various motivational captions. Company designers give each grouping of wall decor products a unique, uniform overall appearance, consistent visual themes, a range of predominant colors, and distinctive border design and lettering, thereby providing each grouping with a distinctive trade dress. Framed art comes either with an aluminum frame with an electroplated high-gloss black finish or a wood frame. High-quality tempered glass is used for safety reasons and to protect against damage. The Company's wall decor includes framed and unframed lithographs in various sizes ranging from 16-inch by 20-inch to 20-inch by 36-inch. The Company's merchandise is categorized into the product "groupings" that convey a specific theme and trade dress.

    The Company markets smaller versions (5-inch by 7-inch to 6-inch by 12-inch) of its wall decor as well as other products designed to be placed on desktops and countertops. All desktop accessories contain motivational words and/or images.

    All books and stationery sold by the Company are specifically selected for their motivational or inspirational content and include those published by the Company as well as by third parties. The Company markets collections of motivational or inspirational quotations and educational books for sales, customer service, human resource and educators.

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    The Company offers a wide variety of customized products to its customers. In-house custom capabilities include hot-stamping, screen-printing, and engraving for logos and personalized messages. Etched brass and crystal products are also available. Some of the products with customized features include employee awards, promotional items and corporate gifts.

    While retail stores typically carry many of the Company's proprietary products, they also carry a variety of non-proprietary products purchased from outside vendors.

    The Company tries to expand its product line by offering new items with each new catalog version and by creating new product lines that are distinctive in appearance from existing lines.

Sales and Marketing

    The Company generates revenue through direct marketing, Company-owned retail stores, franchise stores, wholesale distribution, list rental and licensing agreements. Customers are categorized as follows:

•

corporate buyers including executives, sales managers, human resource managers and production managers of larger corporations



•

management personnel



•

teachers and administrative staff in educational organizations



•

entrepreneurial buyers including small business owners, home office businesses, sales professionals



•

consumers who are primarily purchasing the Company's products for themselves or as a gift for the end user

    The Company believes that the optimal way to reach its diverse customer base is to market its products through several distribution channels. In addition, the Company believes that its different distribution channels provide numerous benefits in cross-marketing.

    The Company's revenue base is comprised of a wide range of customers including Fortune 500 companies, mid-sized and small businesses, corporate management personnel, and retail customers. No individual customer accounted for more than 10% of the Company's net sales during the fiscal year ended February 3, 2001.

    The Company emphasizes customer service to achieve its goal of producing a high level of customer satisfaction.

Direct Marketing

    Through the use of its catalogs, the Company targets sales managers, executives of businesses, meeting planners, human resource managers, corporate training managers and educators who have purchased or shown a willingness to purchase the Company's products in the past. In addition, the Company is constantly prospecting for new customers by mailing its catalogs to prospective customers who have favorable demographic profiles or purchasing patterns. The Company maintains a large proprietary in-house database. Building on this foundation, the Company maintains an ongoing prospecting effort by testing various mailing lists and evaluating the recipient's responsiveness to the Company's product offerings. A group of corporate sales representatives handle larger corporate accounts through telemarketing.

    The Company's Successories catalog features the entire line of proprietary products and some third-party products. The two types of catalogs currently being mailed are a 64-page version mailed to existing customers and catalog requesters, and a 40-page version mailed to individuals on rented lists with the objective to acquire them as new customers. When the prospective customer makes the initial purchase they are subsequently sent a 64-page catalog using selection criteria based on purchase

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history. The Company also mails a separate 32-page recognition awards catalog offering a wide range of proprietary awards and gifts that can be engraved or personalized, and an annual 40-page clearance catalog. During the fiscal year ended February 3, 2001, the Company mailed approximately 16 million Successories catalogs.

    In December 1999, the Company re-launched its interactive Internet website, www.successories.com, which featured increased product offering and enhanced navigational performance. Visitors to the website are also able to view product offerings and place orders for products featured in the Company's catalogs. Customer interest in the website has steadily increased. Internet orders during the fiscal year ended February 3, 2001 increased five-fold in comparison to the prior fiscal year. The Company believes the Internet offers a significant marketing and sales opportunity.

    Successories products are also marketed through the Skymall catalogs circulated in the airlines.

