ITEM 1 - BUSINESS
General
American Business Products, Inc. ("American Business Products") was incorporated under the laws of Delaware in December 1967 to acquire the stock of Curtis 1000 Inc., a producer of envelopes and forms which has operated since 1882. Hereinafter, American Business Products and its subsidiaries are collectively referred to as the "Company." In April 1986, American Business Products was reincorporated under the laws of Georgia. The Company is in the business of manufacturing and distributing specialty custom printed information products and services. The Company is one of the nation's leading suppliers of printed business supplies, principally envelope products, custom labels and custom business forms. Additionally, the Company manufactures and distributes books for the publishing industry and also engages in specialty extrusion coating and laminating of papers, films, and nonwoven fabrics for packaging and other products.
Sale of Subsidiary Assets
Effective on December 31, 1996, Vanier Graphics Corporation ("Vanier"), a wholly owned subsidiary of American Business Products, sold substantially all its assets to The Reynolds and Reynolds Company (the "Vanier Sale"). Vanier was a manufacturer of business forms and a provider of forms management and work-flow analysis.
Restructuring Program
During 1996 the Company reconfigured much of its business supplies production by closing 13 generally smaller plants in various locations and transferring their production to a smaller number of larger, more efficient facilities. This action is expected to reduce operating costs and result in higher equipment utilization, improved employee productivity and other scale economies.
Business Segments
The Company's product line is composed of three business segments: business supplies printing, book manufacturing, and specialty extrusion coating and laminating.
Business supplies printing consists principally of the manufacture of a wide variety of specialty mailers, envelopes, labels and lightweight packaging, and other related products and services including digital imaging or on-demand printing of various documents and materials for businesses. The manufacture and distribution of customized specialty labels is a rapidly growing part of this segment. The Company produces a complete line of standard and specialized types and sizes of envelopes. Prior to the Vanier Sale the Company also manufactured business forms. Business supplies printing accounted for 74.1% of the Company's sales in 1996, 75.2% in 1995 and 76.2% in 1994.
Book manufacturing consists of the printing and binding of both hard cover and soft cover books for the publishing industry. In addition, the Company provides storage and order fulfillment services by shipping orders to publishers' customers from two large distribution centers. This business segment accounted for 8.6% of the Company's sales in 1996 9.2% in 1995 and 8.8% in 1994.
Specialty extrusion coating and laminating consist of applying plastic coatings in varying degrees of thickness to rolls of paper, film or fabric. The Company also prints and metalizes certain of these products for customers. The materials produced by this segment are used primarily for packaging consumer products such as individual servings of sugar, salt and pepper, sugar substitutes, and candy and ice cream bars, as well as medical and pharmaceutical products. These materials also are used for composite can liners and release liner papers for pressure sensitive products such as labels and postage stamps. This business segment accounted for 17.3% of the Company's sales in 1996, 15.6% in 1995, and 15.0% in 1994.
Financial information regarding the Company's three business segments is presented in the Notes to Consolidated Financial Statements under the heading "Business Segment Information" of the Company's 1996 Annual Report, which information is incorporated herein by reference. Portions of the 1996 Annual Report are filed as Exhibit 13 to this Annual Report on Form 10-K.
Production
Substantially all of the Company's products are manufactured by wholly owned subsidiaries of the Company in 13 manufacturing facilities located throughout the United States. (See "Item 2
ITEM 2 - PROPERTIES
The Company's executive offices are located in approximately 15,200 square feet of space at 2100 RiverEdge Parkway, Suite 1200, Atlanta, Georgia 30328. The offices are leased from an unaffiliated party under a lease expiring on January 26, 2003.
In addition to the executive offices, the Company operates 13 production facilities in the United States encompassing approximately 1,066,800 square feet. Twelve of these facilities are owned and one is leased.
The Company's business supplies printing business leases four administrative/sales offices and three warehouses. The Company's book manufacturing business leases four administrative/sales offices and four warehouses. All of the leased facilities are located in the United States.
