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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
( ) 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 of Incorporation) (I.R.S. Employer Identification No.)
One GBC Plaza
Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 272-3700
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
Common Stock, $.125 par value NASDAQ
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.____
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
---- ----
As of February 29, 1996, the aggregate market value of the Common Stock (based
upon the average bid and asked prices of these shares on the Over-The-Counter
Market - NASDAQ) of the company held by nonaffiliates was approximately
$123,719,000. (Estimated solely for the purpose of completing this cover page.)
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class February 29, 1996
----- ------------------
Common Stock, $.125 par value 13,339,895
Class B Common Stock, $.125 par value 2,398,275
Documents Incorporated by Reference Where Incorporated
----------------------------------- ------------------
Annual Report to Stockholders for the fiscal year
ended December 31, 1995 Parts II and IV
Definitive Proxy Statement for the Annual Meeting
of Stockholders to be held May 14, 1996 Parts III and IV
GENERAL BINDING CORPORATION AND SUBSIDIARIES
FORM 10-K - FISCAL YEAR ENDED DECEMBER 31, 1995
Contents and Cross Reference Sheet
Furnished Pursuant to General Instruction G(4) of Form 10-K
Annual Report
Form 10-K Form 10-K Form 10-K to Stockholders
Part No. Item No. Description Page No. Page No.
- --------- --------- ----------- --------- ---------------
I 1 Business 1
2 Properties 3
3 Legal Proceedings 3
4 Submission of Matters to a Vote of Security Holders 3
II 5 Market for Registrant's Common Equity and Related
Stockholder Matters 4 19
6 Selected Financial Data 4 12
7 Management's Discussion and Analysis of Financial Condition
and Results of Operations 4 13-16
8 Financial Statements and Supplementary Data 4 16-32
9 Disagreements on Accounting and Financial Disclosure 4
III 10 Directors and Executive Officers of the Registrant 5
11 Executive Compensation 5
12 Security Ownership of Certain Beneficial Owners and
Management 5
13 Certain Relationships and Related Transactions 5
IV 14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K 6
Signatures 7
- ----------
References are to pages in the Registrant's Annual Report to Stockholders for the fiscal year ended December 31,
1995 which are incorporated herein by reference. See Part IV, Exhibit 13.
Incorporated by reference from the Registrant's definitive Proxy Statement for the Annual Meeting of Stockholders to
be held on May 14, 1996 to be filed within 120 days after the end of the Registrant's fiscal year.
i
PART I
Item 1. Business
General Development and Description of Business and Segment Information
General Binding Corporation, incorporated in 1947, and its subsidiaries (herein
referred to as "GBC" or "Company") are engaged predominantly in one line of
business, namely the design, manufacture and distribution of a broad line of
business machines and related supplies. This broad line includes system
applications in the areas of binding, laminating, shredding, and security
identification. These products are manufactured in nineteen plants in the
United States and abroad. GBC products are sold through a network of direct
sales and telemarketing personnel, dealers, distributors and wholesale
stationers. The Company provides maintenance and repairs on the machines it
sells through a trained field service organization and through trained dealers.
The following table illustrates the ratio of revenue contribution of business
machines, supplies and service for the last three fiscal years:
1995 1994 1993
---- ---- ----
Business machines 24% 25% 24%
Related supplies and service 76% 75% 76%
Includes ring metal business
On December 21, 1995, the Company acquired Pro-Tech Engineering Co., Inc.,
headquartered in Madison, Wisconsin. Pro-Tech manufactures equipment and
distributes supplies used in the digital printing market. The consideration
paid for Pro-Tech was $7.3 million. Compensation will also be paid contingent
upon the achievement of specified levels of earnings through December 31, 1998.
On August 26, 1994, the Company completed its acquisition of the Sickinger
Company located in Auburn Hills, Michigan. Sickinger manufactures paper
punching machines as well as wire and plastic coil binding supplies. The
total consideration paid for the Sickinger Company was $4.9 million.
On July 29, 1993, the Company finalized the purchase of the business and certain
assets of Bates Manufacturing Company, located in Hackettstown, New Jersey.
Bates manufactures and distributes staplers, numbering systems, card files and
other office products through a large network of dealers and wholesalers. The
total consideration paid for the Bates Manufacturing Company was $5.0 million.
Additional information related to the Company's acquisitions is included in Note
13 to the Consolidated Financial Statements of the Company's 1995 Annual Report
to Stockholders.
Customers
The Company's machines and supplies are sold worldwide to users in the business,
education, graphic arts, health, recreation and government markets. With this
broad base of customers, GBC is not dependent upon any single customer for
a significant portion of its business.
Competition
Although there is active competition with respect to each GBC product, GBC is
not aware of any major company competing in all its products. The Company
believes that it has a leadership position for its binding and laminating
products and a strong market share for most of its other products. To maintain
its competitive position, GBC relies primarily on product quality, marketing
strength and customer service.
Backlog and Seasonal Variations
Backlog of orders is not considered a material factor in GBC's business, nor is
the business seasonal in any material respect.