Retail

    The Company-owned retail locations consist of stores and temporary locations located in shopping malls. The Company's stores were introduced in early 1991. As of February 3, 2001, the Company owned a total of 25 retail locations, including 21 stores and 4 temporary locations. The following table shows the number of Company-owned retail locations that were opened, closed, converted to franchise, and in operation for each of the last three fiscal years.

    As of February 3, 2001, the Company's retail locations are located in Canada and the following states:

    As of February 3, 2001, the Company has 3 joint venture stores in Minnesota and Texas.

Wholesale

    The Company sells products to a number of wholesale customers. Wholesale customers include other direct marketing distributors and a distributor who has acquired distribution rights for the Company's products in the United Kingdom.

    The Company licenses some of its proprietary designs to third parties for use in their products for which the Company receives licensing revenue. These third parties generally market office supply products.

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Franchise

    As of February 3, 2001, there were 50 franchised retail stores. The following table shows the number of franchised stores that were opened, closed and in operation for each of the last three fiscal years.

    The franchisee purchases for resale Company manufactured products or products from third-parties that are subject to Company approval. Due to the proprietary nature of most of the company's products, the Company is the only available source for many products sold by franchisees. Product sales to franchisees are typically made at a discount from retail or at product cost plus a certain percentage.

    All franchisees are subject to comply with Company-established operational policies and procedures relating to, among other things, quality of service, training, design and decor of stores, and trademark usage. The Company retains the right to receive an assignment of leasehold interest if the franchisee fails to comply with the Company's operational policies and procedures or upon expiration of the franchise agreement. The Company reviews all proposed franchise store locations and reserves the right to review the lease terms. The Company provides franchisees with training which focuses on the various aspects of store management, including marketing fundamentals, and product knowledge.

    Franchisees currently pay a monthly royalty to the Company of 2% of franchise gross sales. The franchise agreements have an initial term of five years with a renewal option for three additional successive terms of five years each. The agreements also provide the Company with the right to purchase the franchisee's store assets upon termination or expiration of the franchise agreement, and a right of first refusal if the franchise is to be sold. The franchisee must obtain the Company's approval in all instances prior to the sale of a franchised store. The franchise agreement is granted for the operation of a single retail store at a specified location. The Company reserves certain rights to sell products through other channels of distribution distinct from that of a franchised retail business.

Manufacturing, Order Fulfillment and Distribution

    The Company's manufacturing operations consist primarily of framing, product-engraving, and hot-stamping and silk screening. The Company mounts and assembles its framed wall and desk decor in-house and has developed a special packaging system designed to reduce the risk of breakage in shipping.

    Generally, the Company's catalog customers may choose to have their orders sent via ground shipment (7 - 10 days), economy (4 - 6 days), express (2 - 3 days) or next day shipment. The Company's manufacturing operations and order fulfillment capabilities enable it to accommodate last-minute orders for a variety of products, and to produce samples of products for existing and potential customers. These capabilities further enable the Company to produce and test products before inclusion in the distribution channels.

    The Company depends upon outside suppliers for many items such as mugs, stationery and components for framing, all of which are readily available from a number of suppliers. In addition, the Company outsources its film work and printing, although its creative staff works closely with outside film houses and printers to assure that all work is done to the Company's specifications and satisfaction.

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Seasonality

    See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Seasonality."

Competition

    The industry supplying motivational, self-improvement and custom awards is highly competitive and fragmented. The Company competes principally on the basis of product exclusivity, selection, quality, name recognition and price of its products. The Company believes that the proprietary products it offers provide a competitive advantage in its merchandising offering.

Trademarks and Service Marks

    The Company owns a federal registration for the service mark "Successories" in Class 42 on the Principal Register of the United States Patent and Trademark Office ("PTO"). The Company believes the use of the service mark Successories is important in establishing and maintaining its reputation and is committed to protecting this service mark by vigorously challenging any unauthorized use.

    Although many of the quotations and other art work used by the Company are in the public domain and are not individually protectable under copyright and trademark laws, the Company continually endeavors to protect its products by giving the products a distinctive trade dress.

Employees

    As of February 3, 2001, the Company employed 314 persons, of whom 239 were employed full time. Of this total, 192 were employed at the corporate headquarters in marketing, manufacturing, order fulfillment and administrative capacities, and 122 were field personnel, store managers or store personnel. The Company is not a party to any collective bargaining agreements and has not experienced a strike or work stoppage. The Company believes that its employee relations are good.

