---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2004

Commission File Number 0-2604GENERAL BINDING CORPORATION(Exact name of registrant as specified in its
charter)36-0887470(I.R.S. employer identification No.)

Delaware(State or other jurisdiction of incorporation or
organization)One GBC Plaza,
Northbrook, Illinois 60062(Address of principal executive offices, including zip code)

(847) 272-3700(Registrant's telephone number, including area
code)

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 XNo ____

Indicate by checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes XNo ____



Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the close of the latest practicable
date.

|                                       | Outstanding at
|-------------------------------------- | --------------
|Class                                  | July 30, 2004 
|Common Stock, $0.125 par value         | 13,793,161    
|Class B Common Stock, $0.125 par value | 2,398,275     

---

GENERAL BINDING CORPORATION AND SUBSIDIARIESFORM
10-QFor the Quarter Ended June 30, 2004Table of Contents

|PART I  | Financial Information                                                                                       |  | Page
|------- | ----------------------------------------------------------------------------------------------------------- |  | ----
|Item 1. | Financial Statements                                                                                        |  |     
|        | Condensed Consolidated Balance Sheets as of June 30,
      2004 and December 31, 2003                       |  | 2   
|        | Condensed Consolidated Statements of Income for the three and six
      months ended June 30, 2004 and 2003 |  | 3   
|        | Condensed Consolidated Statements of Cash Flows for the six months
      ended June 30, 2004 and 2003       |  | 4   
|        | Notes to Condensed Consolidated Financial Statements                                                        |  | 5   
|Item 2. | Management's Discussion and Analysis of Financial Condition and Results
      of Operations                 |  | 21  
|Item 3. | Quantitative and Qualitative Disclosures About Market Risk                                                  |  | 28  
|Item 4. | Controls and Procedures                                                                                     |  | 28  
|PART II | Other Information                                                                                           |  |     
|Item 4. | Submission of Matters to a Vote of Security holders                                                         |  | 29  
|Item 6. | Exhibits and Reports on Form 8-K                                                                            |  | 30  
|        | Signatures                                                                                                  |  | 31  
|        |                                                                                                             |  |     

1

GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(000 omitted)

|                                                                                                                      |                                                    |                                                   |                         | June 30,                |                         | December 31,
|--------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------------- | ----------------------- | ----------------------- | ----------------------- | ------------
|                                                                                                                      |                                                    |                                                   |                         | 2004                    |                         | 2003        
|                                                                                                                      |                                                    |                                                   |                         | (Unaudited)             |                         |             
|ASSETS                                                                                                                |                                                    |                                                   |                         |                         |                        
|Current assets:                                                                                                       |                                                    |                                                   |                         |                        
|                                                                                                                      | Cash and cash equivalents                          |                                                   | $ 3,948                 |                         | $ 9,568                
|                                                                                                                      | Receivables, less allowances for doubtful accounts |                                                   |                         |                         |                        
|                                                                                                                      |                                                    | and sales returns: 2004 - $16,232; 2003 - $16,614 |                         | 130,359                 |                         | 128,391     
|                                                                                                                      | Inventories:                                       |                                                   |                         |                         |                        
|                                                                                                                      |                                                    | Raw materials                                     |                         | 19,839                  |                         | 19,239      
|                                                                                                                      |                                                    | Work in process                                   |                         | 7,679                   |                         | 6,445       
|                                                                                                                      |                                                    | Finished goods                                    |                         | 77,211                  |                         | 60,556      
|                                                                                                                      |                                                    | Total inventories                                 |                         | 104,729                 |                         | 86,240      
|                                                                                                                      | Deferred tax assets                                |                                                   | 22,009                  |                         | 22,002                 
|                                                                                                                      | Other                                              |                                                   |                         | 11,831                  |                         | 11,912      
|                                                                                                                      |                                                    | Total current assets                              |                         | 272,876                 |                         | 258,113     
|Total capital assets at cost                                                                                          |                                                    | 276,184                                           |                         | 275,860                
|Less - accumulated depreciation                                                                                       |                                                    | (188,320)                                         |                         | (180,874)              
|                                                                                                                      | Net capital assets                                 |                                                   | 87,864                  |                         | 94,986                 
|Goodwill and other intangible assets, net of accumulated
      amortization                                           |                                                    | 149,951                                           |                         | 150,775                
|Other                                                                                                                 |                                                    |                                                   | 27,111                  |                         | 25,476                 
|                                                                                                                      | Total assets                                       |                                                   | $ 537,802
      ======= |                         | $ 529,350
      =======
|                                                                                                                      |                                                    |                                                   |                         |                         |                         |             
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                  |                                                    |                                                   |                         |                        
|Current liabilities:                                                                                                  |                                                    |                                                   |                         |                        
|                                                                                                                      | Accounts payable                                   |                                                   | $ 51,722                |                         | $ 51,253               
|                                                                                                                      | Accrued liabilities                                |                                                   | 74,933                  |                         | 85,119                 
|                                                                                                                      | Notes payable                                      |                                                   | 6,703                   |                         | 5,819                  
|                                                                                                                      | Current maturities of long-term debt               |                                                   | 15,178                  |                         | 14,176                 
|                                                                                                                      |                                                    | Total current liabilities                         |                         | 148,536                 |                         | 156,367     
|Long-term debt, less current maturities                                                                               |                                                    | 295,671                                           |                         | 282,019                
|Other long-term liabilities                                                                                           |                                                    | 36,517                                            |                         | 36,755                 
|Stockholders' equity:                                                                                                 |                                                    |                                                   |                         |                        
|                                                                                                                      | Common stock                                       |                                                   | 1,962                   |                         | 1,962                  
|                                                                                                                      | Class B common stock                               |                                                   | 300                     |                         | 300                    
|                                                                                                                      | Additional paid-in capital                         |                                                   | 25,727                  |                         | 26,727                 
|                                                                                                                      | Retained earnings                                  |                                                   | 66,445                  |                         | 63,409                 
|                                                                                                                      | Treasury stock                                     |                                                   | (21,826)                |                         | (23,588)               
|                                                                                                                      | Accumulated other comprehensive income             |                                                   | (15,530)                |                         | (14,601)               
|                                                                                                                      |                                                    | Total stockholders' equity                        |                         | 57,078                  |                         | 54,209      
|Total liabilities and stockholders' equity                                                                            |                                                    | $ 537,802
      =======                           |                         | $ 529,350
      =======
|The accompanying notes to condensed consolidated financial statements are
      an integral part of these statements.

2

GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(000 omitted, except per share data)

Three months ended
    Six months endedJune 30,
    June 30,2004
    2003
    2004
    2003(Unaudited)
    (Unaudited)
    (Unaudited)
    (Unaudited)Net sales
    $ 174,375
    $ 171,150
    $ 345,306
    $ 340,585Cost of sales:Product cost of sales, including development and
    engineering
    106,787
    102,958
    212,393
    204,923Selling, service and administrative
    55,822
    56,416
    112,021
    113,965Amortization of intangible assets
    41
    189
    229
    377Restructuring
    -
    8,384
    823
    9,789Interest expense
    6,599
    10,247
    13,391
    19,545Other expense (income), net
    583
    137
    928
    (188)Income (loss) before income taxes
    4,543
    (7,181)
    5,521
    (7,826)Income tax expense (benefit)
    1,957
    (2,057)
    2,485
    (2,785)Net income (loss)
    $ 2,586
      =====
    $ (5,124)
      ======
    $ 3,036
      =====
    $ (5,041)
      ======Other comprehensive income, net of taxes:Foreign currency translation adjustments
    (2,145)
    2,821
    (2,551)
    4,831Income (loss) on derivative financial instruments
    744
    (676)
    1,622
    277Comprehensive income (loss)
    $ 1,185
      =====
    $ (2,979)
      ======
    $ 2,107
      =====
    $ 67
      ===Earnings (loss) per common share: (1)Basic
    $ 0.16
      ====
    $ (0.32)
      =====
    $ 0.19
      ====
    $ (0.32)
      =====Diluted
    $ 0.15
      ====
    $ (0.32)
      =====
    $ 0.18
      ====
    $ (0.32)
      =====Weighted average number of common shares outstanding: (2)Basic
    16,180
    15,961
    16,143
    15,956Diluted
    16,837
    15,961
    16,887
    15,956(1)Amounts represent per share amounts for both Common Stock and Class B
      Common Stock.
      (2) Weighted average shares includes both Common Stock and Class B Common
      Stock.The accompanying notes to condensed consolidated financial statements
      are an integral part of these statements.