The Company and a European joint venture partner operate five production facilities. Two of the facilities in Germany and one in Poland are owned and one each in England and Luxembourg are leased.
Certain properties owned by the Company are held subject to mortgages. See the information set forth under the heading "Long Term Debt" in the Notes to Consolidated Financial Statements in the Company's 1996 Annual Report, which information is incorporated herein by reference.
As of March 1, 1997 the Company owned ten properties which had been rendered redundant to operating needs due to the Vanier Sale, the 1996 plant consolidation program and otherwise. The Company intends to sell all of these properties. All operating properties and equipment are believed to be in good condition, adequately utilized and suitable for the purposes for which they are being used.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
As of March 14, 1997, there were no material pending legal proceedings, other than routine litigation incidental to the business, to which the Company was a party or of which any of its properties were the subject, and none are expected by management to materially affect the Company's financial position and results of operations.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the shareholders of the Company during the fourth quarter of 1996.
ITEM 4 (A) - EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information as of March 14, 1997 regarding the executive officers of the Company:
HENRY CURTIS VII, 48, has been Vice President of Administration of the Company since April, 1995. He previously served as Vice President of Administration and Sales Support of Curtis 1000 Inc., a subsidiary of the Company from 1992 to March, 1995. He previously served as Director of Administration and Sales Support of Curtis 1000 Inc. from 1990 to 1992. He served as Director of Employee Benefits of the Company from 1983 to 1990 and held various positions with the Company and its wholly-owned subsidiaries, Curtis 1000 Inc. and Vanier Graphics Corporation since 1971. He has been a director of the Company since 1989 and has served with the Company or its subsidiaries for over 26 years.
MICHAEL C. DENIKEN, 49, has served as Treasurer and Chief Accounting Officer of the Company from October, 1995. He has served with the Company for over 18 years.
DAWN M. GRAY, 52, has served as Secretary of the Company since July, 1989. She served as Assistant Secretary from October, 1976 to June, 1989. She has served with the Company or Curtis 1000 Inc., a wholly-owned subsidiary of the Company, for over 30 years.
ROBERT W. GUNDECK, 53, has served as the Chief Executive Officer of the Company since January, 1996 and President of the Company since April, 1994. He previously served as Chief Operating Officer of the Company from January, 1993 until December, 1995. He served as Executive Vice President of the Company from 1993 until April, 1994 and as Vice President - Corporate Development of the Company from 1990 until 1993. From 1988 until 1990 Mr. Gundeck was Director of Acquisitions and Corporate Development of the Company. He has been a director of the Company since 1993, and he has served with the Company for over 9 years.
RICHARD A. LEFEBER, 61, has served as Vice President - Communications and Investor Relations from April, 1995. He previously served as Vice President-Administration of the Company from January, 1980 to April, 1995. He served as Secretary of the Company from August, 1982 to June, 1989. He has served with the Company or Curtis 1000 Inc., a wholly-owned subsidiary of the Company, for over 39 years.
RICHARD G. SMITH, 48, has served as Vice President - Finance and Chief Financial Officer of the Company since January, 1996. He joined the Company as Vice President - Corporate Development in September, 1995. From August, 1994 to August, 1995, Mr. Smith was Senior Vice President of Brambles USA, Inc., the major U. S. subsidiary of Brambles Industries Limited, an Australian based specialized industrial services provider with annual revenues of approximately $2 billion. From September, 1992 to July, 1994, he was Vice President and Chief Financial Officer of Brambles Acquisition, Inc., the largest subsidiary of Brambles USA, Inc. He was Vice President and Chief Financial Officer of Environmental Systems Company, a New York Stock Exchange-listed hazardous waste company from June, 1991 to August, 1992. Environmental Systems Company was acquired by Brambles in March, 1992. Prior to 1991 he served as Vice President of Corporate Development for Laidlaw, Inc.
The Board of Directors elects officers annually in April for one year terms or until their successors are elected and qualified. Officers are subject to removal by the Board of Directors at any time.
PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information relating to the market for, holders of and dividends paid on the Company's Common Stock is set forth under the captions "Unaudited Quarterly Financial Data," "Stock Exchange Listing," and "Shareholders of Record," in the Company's 1996 Annual Report, which information is incorporated herein by reference.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA
Selected consolidated financial data for the Company for each year of the five year period ended December 31, 1996 is set forth under the caption "Five Year Financial Review" in the Company's 1996 Annual Report, which information is incorporated herein by reference.
ITEM 7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A discussion of the Company's financial condition and results of operations at and for the dates and periods covered by the consolidated financial statements set forth in the Company's 1996 Annual Report is set forth under the caption "Management's Discussion and Analysis" in the Company's 1996 Annual Report. Such discussion is incorporated herein by reference.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements of the Company and its subsidiaries, together with the Independent Auditors' Report, which are set forth in the Company's 1996 Annual Report, are incorporated herein by reference:
Consolidated Statements of Income for each of the three years in the period ended December 31, 1996
Consolidated Balance Sheets as of December 31, 1996 and
Consolidated Statements of Stockholders Equity for each of the three years in the period ended December 31, 1996
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1996
Notes to Consolidated Financial Statements
The supplementary consolidated financial information regarding the Company which is required by Item 302 of Regulation S-K is set forth under the caption "Unaudited Quarterly Financial Data" in the Company's 1996 Annual Report. Such information is incorporated herein by reference.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There has been no change of or disagreements with independent accountants by the Company in the past two fiscal years or subsequently.
PART III
ITEM 10
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the Company is set forth in "Proposal 1 - Election of Directors" under the captions "Nominees," "Information Regarding Nominees and Directors" and "Meetings and Committees of the Board of Directors" in the Company's definitive Proxy Statement for its 1997 Annual Meeting of Shareholders to be held on April 23, 1997 (the "Proxy Statement"). Such information is incorporated herein by reference. Pursuant to Instruction 3 of Item 401(b) of Regulation S-K and General Instruction G(3) of Form 10-K, information relating to the executive officers of the Company is set forth in Part I, Item 4(A) of this Report under the caption "Executive Officers of the Registrant." Information regarding compliance by directors and executive officers of the Company and owners of more than ten percent of the Company's Common Stock with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended, is set forth in the Proxy Statement under the caption "Section 16(a) of the Securities Exchange Act of 1934 Beneficial Ownership Reporting." Such information is incorporated herein by reference.
ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION
Information relating to compensation of the executive officers and directors of the Company is set forth in "Proposal 1 - Election of Directors" under the caption "Director Compensation" and in "Executive Compensation" in the Proxy Statement. Such information is incorporated herein by reference.
ITEM 12
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding ownership of the Company's $2.00 par value Common Stock by certain persons is set forth in "Voting" under the caption "Principal Shareholders" and in "Proposal 1 - Election of Directors" under the caption "Information Regarding Nominees and Directors" and under the caption "Executive Compensation" in the Proxy Statement. Such information is incorporated herein by reference.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding relationships or transactions between the Company and affiliates of the Company is set forth under the caption "Executive Compensation - - Certain Relationships and Related Transactions" in the Proxy Statement referred to in Item 10 above. Such information is incorporated herein by reference.
PART IV
ITEM 14
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this Report:
1. Financial Statements
The Consolidated Financial Statements and the Independent Auditors' Report thereon which are required to be filed as part of this Report are included in the Company's 1996 Annual Report and are set forth in and incorporated by reference in Part II, Item 8 hereof. These Consolidated Financial Statements are as follows:
Consolidated Statements of Income for each of the three years in the period ended December 31, 1996
Consolidated Balance Sheets as of December 31, 1996 and 1995
Consolidated Statements of Stockholder's Equity for each of the three years in the period ended December 31, 1996
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1996
Notes to Consolidated Financial Statements
2. Financial Statement Schedule
The financial statement schedule filed as part of this Report pursuant to Article 12 of Regulation S-X and the Independent Auditors' Report in connection therewith are contained in the Index of Financial Statement Schedule on page S-1 of this Report. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission have been omitted because such schedules are not required under the related instructions or are inapplicable or because the information required is included in the Consolidated Financial Statements or notes thereto.