Item 2. Properties

    The Company leases its corporate office and manufacturing/warehouse facility in Aurora, Illinois, under the terms of a lease agreement which expires in July 2009. The lease is for approximately 20,000 square feet of office space and 110,000 square feet of manufacturing/warehouse space.

    The Company leases all 25 Company-owned stores from various property owners under terms typical to enclosed shopping malls. Lease terms generally vary from five to ten years for stores, and six months to one year for temporary store locations. None of the Company's store leases are individually material to the operations of the Company.

Item 3. Legal Proceedings

    In May 1998, Wascher Corporation ("Wascher"), a franchisee of the Company, filed a Demand for Arbitration dated May 26, 1998 with the American Arbitration Association (Case No. 51-114-00227-98). Wascher alleged the following causes of action against the Company: breach of contract, breach of good faith and fair dealing, common law fraud, unfair competition, Robinson-Patman Act violation, tortuous interference of contract and violation of the Wisconsin Fair Dealership Act. Wascher alleged and sought an award in an amount in excess of $250,000 plus costs, disbursements and attorney's fees, an award of both treble and punitive damages, and such other relief deemed just and equitable. Wascher, through its attorney, sent a letter dated January 18, 2001, to the American Arbitration Association, indicating its willingness to dismiss the matter without prejudice if the Company concurred. The Company stated that it would not object to the dismissal. The American Arbitration Association advised the parties that effective April 27, 2001 the matter was dismissed without prejudice.

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    Except as noted above, there were no other material pending legal proceedings against the Company. The Company is, however, involved in routine litigation arising in the ordinary course of its business and, while the results of the proceedings cannot be predicted with certainty, the Company believes that the final outcome of any such matters will not have a materially adverse effect on the Company's consolidated financial position or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

    None.

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Executive Officers of the Registrant

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PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters

    The Company's common stock is quoted on the Nasdaq National Market under the symbol "SCES". The following table sets forth the high and low bid prices for the Company's common stock as reported by the Nasdaq National Market for the applicable periods shown.

    The above noted high and low bid prices do not necessarily represent actual sale prices for the Company's common stock.

    As of March 31, 2001, the number of holders of record of the Company's common stock was approximately 569, and there were approximately 479 beneficial owners of the Company's common stock.

    The Company has never declared or paid any cash dividends on its common stock. The Company currently intends to retain its earnings to finance future growth and therefore has no present intention of paying cash dividends on its common stock in the foreseeable future. Under the Company's current credit facility with Provident Bank, the payment of cash dividends on common and preferred stock by the Company is prohibited, except, cash dividends on preferred stock are allowed under certain conditions.

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Item 6.  Selected Financial Data

    Set forth below is selected consolidated financial data for the Company as of and for each of the last five fiscal periods. Certain prior year amounts have been reclassified to conform with the current year presentation.

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

    The following discussion should be read in conjunction with, and is qualified in its entirety by, the Consolidated Financial Statements and Notes thereto included elsewhere in this Report.

    Successories (the "Company") designs, manufactures and markets a diverse range of motivational and self-improvement products, many of which are the Company's own proprietary designs. The Company's products include distinctive lines of wall decor, desktop accessories, books and stationery, and personalized gifts and awards. In addition, the Company sells other motivational products supplied by third parties. In-house designers create proprietary art work and designs that can be used in conjunction with a wide variety of products. The Company will also customize products to fulfill customers' special needs.

    The Company's products are marketed primarily under its Successories trade name through direct marketing (catalog, electronic commerce and telemarketing), retail channel (Company-owned stores), sales to franchisees and wholesale distribution. Although the Company utilizes multiple distribution channels for its products, the Company's products have similar purposes and uses in each channel of distribution. The profitability varies among products and distribution channels. The Company utilizes its facilities interchangeably for each distribution channel. Furthermore, the marketing channels are directed at a single customer base located primarily in North America.

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    For the fiscal years ended February 3, 2001, January 29, 2000 and January 30, 1999, net product sales for the various distribution channels, as a percentage of total net product sales, were as follows:

    The gross profit margins for direct marketing and retail vary due to differences in product mix and volume discounts taken by customers based on order size. The gross profit margin for wholesale distribution sales and sales to franchisees is lower than other channels since these sales are generally made at a significant discount from retail price.