1
Materials
Materials and parts used in the manufacture of GBC's products are available from
a number of sources. In general, the Company has not experienced any shortages
in materials or parts. During 1994 a worldwide shortage of polyester developed
and continued through 1995. Polyester is used in the manufacture of
the Company's film products. Due to the volume of the Company's purchases of
polyester and its strong relationships with suppliers; the Company believes that
it will continue to be able to purchase adequate volumes of polyester to meet
demand.
Patents and Trademarks
Many of the equipment and supply products manufactured and/or sold by the
Company and certain application methods related to such products are covered by
United States and foreign patents. The Company's U.S. patent on the basic hot-
knife plastic VeloBind strip binding element expires in the year 2000 and the
proprietary nature of that product is important to the Company's ability to
effectively compete in its markets. Although the other patents owned by the
Company are also highly important to its business, the Company does not consider
its business dependent on any of those patents.
The Company has registered the GBC, VeloBind and Bates trademarks in the United
States and numerous foreign countries and considers those trademarks material to
its business. The Company has also registered numerous other trademarks related
to specific products in the United States and many foreign countries.
Environment
Although the Company has no known operations which have a significant impact
upon the environment, GBC continuously takes active steps to ensure that all of
its operations comply with local, state and federal regulations relating
to environmental protection and occupational safety hazards. These steps have
not had a material effect upon operating results or the Company's competitive
position.
Research and Development
Research and development expenditures amounted to approximately $6,218,000 in
1995, $5,069,000 in 1994, and $4,949,000 in 1993. All research is Company
funded.
Employees
As of December 31, 1995, GBC employed 3,197 people worldwide. Employee
relations are considered to be excellent.
Geographical Information
Financial information by geographical area is incorporated herein by reference
from pages 29-30 of the Registrant's Annual Report to Stockholders for the
fiscal year ended December 31, 1995, Note 11.
2
Item 2. Properties
In addition to the manufacturing locations listed below, the Company operates
sales and service offices throughout the world, five regional warehouses in the
United States, and a 60,000 sq. ft. world headquarters building in
Northbrook, Illinois. Management believes that the Company's manufacturing
facilities are suitable and adequate for its operations and are maintained in a
good state of repair.
Major manufacturing is conducted at the following plant locations:
Approximate Area
in Thousand
Sq. Ft. Including
Location Office Space Ownership
-------- ----------------- ---------
Northbrook, Illinois...................... 190 GBC owned
Addison, Illinois......................... 91 GBC owned
Sparks, Nevada............................ 82 Leased
Basingstoke, England...................... 80 Leased
St. Louis, Missouri....................... 73 GBC owned
Lincolnshire, Illinois.................... 64 Leased
Nuevo Laredo, Mexico...................... 49 Leased
Phoenix, Arizona.......................... 40 GBC owned
Amelia, Virginia.......................... 39 GBC owned
Kerkrade, Holland......................... 37 GBC owned
Auburn Hills, Michigan.................... 35 Leased
Madison, Wisconsin........................ 26 Leased
San Jose, Costa Rica...................... 23 Leased
Tornaco, Italy............................ 22 GBC owned
Noda, Japan............................... 18 GBC owned
Don Mills, Ontario, Canada................ 13 Leased
Castle Hill, Australia.................... 12 GBC owned
Hoofddorp, Holland........................ 11 GBC owned
Mexico City, Mexico....................... 10 GBC owned
Item 3. Legal Proceedings
The Company is not a party to any material pending legal proceedings, and
neither the Company nor any of its officers or directors are aware of any
material contemplated proceeding.
Item 4. Submission of Matters to a Vote of Security Holders During the Fourth
Quarter of 1995
None.
3
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Incorporated herein by reference from page 19 of the Registrant's Annual Report
to Stockholders for the year ended December 31, 1995, section entitled "Market
for Registrant's Common Stock and Related Stockholder Matters" and Note 12 from
page 31 of the notes to consolidated financial statements entitled "Quarterly
Financial Data".
Item 6. Selected Financial Data
Incorporated herein by reference from page 12 of the Registrant's Annual Report
to Stockholders for the fiscal year ended December 31, 1995, section entitled
"Ten Year Summary - Financial Highlights".
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Incorporated herein by reference from pages 13 through 16 of the Registrant's
Annual Report to Stockholders for the fiscal year ended December 31, 1995,
section entitled "Management's Discussion and Analysis of Financial Condition
and Results of Operations".
Item 8. Financial Statements and Supplementary Data
Incorporated herein by reference from pages 16 through 32 of the Registrant's
Annual Report to Stockholders for the fiscal year ended December 31, 1995.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
4
PART III
Item 10. Directors and Executive Officers of the Registrant
Information required under this Item is contained in the Registrant's 1996
Definitive Proxy Statement, which is incorporated herein by reference.
Item 11. Executive Compensation
Information required under this Item is contained in the Registrant's 1996
Definitive Proxy Statement, which is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information required under this Item is contained in the Registrant's 1996
Definitive Proxy Statement, which is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information required under this Item is contained in the Registrant's 1996
Definitive Proxy Statement, which is incorporated herein by reference.