3

GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                      |                                                                          |                                                     |                     | Six months ended June 30,
|--------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------ | --------------------------------------------------- | ------------------- | -------------------------
|                                                                                                                      |                                                                          |                                                     |                     | 2004                     
|                                                                                                                      |                                                                          |                                                     |                     | (Unaudited)              
|Operating activities:                                                                                                 |                                                                          |                                                     |                    
|Net income (loss)                                                                                                     |                                                                          | $ 3,036                                             | $ (5,041)          
|Adjustments to reconcile net income (loss) to net cash used in
      operating activities:                            |                                                                         
|                                                                                                                      | Depreciation                                                             |                                                     | 9,853               | 11,043                   
|                                                                                                                      | Amortization                                                             |                                                     | 2,258               | 2,672                    
|                                                                                                                      | Restructuring and other                                                  |                                                     | 823                 | 9,789                    
|                                                                                                                      | Provision for doubtful accounts and sales returns                        |                                                     | 1,429               | 2,158                    
|                                                                                                                      | Provision for inventory reserves                                         |                                                     | 3,157               | 2,977                    
|                                                                                                                      | Increase in non-current deferred tax liabilities                         |                                                     | 1,419               | 2                        
|                                                                                                                      | Increase in other long-term assets                                       |                                                     | (1,859)             | (2,498)                  
|                                                                                                                      | Other                                                                    |                                                     | (1,323)             | (829)                    
|Changes in current assets and liabilities:                                                                            |                                                                          |                                                     |                    
|                                                                                                                      | Increase in receivables                                                  |                                                     | (4,994)             | (1,541)                  
|                                                                                                                      | (Increase) decrease in inventories                                       |                                                     | (22,723)            | 2,934                    
|                                                                                                                      | (Increase) decrease in other current assets                              |                                                     | (222)               | 113                      
|                                                                                                                      | (Increase) decrease in deferred tax assets                               |                                                     | (2,069)             | 373                      
|                                                                                                                      | Decrease in accounts payable and accrued liabilities                     |                                                     | (7,635)             | (21,906)                 
|                                                                                                                      | Increase (decrease) in income taxes payable                              |                                                     | 194                 | (701)                    
|                                                                                                                      |                                                                          | Net cash used in operating activities               |                     | (18,656)                 
|Investing activities:                                                                                                 |                                                                          |                                                     |                    
|                                                                                                                      | Capital expenditures                                                     |                                                     | (3,594)             | (4,006)                  
|                                                                                                                      | Payments for acquisitions and investments                                |                                                     | (1,304)             | (1,799)                  
|                                                                                                                      | Proceeds from sale of plant and equipment                                |                                                     | 185                 | 45                       
|                                                                                                                      |                                                                          | Net cash used in investing activities               |                     | (4,713)                  
|Financing activities:                                                                                                 |                                                                          |                                                     |                    
|                                                                                                                      | Proceeds from long-term borrowings-maturities greater than 90
      days | 121,722                                             | 31,320             
|                                                                                                                      | Repayments of long-term debt-maturities greater than 90
    days         | (132,688)                                           | (74,793)           
|                                                                                                                      | Net change in borrowings-maturities of 90 days or less                   |                                                     | 26,084              | 47,764                   
|                                                                                                                      | Increase (decrease) in current portion of long-term debt                 |                                                     | 651                 | (6,504)                  
|                                                                                                                      | Payments of debt issuance costs                                          |                                                     | (78)                | (3,395)                  
|                                                                                                                      | Contribution related to Tax Allocation Agreement                         |                                                     | -                   | 2,537                    
|                                                                                                                      | Proceeds from the exercise of stock options                              |                                                     | 1,345               | 230                      
|                                                                                                                      |                                                                          | Net cash provided by (used in) financing activities |                     | 17,036                   
|Effect of exchange rates on cash                                                                                      |                                                                          | 713                                                 | (2,199)            
|                                                                                                                      | Net decrease in cash and cash equivalents                                |                                                     | (5,620)             | (11,255)                 
|Cash and cash equivalents at the beginning of the year                                                                |                                                                          | 9,568                                               | 18,251             
|Cash and cash equivalents at the end of the period                                                                    |                                                                          | $ 3,948
      =====                                 | $ 6,996
      =====
|Supplemental disclosure:                                                                                              |                                                                          |                                                     |                    
|                                                                                                                      | Interest paid                                                            |                                                     | $ 13,236            | $ 18,463                 
|                                                                                                                      | Income taxes paid                                                        |                                                     | 2,838               | 233                      
|                                                                                                                      |                                                                          |                                                     |                     |                          
|The accompanying notes to condensed consolidated financial statements
      are an integral part of these
statements.

4



GENERAL BINDING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS(Unaudited)

(1) Basis of Presentation

The condensed consolidated financial statements include the accounts of
General Binding Corporation and its subsidiaries ("GBC" or the "Company"). These
financial statements have been prepared by GBC, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. GBC believes that the disclosures
included in these condensed consolidated financial statements are adequate to
make the information presented not misleading. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and the notes thereto included in GBC's 2003 Annual Report
on Form 10-K. In the opinion of management, all adjustments necessary to present
fairly the financial position of GBC as of June 30, 2004 and December 31, 2003,
results of their operations for the three and six months ended June 30, 2004 and
2003 and results of their cash flows for the six months ended June 30, 2004 and
2003 have been included. Operating results for any interim period are not
necessarily indicative of results that may be expected for the full year.

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of certain estimates by management in
determining the entity's assets, liabilities, revenues and expenses. Such
estimates and management judgement include the allowance for doubtful accounts
and sales returns, allowances for slow-moving and obsolete inventory, deferred
income tax valuation allowance, tax reserves, and long-lived assets. Actual
results could differ from the estimates used by management.

Certain amounts for prior periods have been reclassified to conform to the
2004 presentation.

(2) Stock Compensation Plan

GBC has stock-based compensation plans for employees and non-employee
directors that provide for the issuance of stock options and restricted stock
units. The Company applies the recognition and measurement principles of
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations in accounting for these plans. In
accordance with the intrinsic value method, no compensation expense has been
recognized for the Company's fixed stock option plans.

The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation", to all stock-based compensation (000
omitted):

5

|                                                                                                        | Three months ended June 30, | Six months ended June 30,
|------------------------------------------------------------------------------------------------------- | --------------------------- | -------------------------
|                                                                                                        | 2004                        | 2003                     
|Net income (loss), as reported                                                                          | $2,586                      | $(5,124)                 
|Add: Stock-based compensation expense included in reported net income,
      net of tax                 | 160                         | 161                      
|Deduct: Total stock-based compensation expense determined under the
      fair value method, net of tax | (831)                       | (791)                    
|Pro forma net income (loss)                                                                             | $1,915 
      =====         | $(5,754)
      ======    
|Earnings (loss) per share - basic                                                                       |                             |                          
|As reported                                                                                             | $0.16 
      ====           | $(0.32)
      =====      
|Pro forma                                                                                               | $0.12 
      ====           | $(0.36)
      =====      
|Earnings (loss) per share - diluted                                                                     |                             |                          
|As reported                                                                                             | $0.15 
      ====           | $(0.32)
      =====      
|Pro forma                                                                                               | $0.11 
      ====           | $(0.36)
      =====      

Pro forma compensation expense for stock options was calculated using the
Black-Scholes model, with the following weighted-average assumptions for grants
in 2004 and 2003 respectively: expected life of ten years for 2004 and 2003;
expected volatility of 59% and 56%; and risk-free interest rates of 4.42% and
3.75%. The weighted-average fair values of stock options granted during the
periods were $11.98 and $6.07 in 2004 and 2003, respectively.

(3) Borrowings

A significant portion of GBC's long-term funding has been provided through
its primary senior credit facility (the "Primary Facility"). As of June 30,
2004, the Primary Facility was comprised of a $72.5 million multicurrency
revolving credit facility and term loans totaling $117.5 million. Outstanding
borrowings under the Primary Facility at June 30, 2004 included $117.5 million
in term loans, $12.0 million under the revolving credit facility and outstanding
letters of credit of $13.1 million which further reduces GBC's availability
under the revolving credit line. GBC is also party to a mortgage financing
arrangement under which certain of its real estate holdings and equipment are
pledged as collateral ("Mortgage Financing"), as well as a multicurrency
revolving credit facility in the Netherlands ("the Netherlands Facility"). As of
June 30, 2004, the outstanding balances on the Mortgage Financing and the
Netherlands Facility were $12.5 million and $9.5 million, respectively.

Interest rates on Primary Facility borrowings are variable and, during 2004,
were set at LIBOR plus 3.5% or 3.75% for borrowings under the $72.5 million
multicurrency revolving credit line, and LIBOR plus 4.50% for the term loans.
Borrowings under the Primary Facility are subject to a "pricing grid" which
provides for lower interest rates in the event that certain of GBC's financial
ratios improve in future periods.