    As previously announced, the Company has suspended its efforts to sell the remaining Company-owned retail stores and is focused on developing a new model targeted to reach businesses residing in a store's community. While testing this new retail model, the Company will not be adding new franchisees to the system.

Results of Operations

    The following table sets forth the results of operations for the last three fiscal years and the change from the previous year, as taken from the Company's consolidated statements of operations. The Company's fiscal year 2000 consisted of the 53 weeks ended February 3, 2001. The Company's

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fiscal year 1999 consisted of the 52 weeks ended January 29, 2000. The Company's fiscal year 1998 consisted of the 52 weeks ended January 30, 1999.

Year Ended February 3, 2001 (Fiscal 2000), Compared to Year Ended January 29, 2000 (Fiscal 1999)

    Net product sales were $52,061,000 for the year ended February 3, 2001, compared to $51,702,000 for the prior year ended January 29, 2000. The $359,000 or 0.7% increase in sales is comprised of an increase of $4,719,000 or 16.3% in direct marketing-Successories and $306,000 or 3.1% in comparable retail Company-owned store sales (same store sales), offset by a decrease of $2,329,000 or 68.0% in non-comparable retail Company-owned store sales, $1,375,000 or 92.6% in direct marketing-golf, $564,000 or 8.0% in sales to franchisees and $398,000 or 45.3% in wholesale sales.

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    The 16.3% increase in direct marketing-Successories sales was attributable to an increase in catalog circulation by approximately 10%, an increase in customer catalog page count, and continued improvements in merchandising, creative presentation and circulation strategy. Internet sales, which are included above, were 17.9% of the total direct marketing-Successories sales. Internet orders grew five-fold in fiscal 2000. The non-comparable retail Company-owned store sales declined due to 11 fewer stores in operation in fiscal 2000. The Company converted some of the Company-owned retail stores to franchised stores, and closed some of the under-performing stores in fiscal 1999. Sales to franchisees decreased by 8% due to 8 fewer stores in operation in fiscal 2000 in comparison to fiscal 1999, and in fiscal 1999 there were non-recurring initial sales related to the conversion of retail Company-owned stores to franchised stores. The decrease in direct marketing-golf and wholesale sales can be attributed to the planned discontinuation of the golf catalog and reduction in the scope of wholesale business with the office supply companies. The Company's focus in fiscal 2000 was on growing it's core motivational products business through the direct marketing-Successories, retail Company-owned stores and sales to franchisees distribution channels.

    Gross margin increased in fiscal 2000 to $30,299,000 from $29,341,000 in fiscal 1999. The increase in gross margin can be primarily attributed to the increase in net product sales, contract framing net income, list rental income and licensing revenue. Contract framing, undertaken in earnest in fiscal 2000, consists of framing third-party products on a fee basis primarily during the Company's seasonally slower production periods.

    Operating expenses, excluding certain exit costs incurred in fiscal 1999, were slightly down in fiscal 2000 even though net product sales increased from fiscal 1999. The exit costs of $961,000 incurred in fiscal 1999 were primarily related to the under-performing retail store closings, and exiting costs associated with the golf and Europe catalog business and wholesale activity with office supply companies. Comparable operating expenses in fiscal 2000 were $27,843,000 or 53.5% (as a percentage of net product sales), in comparison to $27,913,000 or 54.0% (as a percentage of net product sales) in fiscal 1999.

    In fiscal 2000 the Company achieved a pre-tax net income of $731,000, in comparison to a net loss of $1,067,000 in fiscal 1999. The improvement in the operating results can be primarily attributed to the streamlining of the operations by focussing on the Company's most profitable distribution channels and core motivational products business. In addition, cash interest expense decreased by $505,000 or 40.1% in fiscal 2000 in comparison to fiscal 1999, due to lower outstanding debt balance. The outstanding debt balance decreased by $3,995,000 in fiscal 2000 in comparison to fiscal 1999. Income tax expense for fiscal 2000 increased by $241,000 in comparison to fiscal 1999, however, it is primarily a non-cash expense as a result of the Company being able to utilize approximately $1.4 million of its net operating loss carryforwards.

Year Ended January 29, 2000 (Fiscal 1999), Compared to Year Ended January 30, 1999 (Fiscal 1998)

    Net product sales were $51,702,000 for the year ended January 29, 2000, compared to $52,864,000 for the corresponding year ended January 30, 1999. The $1,162,000, or 2.2% decrease in sales was comprised of wholesale sales of $934,000, or 51.5%, retail Company-owned store sales of $2,924,000, or 17.9%, and direct marketing—golf sales of $1,887,000, or 56.0%, offset by an increase in direct marketing—Successories sales of $3,161,000, or 12.2%, and franchise sales of $1,422,000 or 25.3%.

