1 United States Securities and Exchange Commission
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1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [ 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 Commission file number: 1-71 ------------------- ------ BORDEN, INC. New Jersey 13-0511250 - ---------------------------------------- ------------------------------------ (State of incorporation) (I.R.S. Employer Identification No.) 180 East Broad St., Columbus, OH 43215 614-225-4000 - ---------------------------------------- ------------------------------------ (Address of principal executive offices) (Registrant's telephone number) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- 8 3/8% Sinking Fund Debentures New York Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE 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 any amendment to this Form 10-K. [x]. Aggregate market value in thousands of the voting stock held by nonaffiliates of the Registrant based upon the average bid and asked prices of such stock on March 21, 1997: $0. Number of shares of common stock, par value $0.01 per share, outstanding as of the close of business on March 21, 1997: 198,974,994 DOCUMENTS INCORPORATED BY REFERENCE Document Incorporated -------- ------------ none none =============================================================================== The Exhibit Index is located herein at sequential pages 77 through 80. 1 2 BORDEN, INC. INTRODUCTION - ------------ The following filing with the Securities and Exchange Commission ("SEC") by Borden, Inc. ("the Company") presents four separate financial statements: Borden, Inc. Consolidated Financial Statements, Borden, Inc. and Affiliates Combined Financial Statements, the Financial Statements of Wise Holdings, Inc. ("Wise Holdings") and the Financial Statements of Borden Foods Holdings Corporation ("Foods Holdings"). The consolidated statements present the Company after the effect of the sales of (i) the Company's former salty snacks business ("Wise") to Wise Holdings and its subsidiaries and (ii) the Company's former domestic and international foods business ("Foods") to Foods Holdings and its subsidiaries, as explained in Notes 1, 4 and 5 to the consolidated and combined financial statements. The Company, Wise Holdings, and Foods Holdings are controlled by BW Holdings, LLC ("BWHLLC"). The consolidated financial statements are those of the Company, which is the SEC Registrant. The Borden, Inc. and Affiliates ("the Combined Companies") combined financial statements are included herein to present the Company on a combined historical basis, including the financial position, results of operations and cash flows of Wise and Foods. The Combined Companies financial statements are included because management of the Company will continue to control significant financial and managerial decisions with respect to Wise Holdings and Foods Holdings. The Combined Companies financial statements do not reflect push-down accounting and therefore present financial information on a basis consistent with that on which credit was originally extended to the Company. Also, in accordance with rule 3-10 of Regulation S-X, the financial statements of Wise Holdings and Foods Holdings are included in Part IV of this Registration Statement on Form 10-K because Wise Holdings and Foods Holdings are guarantors of the Company's credit facility and all of the Company's outstanding publicly held debt. 2 3 BORDEN, INC. INDEX PART I Item 1 - Business................................................................................. 4 Item 2 - Properties .............................................................................. 10 Item 3 - Legal Proceedings ....................................................................... 10 Item 4 - Submission of Matters to a Vote of Security Holders ..................................... 13 PART II Item 5 - Market for the Registrant's Common Stock and Related Stockholder Matters ................ 13 Item 6 - Selected Financial Data ................................................................. 14 Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations ........................................................ 15 Item 8 - Financial Statements and Supplementary Data ............................................. 25 BORDEN, INC. CONSOLIDATED ("THE REGISTRANT") AND BORDEN, INC. AND AFFILIATES COMBINED FINANCIAL STATEMENTS Consolidated Statements of Operations, years ended December 31, 1996, 1995 and 1994 ................................................................. 25 Consolidated Balance Sheets, December 31, 1996 and 1995 ........................... 27 Consolidated Statements of Cash Flows, years ended December 31, 1996, 1995 and 1994 ................................................................. 29 Consolidated Statements of Shareholders' Equity, years ended December 31, 1996, 1995 and 1994 ................................................................. 31 Combined Statements of Operations, years ended December 31, 1996, 1995 and 1994 ................................................................. 33 Combined Balance Sheets, December 31, 1996 and 1995 ............................... 34 Combined Statements of Cash Flows, years ended December 31, 1996, 1995 and 1994 ................................................................. 36 Combined Statements of Shareholders' Equity, years ended December 31, 1996, 1995 and 1994 ................................................................. 38 Notes to Consolidated and Combined Financial Statements ........................... 40 Independent Auditors' Reports...................................................... 63 Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ......................................................... 67 PART III Item 10 - Directors and Executive Officers of the Registrant ...................................... 67 Item 11 - Executive Compensation .................................................................. 70 Item 12 - Security Ownership of Certain Beneficial Owners and Management .......................... 75 Item 13 - Certain Relationships and Related Transactions .......................................... 76 PART IV Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8-K ........................ 76 3 4 PART I Item 1. Business - ------ -------- The Company was incorporated on April 24, 1899. The Company is engaged primarily in manufacturing, processing, purchasing and distributing a broad range of products through the following segments: dairy, chemical, decorative products and other. The Combined Companies include the Wise and Foods businesses. Corporate departments provide certain governance functions for all business units. The Company's executive and administrative offices are located in Columbus, Ohio. Production facilities are located throughout the United States and in many foreign countries. In September 1994 the Company entered into a merger agreement providing for the acquisition of all of the Company's outstanding common stock by affiliates of Kohlberg Kravis Roberts & Co. ("KKR") in exchange for shares of RJR Nabisco Holdings Corp. ("RJR Holdings") common stock owned by affiliates of KKR. The acquisition was completed on March 14, 1995, following approval of the merger of an affiliate of KKR with and into the Company by shareholders of the Company at a special meeting held on that date. The Company is currently controlled by affiliates of KKR. In 1996, the Company's management made a definitive decision to sell its Wise business. On October 1, 1996, the Company sold its Foods business to Foods Holdings and classified this segment as a discontinued operation in the Company's financial statements in accordance with generally accepted accounting principles. Management of the Company will continue to exercise significant financial and managerial control with respect to Wise Holdings and Foods Holdings. In addition, Wise Holdings and Foods Holdings have guaranteed the Company's obligations under its credit facility and its outstanding publicly held debt securities. Also in 1995, the Company began the process of redesigning its operating structure. As a result of this redesign, management decided to divest certain businesses that did not fit into the Company's long-term strategic plan. Businesses included in the classification, "businesses held for sale," for the segment data were the packaging and plastic films business, certain other non-food operations and an equity interest in a Spanish food company (see Note to the Consolidated and Combined Financial Statements). During the first quarter of 1996 the Company sold substantially all of its interest in the Spanish food company. On October 11, 1996, the Company sold its packaging and