GBC must meet certain restrictive financial covenants as defined under the
Primary Facility. The covenants become more restrictive over time and require
the Company to maintain certain ratios related to total leverage, senior
leverage, fixed charge coverage, as well as a minimum level of consolidated net
worth. There are also other covenants, including restrictions on dividend
payments, acquisitions, additional indebtedness, and capital expenditures. In
addition to the restrictive covenants, multicurrency revolving credit line

6

borrowings are subject to a "borrowing base" which is determined based upon
certain formulas tied to GBC's trade receivables and inventory. With the
exception of its assets pledged under the Mortgage Financing, substantially all
of the assets of General Binding Corporation and its domestic subsidiaries, as
well as a portion of the equity in certain foreign subsidiaries are pledged as
collateral under the Primary Facility.

As of and for the six months ended June 30, 2004, the Company was in
compliance with all debt covenants.

Long-term debt consisted of the following at June 30, 2004 and December 31,
2003 (000 omitted):

|                                                                                                                                                            | June 30,                | December 31,          
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | ----------------------
|                                                                                                                                                            | 2004                    | 2003                  
|Credit Facilities                                                                                                                                           |                         |                       
|U.S. Dollar borrowings - Term loans -
      (weighted average floating 
      interest rate of 5.81% at June 30, 2004 and 5.66% at
      December 31, 2003) | $117,500                | $122,500              
|U.S. Dollar borrowings - Revolving Credit Agreement
      (weighted average floating interest rate of 4.89%
      at June 30, 2004)                         | 12,000                  | -                     
|Euro borrowings - Netherlands Facility (weighted average floating
      interest rate of 4.5% at June 30, 2004)                                             | 9,535                   | -                     
|Industrial Revenue/Development Bonds ("IRB" or "IDB")                                                                                                       |                         |                       
|IDB, due March 2026 - (floating interest rate of 1.10%
      at June 30, 2004 and 1.25% at December 31, 2003)                                               | 6,840                   | 6,840                 
|Notes Payable                                                                                                                                               |                         |                       
|Senior Subordinated Notes- U.S. Dollar borrowing- due 2008  (fixed interest rate of 9.375%)                                                                 | 150,000                 | 150,000               
|Notes Payable- U.S.
      Dollar borrowing- due monthly August 2003 to July 2008
       (fixed interest rate of 6.62%)                                      | 12,487                  | 13,798                
|Other borrowings                                                                                                                                            | 9,190                   | 8,876                 
|Total debt                                                                                                                                                  | 317,552                 | 302,014               
|Less-current maturities                                                                                                                                     | (21,881)                | (19,995)              
|Total Long-term debt                                                                                                                                        | $295,671 
      ======= | $282,019 
      ======

(4

GBC's Certificate of Incorporation provides for 40,000,000 authorized shares
of common stock, $0.125 par value per share, and 4,796,550 shares of Class B
common stock, $0.125 par value per share. Each Class B share is entitled to 15
votes and is to be automatically converted into one share of common stock upon
transfer thereof. All of the Class B shares are owned by Lane Industries, Inc.,
GBC's majority stockholder.

7

The following table illustrates the computation of basic and diluted earnings
per share (000 omitted except per share data):

|                                                                                                                 | Three months ended June 30 | Six months ended June 30  
|---------------------------------------------------------------------------------------------------------------- | -------------------------- | --------------------------
|                                                                                                                 | 2004                       | 2003                      
|Numerator:                                                                                                       |                            |                           
|Net income available to common shareholders                                                                      | $ 2,586     
      =====   | $ (5,124)    
      ======
|Denominator:                                                                                                     |                            |                           
|Denominator for basic earnings per share -
      Weighted average number of common
      shares outstanding  (1) | 16,180                     | 15,961                    
|Effect of dilutive securities:                                                                                   |                            |                           
|Employee stock options (3)                                                                                       | 407                        | -                         
|Restricted stock units                                                                                           | 250                        | -                         
|Denominator for diluted earnings per share - 
      Adjusted weighted-average shares (1)and assumed conversions  | 16,837     
      =====    | 15,961     
      =====   
|Earnings (loss) per share - basic (2)                                                                            | $ 0.16     
      =====    | $ (0.32)    
      =====  
|Earnings (loss) per share - diluted (2)                                                                          | $ 0.15     
      =====    | $ (0.32)    
      =====  

> (1) Weighted average shares includes both Common Stock and Class B Common
> Stock.
> (2)

(5) Restructuring and Other

During the first six months of 2004, GBC recorded restructuring charges of
$0.8 million related to workforce reduction programs which were announced in
2003. During the first six months of 2003, GBC recorded restructuring related
charges of $9.8 million. In the second quarter of 2003, the Company recorded
charges of $8.4 million related to the transition of certain manufacturing
operations from Booneville, Mississippi to Nuevo Laredo, Mexico, along with a
company-wide workforce reduction program. Charges for severance benefits to be
paid under these programs totaled $3.9 million, while charges for asset
impairments at the Company's Booneville facilities were $4.5 million.
Approximately 365 employees were affected by the Booneville transition and
workforce reduction programs. In the first quarter of 2003, GBC recorded
additional restructuring charges of $1.4 million related to the subleasing of a
manufacturing facility in Buffalo Grove, Illinois. The additional charge
represents the incremental difference between GBC's obligation under the lease
and the rental payments to be received from the subtenant.

The components of the restructuring expenses are as follows (000
omitted):



Three months ended June 30,
    Six months ended June 30,2004
    2003
    2004
    2003Severance and early retirement benefits
    $ -
    $3,927
    $ 823
    $3,927Asset impairments
    -
    4,457
    -
    4,457Contractual lease expenses
    -
    -
    -
    1,405Total restructuring expenses
    $ -
      ==
    $8,384
      =====
    $ 823
      ====
    $9,789
      =====


8

Management believes that the restructuring provisions recorded will be
adequate to cover estimated restructuring costs that will be paid in future
periods. The balance in the restructuring reserve at June 30, 2004 is primarily
related to severance, asset write-downs, lease expenses, early retirement and
other benefit expenses to be paid in future periods.



Changes in the restructuring reserve for the six months ended June 30, 2004
were as follows (000 omitted):

Severance
    Asset
      Impairment
      And Other Exit Costs
    Lease Cancellation  Costs
    TotalBalance at December 31, 2003
    $ 5,416
    $ 560
    $2,268
    $8,244Activities during the year:Provisions
    823
    -
    -
    823Cash charges
    (2,618)
    (64)
    (165)
    (2,847)Non-cash charges
    -
    (87)
    -
    (87)Balance at June 30, 2004(1)
    $ 3,621
      =====
    $ 409 
      ====
    $2,103 
      =====
    $6,133 
      =====


> (1) The restructuring reserve at June 30, 2004 consisted of $4.4
> million related to current items reported in the balance sheet as a separate
> item and $1.7 million related to long-term lease cancellation costs reported in
> the balance sheet as a component of other long-term liabilities.

(6) Retirement Plans and Post-Retirement Benefits

The following tables summarize the components of net periodic pension cost
for the Company's retirement plans (000 omitted):

Three months endedJune 30, 2004
    
    June 30, 2003Domestic
    
    International
    
    Domestic
    
    InternationalService cost
    $ 65
    
    $ (212)
    
    $ 69
    
    $ 355Interest cost
    10
    
    (107)
    
    7
    
    609Expected return onplan assets
    -
    
    321
    
    -
    
    (572)Amortization of unrecognizedtransaction obligation
    -
    
    -
    
    -
    
    10Recognized losses
    1
    
    131
    
    1
    
    21Prior service cost
    -
    
    (14)
    
    -
    
    (9)Total
    $ 76
      ===
    
    $ 119 
      ====
    
    $ 76
      ===
    
    $ 414 
      ====Company contributions
    $ -
      ==
    
    $ 2,699 
      =====
    
    $ -
      ==
    
    $ 853 
      ====


9

Six months endedJune 30, 2004
    
    June 30, 2003Domestic
    
    International
    
    Domestic
    
    InternationalService cost
    $ 131
    
    $ 371
    
    $ 138
    
    $ 716Interest cost
    20
    
    840
    
    14
    
    1,284Expected return onplan assets
    -
    
    (835)
    
    -
    
    (1,208)Amortization of unrecognizedtransaction obligation
    -
    
    -
    
    -
    
    11Recognized losses
    2
    
    282
    
    1
    
    89Prior service cost
    -
    
    (31)
    
    -
    
    (21)Total
    $ 153
      ====
    
    $ 627 
      ====
    
    $ 153 
      ====
    
    $ 871 
      ====Company contributions
    $ -
      ==
    
    $ 2,904 
      =====
    
    $ - 
      ==
    
    $ 988 
      ====




Three months ended June 30,
    Six months ended June 30,2004
    
    2003
    
    2004
    
    2003Service cost
    $ 218
    
    $ 184
    
    $ 437
    
    $ 366Interest cost
    160
    
    137
    
    319
    
    270Amortization of unrecognized:Net transaction obligation
    11
    
    22
    
    22
    
    43Recognized losses
    61
    
    29
    
    122
    
    57Total
    $ 450
      ====
    
    $ 372
      ====
    
    $ 900
      ====
    
    $ 736
      ====


The following summarizes the components of net periodic post-retirement
benefit cost (000 omitted):



(7) Business Segments

In accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," GBC has identified three reportable operating segments
based on the organization of GBC into business groups comprised of similar
products and services.

