NORTHBROOK, Ill.--April 30, 2002--General Binding Corporation today reported results for the first quarter of 2002 reflecting lower sales relative to last year's first quarter, resulting from the continuing weak economy. Despite the challenging sales environment, the Company's ongoing success with its Operational Excellence Program allowed it to maintain its gross profit margin, meet earnings goals, and continue its reduction in debt levels. Quarterly Results Financial results for the first quarter included the following highlights: * Sales in the quarter totaled $172 million, down $19.5 million from the first quarter of 2001, due primarily to continued weakness in the sale of certain writing board products, binding and laminating equipment, and commercial laminating films. * The Company maintained its gross profit margin for the quarter relative to the first quarter of the prior year. * Selling, service and administrative expenses totaled $55.5 million, down $4.6 million from the first quarter of 2001, primarily reflecting lower variable selling expenses and the positive effect of certain cost reduction initiatives, particularly in the Films and Europe Groups. * Interest expense for the quarter was slightly lower than the prior year. * Restructuring and other special charges totaled $4.8 million ($0.28 per share) for the quarter and were primarily related to the previously-announced closures and downsizing of certain of the Company's manufacturing facilities in Illinois and Virginia, along with the sale of a non-strategic Mexican property. The prior year results included a special charge of approximately $2.5 million (or $0.09 per share) related to the retirement of the Company's former President and CEO and the associated transition costs. * Included in the results for the quarter was an income tax adjustment equivalent to a reduction in net income of $1.5 million, or $0.10 per share, related to recently-enacted tax legislation. * A net loss of $(0.37) per share was reported in the quarter, compared to a net loss of $(0.07) per share last year. Excluding special charges and the impact of the tax adjustment, net income for the quarter was $0.01 per share, compared to net income of $0.02 per share reported in the prior year. Included in the results for the prior period was approximately $2.4 million, or $0.08 per share, of goodwill amortization. Excluding special charges and goodwill amortization, net income for the first quarter of 2001 would have been $0.10 per share. * Cash flow, as measured by adjusted EBITDA (earnings before interest, taxes, depreciation, amortization and certain special items), was $17.9 million (10.4% of sales), compared to adjusted EBITDA of $21.0 million (11.0% of sales) for the prior period. * Total debt, net of cash and investments, at the end of the quarter was $351 million, an improvement of $8.0 million from the beginning of the year and $43.7 million from March 31, 2001. The Company's debt position benefited from receipt of a $7.5 million tax refund in March 2002 related to recently-enacted tax legislation. "Our Operational Excellence Program is on track," said Dennis Martin, Chairman of the Board, President and CEO. "Although many of the benefits are not expected to begin to be realized until later this year, we are already starting to see some of the positive effects in our businesses. Our pricing initiatives and certain of our cost reduction measures have already taken hold and have helped us maintain our gross profit margins on a year-over-year basis despite the weaker sales comparison." "In terms of sales," he continued, "we have not seen an upturn yet. On a comparison basis, we are down from last year's first quarter primarily because our businesses did not begin to see the brunt of the economic weakness until the second quarter last year. We have, however, recovered from the softness in last year's fourth quarter to the levels we were trending at during the middle of last year. In addition, we are beginning to see a bit of firming in day-to-day sales patterns that gives us further optimism that we are beyond the downturn we experienced late last year." "We will continue to aggressively implement our Operational Excellence Program, and we still expect to attain meaningful improvements in cash flow as a result. And, when the economy improves, we should be in a stronger position to quickly rebound by leveraging a leaner, more-efficient organization with our leading worldwide market positions and strong customer relationships." Accounting Changes As of January 1, 2002, the Company implemented EITF Issue No. 01-09, which specifies when companies are required to record certain sales incentives, such as certain rebates, discounts and allowances, and how these costs are classified in the income statement. The Company previously classified these costs as selling expenses and now classifies them as a reduction to net sales. The Company's prior period information has been restated for this change, and the impact on the prior year's first quarter was a reduction of net sales and of selling, service and administrative expenses by $18.9 million. There is no impact on operating income as a result of this change. In addition, the Company implemented SFAS No. 142, which eliminates the amortization of goodwill and other indefinite-lived intangible assets for current and future periods. Prior periods are not restated for this change. Consequently, included in the results for the first quarter of 2001 is approximately $2.4 million of goodwill amortization. Furthermore, this standard also subjects goodwill to a fair-value based impairment test. The Company has completed the first step of this test and expects to recognize a pre-tax impairment loss in the range of $80-110 million as previously reported. This charge will be non-cash and have no impact on the Company's operations.