    The Company's net product sales decreased in fiscal 1999 by 2.2% compared to fiscal 1998, as planned. Net product sales from the two core channels, direct marketing Successories and franchise sales, reflected a strong growth of 14.6% in fiscal 1999, compared to fiscal 1998. The increase in direct marketing Successories sales can be attributed to planned increases in circulation of catalogs, introduction of the clearance catalog, and increase in page count of the catalogs in fiscal 1999. The

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increase in franchise sales was due to the new product offerings, increase in franchise stores (fiscal 1999—58 stores and fiscal 1998—49 stores), and higher sales volume in fiscal 1999. Sales in other channels, direct marketing golf, retail Company-owned stores and wholesale, decreased by 26.7% in fiscal 1999 in comparison to fiscal 1998. The decrease in direct marketing golf sales was due to planned reductions in circulation of the golf catalogs. The overall decrease in retail Company-owned store sales was due to fewer stores in operation in the current year compared to the prior year (fiscal 1999—25 stores and fiscal 1998—36 stores). The comparable same store sales for the retail Company-owned stores in fiscal 1999 were flat compared to fiscal 1998. The decrease in wholesale channel sales can be attributed to planned reduction in the scope of business in fiscal 1999.

    Gross profit on product sales in fiscal 1999 of $28,166,000 was comparable to $28,136,000 in fiscal 1998, even though net product sales declined by $1,162,000 in fiscal 1999. The improvement in gross profit on product sales can be attributed to a higher gross profit, as a percentage of net product sales, in fiscal 1999. The improvement in gross profit is primarily due to the change in net product sales mix from the various distribution channels in fiscal 1999 compared to fiscal 1998, which impacted the overall gross profit as it varies amongst the various channels, and improvement in gross profit due to the decrease in promotional discounts. Gross profit on net product sales, as a percentage of net sales, was 54.5% in fiscal 1999 versus 53.2% in fiscal 1998.

    Operating expenses decreased in fiscal 1999 to $28,874,000 from $34,235,000 in fiscal 1998. The 15.7% decrease can be primarily attributed to a decrease in expenses related to the Company's golf catalog business, due to fewer retail Company-owned stores in operation, and a reduction in corporate and administrative expenses as a result of focusing on the two core distribution channels, offset by additional expenses of $961,000 incurred as a result of planned retail store closings, exiting costs associated with the golf and Europe catalog businesses, and exiting its wholesale activity with the office supply companies.

    During fiscal 1998, the Company recorded an asset impairment charge of $1,302,000 related to goodwill associated with the acquisition of British Links Golf Classics, Inc.

    The net loss in fiscal 1999 of $1,127,000 versus the net loss of $7,336,000 in fiscal 1998 is primarily due to a decrease in operating expenses in fiscal 1999 and the asset impairment charge recognized in fiscal 1998. As a percentage of net product sales, the net loss for fiscal 1999 was 2.2% versus 13.9% in fiscal 1998.

Liquidity and Capital Resources

    The Company's ongoing cash requirements are for working capital, capital expenditures and debt service. The Company expects to rely on cash generated from its operations, supplemented by borrowings available on the revolving credit loan, to fund it's cash requirements.

    Operating activities provided cash of $2,182,000, $1,648,000 and $3,113,000 in fiscal 2000, fiscal 1999 and fiscal 1998, respectively. The improvement in cash flow in fiscal 2000 in comparison to fiscal 1999 can be primarily attributed to improved operating results, offset by reduction in accounts payable. The decrease in cash flow in fiscal 1999 in comparison to fiscal 1998 is the result of significant reduction in accounts payable and no reduction in accounts receivable, offset by reduction in inventory levels and improved operating results.

    Investing activities used cash of $355,000, $431,000 and $2,078,000 in fiscal 2000, fiscal 1999 and fiscal 1998, respectively. The principal use of cash was capital expenditures. In fiscal 2000 the Company expended funds primarily for the Internet website development, new manufacturing and distribution software implementation to be completed in 2001, and equipment upgrades and replacements. Capital expenditures have declined in fiscal 2000 and fiscal 1999, in comparison to fiscal 1998. In fiscal 1998 the Company expended funds for a new point-of-sale system for Company-owned retail stores and

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upgrades to its computer system and equipment to address the year 2000 compliance needs. Currently, the Company's credit facility limits capital expenditures to $1 million.