5
PART IV
Item 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
(a) List of Documents Filed as part of this Report
The following consolidated statements, schedule and exhibits of General Binding
Corporation and its subsidiaries are filed as part of this report:
(1) Financial Statements
Location
--------
Report of Independent Public Accountants Annual Report Page 32
Consolidated balance sheets - December 31, 1995
and 1994 Annual Report Page 17
Consolidated statements of income for the years ended
December 31, 1995, 1994 and 1993 Annual Report Page 16
Consolidated statements of stockholders' equity for the
years ended December 31, 1995, 1994 and 1993 Annual Report Page 19
Consolidated statements of cash flows for the years ended
December 31, 1995, 1994 and 1993 Annual Report Page 18
Notes to consolidated financial statements Annual Report Pages 19-32
These consolidated Financial Statements, related Notes, and Report of Independent Public Accountants, appearing in the
Registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1995, pages 16-32, which are filed as
Exhibit 13 to the Form 10-K, are incorporated by reference.
(2) Financial statement schedule
Page Number
-----------
Report of Independent Public Accountants on Schedule 9
II. Valuation and Qualifying Accounts 10
All other financial statements and schedules not listed have been omitted because they are not applicable, not required,
or because the required information is included in the consolidated financial statements or notes thereto.
(3) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
No. 3: Certificate of Incorporation, as amended May 11, 1988. Incorporated by reference
to Exhibit 3 to the Company's Annual Report on Form 10-K for the year ended
December 31, 1993.
No. 4: Consent agreement to provide the Commission upon written request a copy of the
Registrant's long-term debt agreements.
No. 13: Annual Report to Stockholders for the fiscal year ended December 31, 1995
(Pages 12 through 32).
No. 21: Subsidiaries of the Registrant.
No. 22: Definitive proxy statement to be filed with the Securities and Exchange
Commission on or about April 8, 1996.
No. 27: Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the last quarter of the fiscal year ended December 31, 1995.
6
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: /s/ GOVI C. REDDY
--------------------------------------
Govi C. Reddy
President and Chief
Executive Officer
By: /s/ EDWARD J. MCNULTY
--------------------------------------
Edward J. McNulty
Vice President and Chief
Financial Officer
Dated: March 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
/s/ WILLIAM N. LANE III Chairman of the Board March 25, 1996
- ------------------------------- and Director
William N. Lane III
/s/ GOVI C. REDDY President, Chief Executive March 25, 1996
- ------------------------------- Officer and Director
Govi C. Reddy
/s/ ARTHUR C. NIELSEN, JR. Director March 25, 1996
- -------------------------------
Arthur C. Nielsen, Jr.
/s/ THOMAS V. KALEBIC Director March 25, 1996
- -------------------------------
Thomas V. Kalebic
/s/ WARREN R. ROTHWELL Director March 25, 1996
- -------------------------------
Warren R. Rothwell
7
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports in this Form 10-K, into the Company's previously filed Registration
Statement File No. 2-70047. It should be noted that we have not audited any
financial statements of the Company subsequent to December 31, 1995 or performed
any audit procedures subsequent to the date of our report.
Arthur Andersen LLP
Chicago, Illinois,
March 25, 1996.
8
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
We have audited in accordance with generally accepted auditing standards, the
financial statements included in General Binding Corporation's Annual Report to
Stockholders incorporated by reference in this Form 10-K, and have issued our
report thereon dated January 31, 1996. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. Schedule II is the
responsibility of the Company's management and is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not part of
the basic financial statements. This schedule has been subjected to the
auditing procedures applied in the audits of the basic 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 basic financial statements
taken as a whole.
Arthur Andersen LLP
Chicago, Illinois,
January 31, 1996.
9
GENERAL BINDING CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Allowances for Doubtful Accounts and Sales Returns
Changes in the allowances for doubtful accounts and sales returns were as
follows (000 omitted):
1995 1994 1993
---- ---- ----
Balance at beginning of year ................ $ 4,840 $ 4,821 $ 4,504
Additions charged to expense ................ 1,729 1,804 1,478
Deductions - write offs .................... (1,203) (1,643) (1,068)
Other .................................. (180) (142) (93)
------- ------- -------
Balance at end of year ...................... $ 5,186 $ 4,840 $ 4,821
------- ------- -------
Amounts primarily relate to the effects of foreign currency exchange rate
changes and the acquisition of Sickinger in 1994.
10
GENERAL BINDING CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. and
Applicable Section
of Item 601 of
Regulation S-K
- ------------------
3 Certificate of Incorporation, as amended May 11, 1988,
filed as Exhibit 3 to the Company's 1993 Annual Report
on Form 10-K, and incorporated herein by reference.
4 Consent agreement to provide the Commission upon
written request a copy of the Registrant's
long-term debt agreements included herein.
13 Annual Report to Stockholders for the fiscal year ended
December 31, 1995 (Pages 12 through 32) included herein.
21 Subsidiaries of the Registrant included herein.
22 Definitive proxy statement to be filed with the
Securities and Exchange Commission on or about
April 8, 1996, and incorporated herein by
reference.
27 Financial Data Schedule included herein.