The Commercial and Consumer Group (CCG) focuses on "consumer-ready" products
that leverage GBC's leadership among customers of its binding, laminating and
information-display products in the work, school and home
environments.

The Industrial and Print Finishing Group (IPFG) targets print-for-pay and
other finishing customers who use GBC's professional-grade finishing equipment
and supplies as a part of their mass production of sophisticated, professional
applications.

The Europe Group distributes many "consumer-ready" binding, laminating and
visual communication products to customers in the work, school and home
environments. In addition, the Europe Group markets professional-grade finishing
equipment and supplies to commercial reprographic centers.

10



The

The

Expenses incurred by the three reportable segments described above relate to
costs incurred to manufacture or purchase products, as well as selling, general
and administrative costs. For internal management purposes and the presentation
below, operating income is calculated as net sales less (i) product cost of
sales, (ii) selling, service and administrative expenses and (iii) amortization
of other intangibles.

GBC does not separately identify interest expense or income taxes for its
operating segments. Additionally, certain expenses of a corporate nature and
certain shared service expenses are not allocated to the business groups. Sales
between business groups are recorded at cost for domestic business units, and
cost plus a normal profit margin for sales between domestic and international
business units. GBC's business groups record expenses for certain services
provided and expense allocations; however, the charges and allocations between
business groups are not significant.

Segment data is provided below for the three and six months ended June 30,
2004 and 2003 (000 omitted):

Unaffiliated Customer SalesThree months ended June 30,
    Six months ended June 30,2004
    2003
    2004
    2003Commercial and Consumer Group
    $ 108,897
    $ 111,467
    $ 214,325
    $ 221,037Industrial and Print Finishing Group
    39,107
    34,704
    76,910
    68,238Europe
    26,371
    24,979
    54,071
    51,310Total
    $ 174,375
      =======
    $ 171,150
      =======
    $ 345,306
      =======
    $ 340,585
      =======


11

Operating IncomeThree months ended June 30,
    Six months ended June 30,2004
    2003
    2004
    2003Commercial and Consumer Group
    $ 11,221
    $ 12,867
    $ 19,825
    $ 24,493Industrial and Print Finishing Group
    4,987
    4,806
    9,782
    9,360Europe
    1,444
    1,206
    3,594
    2,494Unallocated corporate items
    (5,927)
    (7,292)
    (12,538)
    (15,027)Total
    $ 11,725
      ======
    $ 11,587
      ======
    $ 20,663
      ======
    $ 21,320
      ======




Affiliated Customer SalesThree months ended June 30,
    Six months ended June 30,2004
    2003
    2004
    2003Commercial and Consumer Group
    $ 2,805
    $ 2,676
    $ 4,529
    $ 4,927Industrial and Print Finishing Group
    5,716
    4,563
    11,997
    9,762Europe
    2,753
    3,707
    6,103
    7,369Eliminations
    (11,274)
    (10,946)
    (22,629)
    (22,058)Total
    $ - 
      ==
    $ - 
      ==
    $ - 
      ==
    $ - 
      ==




Total Segment AssetsJune 30,
    December 31,2004
    2003Commercial and Consumer Group
    $ 347,276
    $ 341,367Industrial and Print Finishing Group
    74,831
    70,499Europe
    56,599
    56,498Unallocated corporate items
    59,096
    60,986Total
    $ 537,802
      =======
    $ 529,350
      =======




The following is a reconciliation of segment operating income to income
before taxes (000 omitted):

Three months ended June 30,
    Six months ended June 30,2004
    2003
    2004
    2003Total segment operating income
    $ 11,725
    $ 11,587
    $ 20,663
    $ 21,320Interest expense
    (6,599)
    (10,247)
    (13,391)
    (19,545)Restructuring and other expenses
    -
    (8,384)
    (823)
    (9,789)Other (expense) income
    (583)
    (137)
    (928)
    188Income (loss) before taxes
    $ 4,543 
      =====
    $ (7,181)
      ======
    $ 5,521 
      =====
    $ (7,826)
      ======


GBC's products are sold primarily in North America, Latin America, Europe,
Japan and Australia to office products resellers and directly to end-users in
the business, education, commercial/professional and government markets. GBC has
a large base of customers; however, the loss of, or major reduction in business
or failure to collect receivables from, one

12

or more of GBC's major customers
could have a material adverse effect on GBC's financial position or results of
operations.

Financial information for the three and six months ended June 30, 2004 and
2003, by geographical area is summarized below (000 omitted):

Unaffiliated Customer Sales
    
    Total Long-lived AssetsThree months ended June 30,
    Six months ended June 30,
    
    June 30,
    December 31,2004
    2003
    2004
    2003
    
    2004
    2003US
    $ 104,242
    $ 108,022
    $ 202,328
    $ 213,642
    
    $ 304,234
    $ 273,664Europe
    39,676
    35,826
    80,209
    72,419
    
    53,789
    53,291Other International
    30,457
    27,302
    62,769
    54,524
    
    25,452
    25,623Eliminations
    -
    -
    -
    -
    
    (118,549)
    (81,342)$ 174,375
      =======
    $ 171,150
      =======
    $ 345,306
      =======
    $ 340,585
      =======
    
    $ 264,926
      =======
    $ 271,236
      =======


(8) Income Taxes

GBC's effective income tax rate varies from the U.S. statutory income tax
rate based upon the taxing jurisdictions in which the Company and its foreign
subsidiaries and branches generate taxable income or loss, judgements as to the
realizability of any losses incurred, and the Company's assertion with respect
to reinvestment of the earnings of foreign subsidiaries.

(9) New Accounting Standards

In December 2003, the FASB issued Interpretation No. 46 (Revised December
2003), "Consolidation of Variable Interest Entities." The objective of FIN No.
46 is to improve financial reporting by companies with transactions involving
variable interest entities. Prior to FIN No. 46, companies generally included
another entity in its consolidated financial statements only if it controlled
the entity through voting interests. Under FIN No. 46, a variable interest
entity would be consolidated by a company if that company is subject to a
majority of the risk or loss from the variable interest entity's activities or
entitled to receive a majority of the entity's residual returns or both. GBC's
adoption of FIN No. 46 in 2004 has had no impact on its financial position or
results of operations.

In December 2003, the FASB issued a revision to SFAS No. 132, "Employers
Disclosures about Pensions and Other Postretirement Benefits." This statement
revises certain disclosures about pension plans and other postretirement benefit
plans. The additional disclosures required by this statement include:
information describing the types of plan assets; investment strategy;
measurement date(s); plan obligations; cash flows; and components of net
periodic benefit cost to be recognized during interim periods. GBC adopted the
interim period disclosures in the first quarter of 2004, and is required to
adopt the new disclosures related to foreign plans and estimated future benefit
payments in the fourth quarter of 2004.

13

(10) Goodwill and Other Intangible Assets

In accordance with SFAS No. 142, GBC tests its goodwill balances to determine
whether these assets are impaired. The annual impairment test is performed as of
January 1. In 2004, it was determined that the Company's goodwill balances were
not impaired.

SFAS No. 142 also requires that previously recognized intangible assets,
other than goodwill, be reassessed to determine the appropriateness of the
estimated useful lives of these assets. Intangible assets determined to have
finite lives are amortized over those lives, and intangible assets that have
indefinite lives are not amortized. As of June 30, 2004, there have been no
events or circumstances which would warrant a revision to the remaining useful
lives of these assets.

GBC's other intangible assets as of June 30, 2004 and December 31, 2003 are
summarized below (000 omitted):

Gross Carrying Amount at
    Accumulated Amortization atJune 30,
    December 31,
    June 30,
    December 31,2004
    2003
    2004
    2003Customer agreements and relationships
    $ 5,767
    $ 5,767
    $ (4,088)
    $ (3,860)Patents
    1,464
    1,464
    (1,318)
    (1,171)Total
    $ 7,231
      =====
    $ 7,231
      =====
    $ (5,406)
      ======
    $ (5,031)
      ======




Fiscal year ended December 31,
    AmortizationExpense2004
    $ 7512005
    4582006
    4582007
    4582008
    75



(11) Subsidiary Guarantor Information

During 1998, GBC issued $150 million of 9.375% Senior Subordinated Notes
which are due in 2008. Each of GBC's domestic restricted subsidiaries has
jointly and severally, fully and unconditionally guaranteed the Senior
Subordinated Notes. Rather than filing separate financial statements for each
guarantor subsidiary with the Securities and Exchange Commission, GBC has
elected to present the following consolidating financial statements which detail
the results of operations, financial position and cash flows of the Parent,
Guarantors, and Non-Guarantors (in each case carrying investments under the
equity method), and the eliminations necessary to arrive at the information for
GBC on a consolidated basis.

14

Consolidating Balance Sheets (000 omitted)



|                                           |                                      |                            | June 30, 2004 (Unaudited)
|------------------------------------------ | ------------------------------------ | -------------------------- | -------------------------
|                                           |                                      |                            | Parent                   
|Assets                                     |                                      |                            |                          
|Current assets:                            |                                      |                            |                          
|                                           | Cash and cash equivalents            | $ 194                      | $ (6)                    
|                                           | Receivables, net                     | 69,674                     | -                        
|                                           | Inventories, net                     | 69,964                     | 265                      
|                                           | Deferred tax assets                  | 18,238                     | 1,197                    
|                                           | Other                                | 3,496                      | -                        
|                                           | Due from affiliates                  | -                          | 57,108                   
|                                           |                                      | Total current assets       | 161,566                  
|Net capital assets                         | 53,386                               | 6,215                      | 28,263                   
|Goodwill and other intangibles, net of     |                                      |                            |                          
|                                           | accumulated amortization             | 120,206                    | 22,394                   
|Other                                      | 10,985                               | 9,342                      | 6,784                    
|Investment in subsidiaries                 | 157,959                              | 176,734                    | -                        
|                                           | Total assets                         | $ 504,102
      =======    | $ 273,249
      =======  
|                                           |                                      |                            |                          
|Liabilities and Stockholders' Equity       |                                      |                            |                          
|Current liabilities:                       |                                      |                            |                          
|                                           | Accounts payable                     | $ 31,805                   | $ 1,218                  
|                                           | Accrued liabilities                  | 47,219                     | 1,022                    
|                                           | Notes payable                        | -                          | -                        
|                                           | Current maturities of long-term debt | 14,254                     | -                        
|                                           | Due to affiliates                    | 47,204                     | -                        
|                                           |                                      | Total current liabilities  | 140,482                  
|Long-term debt - affiliated                | 71                                   | -                          | 3,486                    
|Long-term debt, less current maturities    | 284,573                              | -                          | 11,098                   
|Other long-term liabilities                | 21,898                               | 176                        | 14,443                   
|Stockholders' equity:                      |                                      |                            |                          
|                                           | Common stock                         | 1,962                      | -                        
|                                           | Class B common stock                 | 300                        | -                        
|                                           | Additional paid-in capital           | 25,727                     | 122,295                  
|                                           | Retained earnings                    | 66,445                     | 142,106                  
|                                           | Treasury stock                       | (21,826)                   | -                        
|                                           | Accumulated other comprehensive      |                            |                          
|                                           | income                               | (15,530)                   | 6,432                    
|                                           |                                      | Total stockholders' equity | 57,078                   
|Total liabilities and stockholders' equity | $ 504,102
      =======              | $ 273,249
      =======    | $ 199,185
      =======  

15



Consolidating Balance Sheets
(000 omitted)



|                                           |                                      |                            | December 31, 2003      
|------------------------------------------ | ------------------------------------ | -------------------------- | -----------------------
|                                           |                                      |                            | Parent                 
|Assets                                     |                                      |                            |                        
|Current assets:                            |                                      |                            |                        
|                                           | Cash and cash equivalents            | $ 3,749                    | $ 1                    
|                                           | Receivables, net                     | 69,404                     | -                      
|                                           | Inventories, net                     | 48,424                     | 406                    
|                                           | Deferred tax assets                  | 19,039                     | 1,197                  
|                                           | Other                                | -                          | 5,519                  
|                                           | Due from affiliates                  | -                          | 38,039                 
|                                           |                                      | Total current assets       | 140,616                
|Net capital assets                         | 58,142                               | 6,485                      | 30,359                 
|Goodwill and other intangibles, net of     |                                      |                            |                        
|                                           | accumulated amortization             | 120,581                    | 22,394                 
|Other                                      | 13,544                               | 9,328                      | 2,604                  
|Investment in subsidiaries                 | 159,297                              | 182,757                    | -                      
|                                           | Total assets                         | $ 492,180
      =======    | $ 266,126
      =======
|                                           |                                      |                            |                        
|Liabilities and Stockholders' Equity       |                                      |                            |                        
|Current liabilities:                       |                                      |                            |                        
|                                           | Accounts payable                     | $ 35,057                   | $ 893                  
|                                           | Accrued liabilities                  | 58,981                     | 170                    
|                                           | Notes payable                        | -                          | -                      
|                                           | Current maturities of long-term debt | 13,165                     | -                      
|                                           | Due to affiliates                    | 30,337                     | -                      
|                                           |                                      | Total current liabilities  | 137,540                
|Long-term debt - affiliated                | 519                                  | -                          | 3,135                  
|Long-term debt, less current maturities    | 279,973                              | -                          | 2,046                  
|Other long-term liabilities                | 19,939                               | 248                        | 16,568                 
|Stockholders' equity:                      |                                      |                            |                        
|                                           | Common stock                         | 1,962                      | -                      
|                                           | Class B common stock                 | 300                        | -                      
|                                           | Additional paid-in capital           | 26,727                     | 121,115                
|                                           | Retained earnings                    | 63,409                     | 133,924                
|                                           | Treasury stock                       | (23,588)                   | -                      
|                                           | Accumulated other comprehensive      |                            |                        
|                                           | income                               | (14,601)                   | 9,776                  
|                                           |                                      | Total stockholders' equity | 54,209                 
|Total liabilities and stockholders' equity | $ 492,180
      =======              | $ 266,126
      =======    | $ 192,662
      =======

16

Consolidating Income Statements

|                                                |                                                  |                     | Three months ended June 30, 2004
    (Unaudited)
|----------------------------------------------- | ------------------------------------------------ | ------------------- | ------------------------------------------------
|                                                |                                                  |                     | Parent                                          
|Unaffiliated sales                              | $ 104,242                                        | $ -                 | $ 70,133                                        
|Affiliated sales                                | 11,432                                           | -                   | 8,837                                           
|                                                | Net sales                                        | 115,674             | -                                               
|                                                | Cost of sales, including development and         |                     |                                                 
|                                                | engineering                                      | 76,984              | (56)                                            
|                                                | Selling, service and administrative              | 34,923              | -                                               
|                                                | Amortization of goodwill and related intangibles | 41                  | -                                               
|                                                | Restructuring                                    | (107)               | -                                               
|                                                | Interest expense                                 | 6,438               | 7                                               
|                                                | Other (income) expense                           | (870)               | (128)                                           
|                                                | (Loss) income before taxes and undistributed     |                     |                                                 
|                                                | earnings of wholly owned subsidiaries            | (1,735)             | 177                                             
|Income (benefits) taxes                         | (351)                                            | 68                  | 2,240                                           
|                                                | (Loss) income before undistributed earnings of   |                     |                                                 
|                                                | wholly owned subsidiaries                        | (1,384)             | 109                                             
|Undistributed earnings (losses) of wholly-owned |                                                  |                     |                                                 
|                                                | subsidiaries                                     | 3,970               | 4,683                                           
|Net (loss) income                               | $ 2,586
      =====                              | $ 4,792
      ===== | $ 3,861
      =====                             



|                                                |                                                  |                     | Three months ended June 30, 2003 (Unaudited)
|----------------------------------------------- | ------------------------------------------------ | ------------------- | --------------------------------------------
|                                                |                                                  |                     | Parent                                      
|Unaffiliated sales                              | $ 108,022                                        | $ -                 | $ 63,128                                    
|Affiliated sales                                | 11,190                                           | -                   | 6,900                                       
|                                                | Net sales                                        | 119,212             | -                                           
|                                                | Cost of sales, including development and         |                     |                                             
|                                                | engineering                                      | 76,762              | 206                                         
|                                                | Selling, service and administrative              | 36,392              | -                                           
|                                                | Amortization of goodwill and related intangibles | 189                 | -                                           
|                                                | Restructuring                                    | 8,292               | -                                           
|                                                | Interest expense                                 | 9,837               | 26                                          
|                                                | Other expense (income)                           | 519                 | (1,233)                                     
|                                                | (Loss) income before taxes and undistributed     |                     |                                             
|                                                | earnings of wholly owned subsidiaries            | (12,779)            | 1,001                                       
|Income taxes (benefits)                         | (4,508)                                          | 428                 | 2,023                                       
|                                                | (Loss) income before undistributed earnings of   |                     |                                             
|                                                | wholly owned subsidiaries                        | (8,271)             | 573                                         
|Undistributed earnings (losses) of wholly-owned |                                                  |                     |                                             
|                                                | subsidiaries                                     | 3,147               | 2,944                                       
|Net (loss) income                               | $ (5,124)
      ======                           | $ 3,517
      ===== | $ 2,574
      =====                         