    Financing activities used cash of $298,000, $1,593,000 and $1,171,000 in fiscal 2000, fiscal 1999 and fiscal 1998, respectively. The principal uses of cash were scheduled repayments and pre-payments on the outstanding bank debt. The principal sources of cash were proceeds from the sale of common stock issuance in fiscal 2000 and preferred stock issuance in fiscal 1999. The above noted equity infusions have helped the Company lower its outstanding debt levels and related interest expense, increase the working capital available for investing in the growth of the business, and improve the overall liabilities to equity positioning of the Company.

    On June 20, 1997, the Company entered into a credit facility agreement with The Provident Bank (the "Bank"). Per the agreement, as amended most recently on August 28, 2000, the facility is comprised of a $7.5 million term loan and a revolving credit loan. The revolving credit loan provides for maximum borrowings of $9 million through May 1, 2000 and for each succeeding July 1 through December 31; the maximum borrowings at all other times is $6 million. Borrowings under the revolving credit loan are limited to 85% of eligible receivables plus 57% of eligible inventory, as defined, provided that from February through April eligible inventory is limited to $5 million through the year 2000 and $3 million in years thereafter. In addition, from August 2000 through February 2001, the borrowing base was further reduced by $1,500,000 ("Holdback") and in February 2001 was released when the amount of the Holdback was applied to the scheduled payments of principal on the term loan for the remainder of 2001. A commitment fee of 0.5% is payable on the daily unused amount of the maximum revolving credit commitment. The facility expires in June 2003, and borrowings under the facility are secured by substantially all the assets of the Company. The interest rates on the term loan and revolving credit loan borrowings generally fluctuate based on the margin ratio, as defined, from a minimum of prime plus 0.50% to a maximum of prime plus 3.00% on the term loan, and a minimum of prime to a maximum of prime plus 3.00% on the revolving credit loan. Interest is payable monthly. The interest rate on the term loan was 8.75% and revolving credit loan was 8.25% at February 3, 2001. The term loan is payable in quarterly installments of $312,500 through June 1, 2000, and $375,000 thereafter. Prepayments on the loans are required in certain cases including, among others, equity offerings and asset dispositions. As of February 3, 2001, available borrowings on the revolving credit loan were $6,000,000. In addition, in July 1997, the agreement for the credit facility was amended to include an additional $500,000 fixed rate loan. The loan bears interest at 12% and is due in June 2003.

    Subsequent to fiscal 2000, in February 2001 the Company pre-paid the entire outstanding Bank term loan and fixed rate loan balance in the amount of $3,590,000. The above noted loans had payment terms through June 2003.

    The credit facility also contains, among other provisions, requirements for maintaining certain earnings levels and financial ratios, limits on capital expenditures and additional indebtedness, and restrictions on the payment of dividends and use of proceeds from certain equity offerings. At February 3, 2001, the Company was in compliance with the debt covenant requirements of the credit facility agreement.

    See Note 6 in the Notes to the Consolidated Financial Statements in Part IV of this document.

    The Company believes that internally generated funds and the credit facility will be sufficient to meet its current operating needs, fund debt service and anticipated capital expenditures for the next year.

Seasonality

    The Company's business is subject to seasonal variations in demand. Historically, a significant portion of the Company's sales and net income have been realized during the period from October

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through January. The effects of seasonality are greater in the Company's retail operations than the other segments of its business. Most operating expenses are incurred evenly throughout the year, although some selling and administrative expenses are variable depending on sales, and direct marketing catalog advertising expenses as a percentage of sales are higher in the first calendar quarter. The Company's quarterly operating results may also vary depending upon such factors as catalog mailings, and the timing of new product introductions and promotions by the Company. The Company's cash requirements generally reach a seasonal peak in the second half of the fiscal year to finance increased inventory levels needed to meet the third and fourth quarter sales demand.

Inflation

    The Company does not believe that inflation has had a material impact on its operations.