3. Exhibits
The exhibits required to be filed as part of this Report are set forth in the Index of Exhibits on page E-1 of this Report.
(b) Reports on Form 8-K:
No current reports on Form 8-K were filed by the Registrant during the last quarter of the period covered by this report.
(c) The exhibits required to be filed as part of this Report are set forth in the Index of Exhibits on page E-1 of this report
(d) The financial statement schedule required to be filed as part of this Report is set forth in the Index of Financial Statement Schedule on page S-1 of this Report.
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.
AMERICAN BUSINESS PRODUCTS, INC. (Registrant)
Date: March 14, 1997 BY:/S/ Robert W. Gundeck ---------------------------------- Robert W. Gundeck Chief Executive Officer, President and Director
Date: March 14, 1997 /S/ Richard G. Smith ---------------------------------- Richard G. Smith Vice President-Finance and Chief Financial Officer
Date: March 14, 1997 /S/ Michael C. Deniken ---------------------------------- Michael C. Deniken Treasurer and Chief Accounting Officer
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 date indicated.
Date: March 14, 1997 */S/ F. Duane Ackerman ----------------------------- F. Duane Ackerman, Director
Date: March 14, 1997 */S/ W. J. Biggers ------------------------------ W. J. Biggers, Director
Date: March 14, 1997 */S/ Thomas R. Carmody ----------------------------- Thomas R. Carmody, Director & Chairman of the Board
Date: March 14, 1997 */S/ Henry Curtis VII ----------------------------- Henry Curtis VII, Director
Date: March 14, 1997 */S/ Hollis L. Harris ----------------------------- Hollis L. Harris, Director
Date: March 14, 1997 */S/ W. Stell Huie ----------------------------- W. Stell Huie, Director
Date: March 14, 1997 */S/ Thomas F. Keller, ------------------------------- Thomas F. Keller, Director
Date: March 14, 1997 */S/ Rex A. McClelland ------------------------------- Rex A. McClelland, Director
Date: March 14, 1997 */S/ Daniel W. McGlaughlin ------------------------------- Daniel W. McGlaughlin, Director
Date: March 14, 1997 */S/ C. Douglas Miller ------------------------------- C. Douglas Miller, Director
Date: March 14, 1997 */S/ G. Harold Northrop ------------------------------- G. Harold Northrop, Director
* By:/S/ Dawn M. Gray ----------------- Dawn M. Gray, Attorney-in-Fact
AMERICAN BUSINESS PRODUCTS, INC. INDEX OF EXHIBITS
Where an exhibit is filed by incorporation by reference to a previously filed registration statement or report, such registration statement or report is identified in parentheses.
E-1
E-2
AMERICAN BUSINESS PRODUCTS, INC.
INDEX OF FINANCIAL STATEMENT SCHEDULE
S-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of American Business Products, Inc.:
We have audited the consolidated financial statements of American Business Products, Inc. and subsidiaries (the "Company") as of December 31, 1996 and 1995, and for each of the three years in the period ended December 31, 1996, and have issued our report thereon dated February 14, 1997; such financial statements and report are included in your 1996 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of American Business Products, Inc. and subsidiaries listed in Item 14 and on page S-1. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
/S/ DELOITTE & TOUCHE LLP - -------------------------- DELOITTE & TOUCHE LLP Atlanta, Georgia February 14, 1997
S-2
SCHEDULE II
AMERICAN BUSINESS PRODUCTS, INC. AND SUBSIDIARIES VALUATION RESERVES (in thousands)
(1) Sale of Vanier Graphics Corporation Assets on December 31, 1996. (2) Deductions represent uncollectible accounts charged off, less recoveries.
S-3