17

Consolidating Income Statements (000
omitted)

|                                                |                                                |                     | Six months ended June 30, 2004
    (Unaudited)
|----------------------------------------------- | ---------------------------------------------- | ------------------- | ----------------------------------------------
|                                                |                                                |                     | Parent                                        
|Unaffiliated sales                              | $ 202,328                                      | $ -                 | $ 142,978                                     
|Affiliated sales                                | 22,518                                         | -                   | 16,571                                        
|                                                | Net sales                                      | 224,846             | -                                             
|                                                | Cost of sales, including development and       |                     |                                               
|                                                | engineering                                    | 150,729             | (37)                                          
|                                                | Selling, service and administrative            | 69,011              | -                                             
|                                                | Amortization of intangible assets              | 229                 | -                                             
|                                                | Restructuring                                  | 234                 | -                                             
|                                                | Interest expense                               | 12,907              | 12                                            
|                                                | Other (income) expense                         | (1,765)             | (278)                                         
|                                                | (Loss) income before taxes and undistributed   |                     |                                               
|                                                | earnings of wholly owned subsidiaries          | (6,499)             | 303                                           
|Income (benefits) taxes                         | (2,924)                                        | 136                 | 5,273                                         
|                                                | (Loss) income before undistributed earnings of |                     |                                               
|                                                | wholly owned subsidiaries                      | (3,575)             | 167                                           
|Undistributed earnings (losses) of wholly-owned |                                                |                     |                                               
|                                                | subsidiaries                                   | 6,611               | 8,015                                         
|Net income (loss)                               | $ 3,036
      =====                            | $ 8,182
      ===== | $ 6,444
      =====                           



|                                                |                                                |                     | Six months ended June 30, 2003
    (Unaudited)
|----------------------------------------------- | ---------------------------------------------- | ------------------- | ----------------------------------------------
|                                                |                                                |                     | Parent                                        
|Unaffiliated sales                              | $ 213,642                                      | $ -                 | $ 126,943                                     
|Affiliated sales                                | 21,957                                         | -                   | 14,344                                        
|                                                | Net sales                                      | 235,599             | -                                             
|                                                | Cost of sales, including development and       |                     |                                               
|                                                | engineering                                    | 151,040             | 391                                           
|                                                | Selling, service and administrative            | 73,889              | -                                             
|                                                | Amortization of intangible assets              | 377                 | -                                             
|                                                | Restructuring                                  | 9,697               | -                                             
|                                                | Interest expense                               | 18,915              | 86                                            
|                                                | Other expense (income)                         | 82                  | (1,822)                                       
|                                                | (Loss) income before taxes and undistributed   |                     |                                               
|                                                | earnings of wholly owned subsidiaries          | (18,401)            | 1,345                                         
|Income (benefits) taxes                         | (7,226)                                        | 565                 | 3,876                                         
|                                                | (Loss) income before undistributed earnings of |                     |                                               
|                                                | wholly owned subsidiaries                      | (11,175)            | 780                                           
|Undistributed earnings (losses) of wholly-owned |                                                |                     |                                               
|                                                | subsidiaries                                   | 6,134               | 6,442                                         
|Net (loss) income                               | $ (5,041)
      ======                         | $ 7,222
      ===== | $ 5,354
      =====                           

18

Consolidating Statement of Cash Flows (000 omitted)

|                                                    |                                                |                                           | Six months ended June 30, 2004
    (Unaudited)
|--------------------------------------------------- | ---------------------------------------------- | ----------------------------------------- | ----------------------------------------------
|                                                    |                                                |                                           | Parent                                        
|Net cash (used in) provided by operating activities | $ (6,807)                                      | $ 266                                     | $ (12,115)                                    
|Investing activities:                               |                                                |                                           |                                               
|                                                    | Capital expenditures                           | (2,234)                                   | (273)                                         
|                                                    | Payments of acquisitions and investments       | (1,304)                                   | -                                             
|                                                    | Proceeds from sale of plant and equipment      | 185                                       | -                                             
|                                                    |                                                | Net cash used in investing activities     | (3,353)                                       
|Financing activities:                               |                                                |                                           |                                               
|                                                    | (Decrease) increase in intercompany borrowings | (351)                                     | -                                             
|                                                    | Proceeds of long-term debt-                    |                                           |                                               
|                                                    |                                                | maturities greater than 90 days           | 108,500                                       
|                                                    | Repayments of long-term debt-                  |                                           |                                               
|                                                    |                                                | maturities greater than 90 days           | (128,811)                                     
|                                                    | Net change in borrowings-maturities            |                                           |                                               
|                                                    |                                                | of 90 days or less                        | 26,000                                        
|                                                    | Increase in current portion of                 |                                           |                                               
|                                                    |                                                | long-term obligations                     | -                                             
|                                                    | Payments of debt issuance costs                | (78)                                      | -                                             
|                                                    | Proceeds from the exercise of stock options    | 1,345                                     | -                                             
|                                                    |                                                | Net cash provided by financing activities | 6,605                                         
|Effect of exchange rates on cash                    | -                                              | -                                         | 713                                           
|Net decrease in cash & cash equivalents             | (3,555)                                        | (7)                                       | (2,058)                                       
|Cash and cash equivalents at the beginning of       |                                                |                                           |                                               
|                                                    | the year                                       | 3,749                                     | 1                                             
|Cash and cash equivalents at the end of the period  | $ 194
      ====                               | $ (6)
      ===                           | $ 3,760
      =====                           

19

Consolidating Statement of Cash Flows (000 omitted)

|                                                    |                                                |                                                     | Six months ended June 30, 2003
    (Unaudited)
|--------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------- | ----------------------------------------------
|                                                    |                                                |                                                     | Parent                                        
|Net cash provided by (used in) operating activities | $ 4,742                                        | $ 16                                                | $ (5,213)                                     
|Investing activities:                               |                                                |                                                     |                                               
|                                                    | Capital expenditures                           | (2,262)                                             | (17)                                          
|                                                    | Payments of acquisitions and investments       | (1,799)                                             | -                                             
|                                                    | Proceeds from sale of plant and equipment      | 13                                                  | -                                             
|                                                    |                                                | Net cash used in investing activities               | (4,048)                                       
|Financing activities:                               |                                                |                                                     |                                               
|                                                    | Increase (decrease) in intercompany borrowings | 4,032                                               | -                                             
|                                                    | Proceeds of long-term debt-                    |                                                     |                                               
|                                                    |                                                | maturities greater than 90 days                     | 14,842                                        
|                                                    | Repayments of long-term debt-                  |                                                     |                                               
|                                                    |                                                | maturities greater than 90 days                     | (74,625)                                      
|                                                    | Net change in borrowings-maturities            |                                                     |                                               
|                                                    |                                                | of 90 days or less                                  | 50,249                                        
|                                                    | Decrease in current portion of                 |                                                     |                                               
|                                                    |                                                | long-term obligations                               | (6,139)                                       
|                                                    | Contribution related to Tax Allocation         |                                                     |                                               
|                                                    |                                                | Agreement                                           | 2,537                                         
|                                                    | Payments of debt issuance costs                | (3,395)                                             | -                                             
|                                                    | Proceeds of stock options                      | 230                                                 | -                                             
|                                                    |                                                | Net cash (used in) provided by financing activities | (12,269)                                      
|Effect of exchange rates on cash                    | -                                              | -                                                   | (2,199)                                       
|Net (decrease) increase in cash & cash equivalents  | (11,575)                                       | (1)                                                 | 321                                           
|Cash and cash equivalents at the beginning of       |                                                |                                                     |                                               
|                                                    | the year                                       | 12,747                                              | 2                                             
|Cash and cash equivalents at the end of the period  | $ 1,172
      =====                            | $ 1
      ==                                        | $ 5,823
      =====                           

20

Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following narrative discusses the results of operations, liquidity and
capital resources for GBC on a consolidated basis. This section should be read
in conjunction with GBC's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained therein.

Results of Operations - Quarter Ended June 30, 2004 compared to
Quarter Ended June 30, 2003

Sales

GBC's net sales for the second quarter of 2004 increased 1.9% to $174.4
million compared to $171.2 million in the second quarter of 2003. The Company's
net sales were favorably impacted by a weaker U.S. dollar in 2004 compared to
2003. The effect of foreign exchange rates benefited sales by approximately 2.3%
in the second quarter of 2004. Net sales by business segment are summarized
below (000 omitted):

Three months endedJune 30,2004
    2003Commercial and Consumer Group
    $ 108,897
    $ 111,467Industrial and Print Finishing Group
    39,107
    34,704Europe Group
    26,371
    24,979Net Sales
    $174,375
      ======
    $171,150
      ======


The Commercial and Consumer Group's sales decreased $2.6 million or 2.3% for
the second quarter of 2004 when compared to 2003. Factors affecting the Group's
2004 results include: a) competitive pricing pressure in the Group's office
products business; b) lower direct sales due to lower than expected sales
representative head count; and c) a decision to exit certain private label
three-ring binder business. Sales for the Industrial and Print Finishing Group
increased by $4.4 million or 12.7% in the second quarter of 2004 when compared
to the prior year, primarily due to growth in the Group's European commercial
films and digital print finishing businesses. Sales in the Europe Group
increased $1.4 million or 5.6% in 2004, due primarily to the effect of a weaker
U.S. dollar in 2004 compared to 2003. The effect of foreign exchange rates
benefited the Europe group by 7.5% in the second quarter of 2004. The decrease
in local currency sales in Europe is due to a competitive pricing environment
for certain products.

21



Gross Margins, Costs and Expenses

GBC's gross profit margin in the second quarter of 2004 declined 1.1 points
to 38.8% compared to the second quarter of 2003, primarily as a result of
competitive pricing pressures in the office products business of the Commercial
and Consumer Group and the commercial films business of the Industrial and Print
Finishing Group.



Despite the impact of foreign exchange rates, total selling, service and
administrative expenses decreased $0.6 million or 1.1% in the second quarter of
2004 compared to 2003, primarily due to the initiatives of the Company's
Operational Excellence Program.



Operating Income

Segment operating income for GBC's business groups, which is calculated as
net sales less product cost of sales, selling, service and administrative
expenses and amortization of other intangibles, is summarized below (000
omitted):

Segment
      Operating Income
      Three months endedJune
      30,2004
    2003Commercial and Consumer Group
    $ 11,221
    $ 12,867Industrial and Print Finishing Group
    4,987
    4,806Europe Group
    1,444
    1,206Unallocated corporate items
    (5,927)
    (7,292)Total
    $ 11,725
      ======
    $11,587
      ======


Operating income for the second quarter of 2004 increased 1.2% or $0.1
million compared to 2003. Operating income in the Commercial and Consumer Group
decreased by $1.6 million in the second quarter of 2004, primarily due to lower
sales and gross profit margins in the Group's office products business. The
Industrial and Print Finishing Group's operating income increased approximately
3.8% in the second quarter of 2004 compared to 2003, as higher sales offset
lower gross profit margins in the Group's commercial films business. Europe's
operating income improved by $0.2 million in the second quarter of 2004 compared
to 2003, due to reduced selling, service and administrative costs in local
currency and the favorable impact of a weaker U.S. dollar. Corporate expenses
are lower in 2004 compared to 2003 primarily as a result of reduced spending on
information services and favorable medical claims experience.

22

Restructuring and Other

GBC incurred no restructuring charges during the second quarter of 2004. In
the second quarter of 2003, GBC recorded a pre-tax restructuring charge of $8.4
million related to the transition of certain manufacturing operations from
Booneville, Mississippi to Nuevo Laredo, Mexico, along with a company-wide
workforce reduction program. Approximately 365 employees were affected by those
actions.



Interest Expense

Interest expense decreased by $3.6 million to $6.6 million in the second
quarter of 2004 compared to 2003, as a result of lower average outstanding
borrowings and lower interest rates on the Company's primary senior credit
facility which was refinanced in June 2003. Included in interest expense in 2003
was $1.1 million related to a loss on extinguishment of the Company's prior
credit facility.

Income Taxes

In the second quarter of 2004, GBC's income tax expense was $2.0 million on
pre-tax income of $4.5 million, yielding an effective income tax rate of 43%. In
2003, GBC realized an income tax benefit of $2.1 million on a pre-tax loss of
$7.2 million.



Net Income (Loss)

GBC had net income of $2.6 million for the second quarter of 2004 ($0.15 per
share diluted), compared to a net loss of ($5.1) million for the second quarter
of 2003 [($0.32) per share diluted].

Six Months Ended June 30, 2004 compared to Six Months June 30,
2003

Sales

GBC's net sales for the first half of 2004 decreased 1.4% to $345.3 million
compared to the first half of 2003. The Company's net sales were favorably
impacted by a weaker U.S. dollar in 2004 compared to 2003. The effect of foreign
exchange rates benefited sales by approximately 3.9% in the first half of 2004
compared to 2003. Net sales by business segment are summarized below (000
omitted):

23

Six months ended June 30,2004
    2003Commercial and Consumer Group
    $ 214,325
    $ 221,037Industrial and Print Finishing Group
    76,910
    68,238Europe Group
    54,071
    51,310Net Sales
    $ 345,306
      =======
    $ 340,585
      =======


The Commercial and Consumer Group's sales decreased $6.7 million or 3.0% for
the first six months of 2004 when compared to 2003. Factors affecting the
Group's 2004 results include: a) competitive pricing pressure in the Group's
office products business; b) lower direct sales due to lower than expected sales
representative head count; and c) a decision to exit certain private label
three-ring binder business. Sales for the Industrial and Print Finishing Group
increased $8.7 million or 12.7%. Increases in the digital print finishing and
European commercial films businesses were partially offset by a decrease in U.S.
commercial film sales. The U.S. commercial films business continues to be
affected by pricing pressures. Sales in the Europe Group increased by $2.8
million or 5.4%. The effect of foreign exchange rates benefited sales in Europe
by approximately 11.0%. Sales in local currency were impacted by: a) reduced
sales of lamination products to certain customers; and b) a competitive pricing
environment for certain supply items.



Gross Margins, Costs and Expenses

GBC's gross profit margin in the first half of 2004 declined 1.3 points to
38.5% compared to the first half of 2003. Due to competitive pricing pressure,
gross profit margins in the Commercial and Consumer Group and the Industrial and
Print Finishing Group decreased, while margins in Europe remained relatively
flat.

Total selling, service and administrative expenses in the first half of 2004
decreased $1.9 million or 1.7% compared to 2003, due primarily to initiatives of
the Operational Excellence program, lower medical claims activity in the U.S.
and reduced spending on information systems. Selling, service and administrative
expenses as a percentage of sales decreased 1.0% to 32.4% in the first half of
2004 compared to 2003.

Operating Income

Segment operating income for GBC's business groups, which is calculated as
net sales less product cost of sales, selling, service and administrative
expenses and amortization of other intangibles, is summarized below (000
omitted):

24

Segment 
      Operating Income
      Six months endedJune
      30,2004
    2003Commercial and Consumer Group
    $ 19,825
    $ 24,493Industrial and Print Finishing Group
    9,782
    9,360Europe Group
    3,594
    2,494Unallocated corporate items
    (12,538)
    (15,027)Total
    $ 20,663
      ======
    $ 21,320
      ======


Segment operating income for the first half of 2004 decreased 3.1% or $0.7
million compared to 2003. Operating income in the Commercial and Consumer Group
decreased by $4.7 million, or 19.1%, in the first half of 2004 primarily due to
the lower level of sales and reduced gross profit margin, which was partially
offset by reduced selling, service and administrative expenses. The Industrial
and Print Finishing Group's operating income increased 4.5% or $0.4 million due
to the higher sales volume. The Europe Group's operating income increased $1.1
million as the effect of reduced local currency sales was offset by reduced
selling, service and administrative expenses in local currencies and the
favorable impact of the weaker U.S. dollar.

Restructuring and Other

During the first half of 2004, GBC incurred restructuring charges of $0.8
million related to workforce reduction programs which were announced in 2003. In
the first six months of 2003, GBC recorded restructuring related charges of $9.8
million. In the second quarter of 2003, GBC recorded a pre-tax restructuring
charge of $8.4 million related to the transition of certain manufacturing
operations from Booneville, Mississippi to Nuevo Laredo, Mexico, along with a
company-wide workforce reduction program. Approximately 365 employees were
affected as a result of these actions. In the first quarter of 2003, GBC
recorded a pre-tax restructuring charge of $1.4 million related to the
subleasing of a manufacturing facility as part of a previously-announced
rationalization.

Interest Expense

Interest expense decreased by $6.2 million to $13.4 million in the first half
of 2004 compared to 2003 due to reduced debt levels and lower interest rates on
the Company's primary senior credit facility. Included in interest expense in
2003 was $1.1 million related to the loss on the extinguishment of the Company's
previous credit facility which was refinanced in June 2003.