Disclosure Regarding Forward-Looking Statements

    This Form 10-K report contains forward-looking statements which the Company believes are within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be deemed to include, among other things, statements relating to anticipated financial performance, the management team, management's long-term performance goals, programs to reduce the Company's costs and enhance asset utilization, the Company's generation of funds sufficient to meet its current operating needs and to fund anticipated capital expenditures, realization of deferred tax assets, as well as statements relating to the Company's operational and growth strategies. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be accurate, and actual results could differ materially from those addressed in forward-looking statements contained in this Form 10-K report. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Item 7A.  Quantitative and Qualitative Disclosure About Market Risk

    The Company is subject to market risk associated with adverse changes in interest rate and foreign currency exchange rates, but does not hold any market risk sensitive instruments for trading purposes. The Company uses both fixed and variable rate debt, as described in Note 6 of the Notes to Consolidated Financial Statements. Principal exposed to interest rate risk is limited to $3,090,000 in variable rate debt. The impact of 1% change in interest rates on the variable rate debt is approximately $31,000. The Company's exposure to foreign currency exchange rate risk relates primarily to the financial position and results of operations in Canada. The Company's exposure to foreign currency exchange rate risk is difficult to estimate due to factors such as balance sheet accounts, and the existing economic uncertainty and future economic conditions in the international marketplace.

Item 8.  Financial Statements and Supplementary Data

    See the Index to Financial Statements and Financial Statement Schedules on page F-1. Such Financial Statements and Schedules are incorporated herein by reference.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

    None

17

PART III

Item 10.  Directors and Executive Officers of the Registrant

    Information regarding the Company's Directors will be included under the caption, "Election of Directors," in the Company's Proxy Statement for its 2001 Annual Meeting of shareholders, which will be filed with the Securities and Exchange Commission within 120 days after February 3, 2001, and is incorporated herein by reference. Information regarding the Company's executive officers of the Company is included under a separate caption in Part I hereof, and is incorporated herein by reference.

Item 11.  Executive Compensation

    Information regarding the Executive Compensation will be included under the caption, "Compensation and Other Transactions with Management," in the Company's Proxy Statement for its 2001 Annual Meeting of shareholders, which will be filed with the Securities and Exchange Commission within 120 days after February 3, 2001, and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

    Information regarding the above will be included under the caption, "Security Ownership," in the Company's Proxy Statement for its 2001 Annual Meeting of shareholders, which will be filed with the Securities and Exchange Commission within 120 days after February 3, 2001, and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

    Information regarding the above will be included under the caption, "Compensation and Other Transactions with Management," in the Company's Proxy Statement for its 2001 Annual Meeting of shareholders, which will be filed with the Securities and Exchange Commission within 120 days after February 3, 2001, and is incorporated herein by reference.

18

PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

19

Index to Financial Statements and Financial Statement Schedules

    All other financial schedules called for under Regulation S-X are not submitted because they are not applicable, or not required, or because the required information is not material or is included in the consolidated financial statements or notes thereto.

F–1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and the Stockholders of
  Successories, Inc.

    We have audited the accompanying consolidated balance sheet of Successories, Inc. (an Illinois corporation) as of February 3, 2001, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended. Our audit also included the financial statement schedules listed in the Index at Item 8, Financial Statements and Supplementary Data—page F-26. These financial statements and the financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audit.

    We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Successories, Inc. as of February 3, 2001 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

Crowe, Chizek and Company, LLP

Oak Brook, Illinois
March 20, 2001

F–2

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors
and the Stockholders of
Successories, Inc.

    We have audited the accompanying consolidated balance sheet of Successories, Inc. (an Illinois corporation) and subsidiaries as of January 29, 2000, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the two fiscal years in the period ended January 29, 2000. These financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Successories, Inc. and subsidiaries as of January 29, 2000, and the results of its operations and its cash flows for each of the two fiscal years in the period ended January 29, 2000, in conformity with accounting principles generally accepted in the United States.

    Our audits were made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The schedule on Page F-26 is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the consolidated financial statements taken as a whole.

Arthur Andersen LLP
Chicago, Illinois
March 24, 2000
(except with respect to the matters discussed in
Note 6, as to which the date is April 6, 2000)

F–3

SUCCESSORIES, INC.

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of these statements.

F–4

SUCCESSORIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of these statements.

F–5

SUCCESSORIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

The accompanying notes are an integral part of these statements.

F–6

SUCCESSORIES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

The accompanying notes are an integral part of these statements.

F–7

SUCCESSORIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS