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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, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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 60062
NORTHBROOK, ILLINOIS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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
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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
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As of February 28, 1997, 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 $170,707,000. (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 28, 1997
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Common Stock, $.125 par value 13,368,669
Class B Common Stock, $.125 par value 2,398,275
DOCUMENTS INCORPORATED BY REFERENCE WHERE INCORPORATED
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Annual Report to Stockholders for the fiscal year
ended December 31, 1996 Parts II and IV
Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held May 6, 1997. Parts III and IV
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GENERAL BINDING CORPORATION AND SUBSIDIARIES
FORM 10-K-FISCAL YEAR ENDED DECEMBER 31, 1996
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.*
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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 17
6 Selected Financial Data 4 10
7 Management's Discussion and Analysis of Financial Condition
and Results of Operations 4 11-13
8 Financial Statements and Supplementary Data 4 14-32
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, 1996 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 6, 1997 to be filed
within 120 days after the end of the Registrant's fiscal year.
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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 seventeen 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:
1996 1995 1994
----- ---- ----
Business machines......................... 29% 24% 25%
Related supplies and service *............ 71% 76% 75%
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* Includes ring metal business
The Company has made significant acquisitions during the time period covered by
this Filing. For additional information, see Notes 13 and 15 to the
Consolidated Financial Statements of the Company's 1996 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.
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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 early 1996. 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
was able to purchase adequate volumes of polyester to meet demand during the
shortage.
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
important trademarks related to specific products in the United States and many
foreign countries, however the Company does not consider its business dependent
on any of those trademarks.
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 $7,249,000
in 1996, $6,218,000 in 1995 and $5,069,000 in 1994. All research is Company
funded.
Employees
As of December 31, 1996, GBC employed 3,543 people worldwide. Employee
relations are considered to be excellent.
Geographical Information
Financial information by geographical area is incorporated herein by
reference from page 28-29 of the Registrant's Annual Report to Stockholders for
the fiscal year ended December 31, 1996, Note 11.
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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
Hagerstown, Maryland 33 GBC owned
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
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 1996
None.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Incorporated herein by reference from page 17 of the Registrant's Annual
Report to Stockholders for the year ended December 31, 1996, section entitled
"Market for Registrant's Common Stock and Related Stockholder Matters" and Note
12 from page 30 of the notes to consolidated financial statements entitled
"Quarterly Financial Data".
ITEM 6. SELECTED FINANCIAL DATA
Incorporated herein by reference from page 10 of the Registrant's Annual
Report to Stockholders for the fiscal year ended December 31, 1996, 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 11 through 13 of the
Registrant's Annual Report to Stockholders for the fiscal year ended December
31, 1996, 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 14 through 32 of the
Registrant's Annual Report to Stockholders for the fiscal year ended December
31, 1996.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required under this Item is contained in the Registrant's
1997 Definitive Proxy Statement, which is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information required under this Item is contained in the Registrant's
1997 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
1997 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
1997 Definitive Proxy Statement, which is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) List of Documents Filed as part of this Report
The following consolidated statements, schedules 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, 1996
and 1995.......................................... Annual Report Page 15
Consolidated statements of income for the years
ended December 31, 1996, 1995, and 1994........... Annual Report Page 14
Consolidated statements of stockholders' equity
for the years ended December 31, 1996, 1995,
and 1994.......................................... Annual Report Page 17
Consolidated statement of cash flows for the
years ended December 31, 1996, 1995, 1994......... Annual Report Page 16
Notes to consolidated financial statements........ Annual Report Pages 18-32
* 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, 1996, pages 14-32, which are
filed as Exhibit 13 to the Form 10-K, are incorporated by reference.
(2) Financial statement schedule
PAGE NUMBER
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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, 1996 (Pages 10 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 3,
1997.
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, 1996.
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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 26, 1997
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 26, 1997
------------------------------- and Director
William N. Lane III
/s/ GOVI C. REDDY President, Chief Executive March 26, 1997
------------------------------- Officer and Director
Govi C. Reddy
/s/ ARTHUR C. NIELSEN, JR.
------------------------------- Director March 26, 1997
Arthur C. Nielsen, Jr.
/s/ THOMAS V. KALEBIC Director March 26, 1997
-------------------------------
Thomas V. Kalebic
/s/ WARREN R. ROTHWELL Director March 26, 1997
--------------------------------
Warren R. Rothwell
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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, 1996 or performed any audit procedures subsequent to the date of our
report.
Arthur Andersen LLP
Chicago, Illinois,
March 26, 1997.
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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, 1997. 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, 1997.
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GENERAL BINDING CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS OF DOLLARS)
ALLOWANCES FOR DOUBTFUL ACCOUNTS AND SALES RETURNS
Changes in the allowances for doubtful accounts and sales returns were as
follows:
1996 1995 1994
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Balance at beginning of year $ 5,186 $ 4,840 $ 4,821
Additions charged to expense 3,118 1,729 1,804
Deductions - write offs. (1,788) (1,203) (1,643)
Other * (92) (180) (142)
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Balance at end of year $ 6,424 $ 5,186 $ 4,840
======= ======= =======
* Amounts primarily relate to the effects of foreign currency exchange
rate changes as well as the acquisition of Sickinger in 1994 and ProTech
in 1996.
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GENERAL BINDING CORPORATION AND SUBSIDIARIES
INDEX TO EXHIBITS
Exhibit No. and
Applicable Section
of Item 601 of
Regulation S-K
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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, 1996 (Pages 10 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 3, 1997, and incorporated herein by reference.
27 Financial Data Schedule included herein.