25

Income Taxes

In the first half of 2004, GBC recorded income tax expense of $2.5 million on
pre-tax income of $5.5 million. GBC recorded an income tax benefit of $2.8
million in the first half of 2003 on a pre-tax loss of $7.8
million.

Net Income (Loss)

GBC realized net income of $3.0 million for the first half of 2004 compared
to a net loss of ($5.0) million for the first half of 2003. The net loss in 2003
includes pre-tax restructuring charges of $9.8 million and the loss on
extinguishment of debt of $1.1 million.

Liquidity and Capital Resources

Credit Facility

Management assesses the Company's liquidity in terms of its overall debt
capacity and ability to generate cash from operations to fund its operating
activities, capital needs and debt service requirements. Significant factors
affecting liquidity are cash flows generated from operating activities, capital
expenditures, interest and debt service requirements, adequate bank lines of
credit and financial flexibility to attract long-term capital with satisfactory
terms. GBC's primary sources of liquidity and capital resources are internally
generated cash flows and borrowings under GBC's revolving credit facility.

GBC's multicurrency revolving credit facility was entered into with a group
of international financial institutions (the "Primary Facility"). As of June 30, 2004, the Primary Facility was comprised of a
$72.5 million multicurrency revolving credit facility and term loans totaling
$117.5 million. Outstanding borrowings under the Primary Facility at June 30,
2004 included $117.5 million under the term loan, $12.0 million under the
revolving credit facility and outstanding letters of credit of $13.1 million,
which further reduce GBC's availability under the revolving credit line. GBC is
also party to a mortgage financing arrangement under which certain of its real
estate holdings and equipment are pledged as collateral ("Mortgage Financing"),
as well as a multicurrency revolving credit facility in the Netherlands ("the
Netherlands Facility"). As of June 30, 2004, the outstanding balances on the
Mortgage Financing and the Netherlands Facility were $12.5 million and $9.5
million, respectively.

Credit Facility - Financial Covenants

GBC must meet certain restrictive financial covenants as defined under the
Primary Facility. The covenants become more restrictive over time and require
the Company to maintain certain ratios related to total leverage, senior
leverage and fixed charge coverage, as well as a minimum level of consolidated
net worth.

26

There are also other covenants, including restrictions on dividend
payments, acquisitions, additional indebtedness and capital expenditures. In
addition to the restrictive covenants, multicurrency revolving credit line
borrowings are subject to a "borrowing base" which is determined based upon
certain formulas tied to GBC's trade receivables and inventory. With the
exception of its assets pledged under the Mortgage Financing, substantially all
of the assets of General Binding Corporation and its domestic subsidiaries, as
well as a portion of equity in certain foreign subsidiaries are pledged as
collateral under the Primary Facility.

As of June 30, 2004, GBC was in compliance with all covenants under the
Facility.

Based upon its current financial forecast, the Company expects to remain in
compliance with the covenants under the Primary Facility. The financial forecast
assumes that there will be no further significant deterioration of worldwide
economic conditions, no significant increases in competitive pressure, and that
certain objectives of the Operational Excellence Program will be achieved. If
these assumptions are not met or if other unforeseen events occur, it is
possible that the Company will fail one or more of its covenants. In that
situation, if GBC were unable to obtain an amendment to the Primary Facility or
a waiver in the event of a covenant violation, the Company's liquidity would be
severely impacted.

Cash Flows

Cash used in operating activities was $18.7 million for the six months ended
June 30, 2004, compared to $0.5 million in 2003. The increase was due primarily
to higher levels of working capital, particularly inventory which increased
$22.7 million from December 31, 2003.



Net cash used in investing activities was $4.7 million during 2004, compared
to $5.8 million in 2003.

Net cash provided by financing activities was $17.0 million during 2004,
compared to $2.8 million used in 2003.

GBC is restricted under its credit agreements from paying dividends, and
therefore no dividends were paid during the first six months of 2004 and
2003.

New Accounting Standards

In December 2003, the FASB issued Interpretation No. 46 (Revised December
2003), "Consolidation of Variable Interest Entities." The objective of FIN No.
46 is to improve financial reporting by companies with transactions involving
variable interest entities. Prior to FIN No. 46, companies generally included
another entity in its consolidated financial statements only if it controlled
the entity through voting interests. Under FIN No. 46, a variable interest
entity would

27

be consolidated by a company if that company is subject to a
majority of the risk or loss from the variable interest entity's activities or
entitled to receive a majority of the entity's residual returns or both. GBC's
adoption of FIN No. 46 in 2004 has had no impact on its financial position or
results of operations.

In December 2003, the FASB issued a revision to SFAS No. 132, "Employers
Disclosures about Pensions and Other Postretirement Benefits." This statement
revises certain disclosures about pension plans and other postretirement benefit
plans. The additional disclosures required by this statement include:
information describing the types of plan assets; investment strategy;
measurement date(s); plan obligations; cash flows; and components of net
periodic benefit cost to be recognized during interim periods. GBC adopted the
interim period disclosures in the first quarter of 2004, and is required to
adopt the new disclosures related to foreign plans and estimated future benefit
payments in the fourth quarter of 2004.

Forward-Looking Statements

"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in this report contains, and other periodic reports
and press releases of the Company may contain, certain forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. The Company intends such forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of invoking these safe harbor provisions. These
forward-looking statements, which are based on certain assumptions and describe
future plans, strategies and expectations of the Company, are generally
identifiable by use of the words "believe," "expect," "intend," "anticipate,"
"estimate," "forecast," "project," "plan," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain and actual results may differ from those predicted. The
Company undertakes no obligation to update these forward-looking statements in
the future.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

As of June 30, 2004, there were no changes with regard to market risk since
December 31, 2003 that would require further quantitative or qualitative
disclosure. For GBC's quantitative and qualitative disclosures about market risk
for the fiscal year ended December 31, 2003, refer to pages 28-29 in GBC's
Annual Report on Form 10-K.

Item 4. Controls and
Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q,
the Company carried out an evaluation, under the supervision and with the
participation of GBC's Disclosure Committee and the Company's management,
including the Chief Executive Officer and the Chief Financial Officer, of the

28

effectiveness of the design and operation of GBC's disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14. Based upon that evaluation, the
Chief Executive Officer and the Chief Financial Officer concluded that GBC's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company (including its consolidated
subsidiaries) that would be required to be included in GBC's periodic SEC
filings.

There has been no change in the Company's internal control over financial
reporting that occurred during the quarter ended June 30, 2004 that has
materially affected, or is reasonable likely to materially affect, the Company's
internal control over financial reporting.

Part IIOTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

The 2004 Annual Meeting of Stockholders of GBC (the "Meeting") was held on
May 13, 2004.

At the meeting the following individuals were elected to serve as a
  director of GBC until the 2005 annual meeting of stockholders according to the
  following votes:

Director
    Votes for
    Votes againstor withheldGeorge V. Bayly
    48,221,593
    707,942G. Thomas Hargrove
    48,379,300
    550,235Jeffrey P. Lane
    47,835,298
    1,094,237Nelson P. Lane
    47,803,365
    1,126,170Dennis J. Martin
    47,987,420
    942,115Arthur C. Nielsen, Jr.
    48,211,901
    717,634Forrest M. Schneider
    47,753,768
    1,175,767Robert J. Stucker
    47,598,858
    1,330,677


The appointment by the Board of Directors of PricewaterhouseCoopers LLP as
the independent auditors of GBC's financial statements for the year ended
December 31, 2004 was ratified at the meeting according to the following votes:
For: 48,899,146, Against or Withheld: 26,359, Abstentions: 4,030.

29



Item 6. Exhibits and Reports on Form-8K

(a)                Exhibits (numbered in accordance with item 601 of regulation S-K)

Exhibit 31.1: Certification of the Chief Executive Officer Pursuant to
Section 
                   
302 of the Sarbanes-Oxley Act of 2002.

> Exhibit 31.2: Certification of the Chief Financial Officer Pursuant to
> Section 302 of the Sarbanes-Oxley Act of 2002.
> Exhibit 32.1: Certification of the Chief Executive Officer Pursuant to
> Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2: Certification of the Chief Financial Officer Pursuant to
Section 
                    906 of the Sarbanes-Oxley Act of 2002.

(b)                Reports on Form 8-K: Registrant's Press Release dated April 22, 2004
  setting forth earnings for the                      first quarter ended March
31, 2004.

30



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 CORPORATIONBy:
    /s/ Dennis J. MartinDennis J. MartinChairman, President and Chief
      Executive OfficerBy:
    /s/ Don CivginDon CivginSenior Vice President and Chief
      Financial OfficerAugust 6, 2004


31