---

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549



FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934



For the Quarterly Period Ended March 31, 2005
Commission File Number 0-2604



GENERAL BINDING CORPORATION



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                                  | April 29, 2005
|Common Stock, $0.125 par value         | 14,026,369    
|Class B Common Stock, $0.125 par value | 2,398,275     

---

GENERAL BINDING CORPORATION AND SUBSIDIARIESFORM
10-QFor the Quarter Ended March 31, 2005Table of Contents

PART I
    Financial Information
    
    PageItem 1.
    Financial StatementsCondensed Consolidated Balance Sheets as of March 31,2005 and
      December 31, 2004
    
    2Condensed Consolidated Statements of Income for the threemonths
      ended March 31, 2005 and 2004
    
    3Condensed Consolidated Statements of Cash Flows for thethree months
      ended March 31, 2005 and 2004
    
    4Notes to Condensed Consolidated Financial Statements
    
    5Item 2.
    Management's Discussion and Analysis of Financial Condition and Results
      of Operations
    
    20Item 3.
    Quantitative and Qualitative Disclosures About Market Risk
    
    27Item 4.
    Controls and Procedures
    
    28PART II
    Other InformationItem 6.
    Exhibits
    
    28Signatures
    
    29


1

GENERAL BINDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(000 omitted)

March 31,
    
    December 31,2005
    
    2004(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $ 7,717
    
    $ 6,259Receivables, less allowances for doubtful accountsand sales returns: 2005 - $16,263, 2004 - $16,476
    
    146,973
    
    141,445Inventories:Raw materials
    
    20,357
    
    20,637Work in process
    
    5,497
    
    6,584Finished goods
    
    74,505
    
    70,775Total inventories
    
    100,359
    
    97,996Deferred tax assets
    
    12,087
    
    12,437Other
    
    
    13,849
    
    14,043Total current assets
    
    280,985
    
    272,180Total capital assets at cost
    
    265,297
    
    272,092Less - accumulated depreciation
    
    (187,332)
    
    (187,399)Net capital assets
    
    77,965
    
    84,693Goodwill and other intangible assets, net of accumulated
      amortization
    
    150,173
    
    150,383Other
    
    
    36,075
    
    33,158Total assets
    
    $ 545,198
      =======
    
    $ 540,414
      =======LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable
    
    $ 50,710
    
    $ 49,758Accrued liabilities
    
    93,641
    
    90,205Notes payable
    
    6,366
    
    7,788Current maturities of long-term debt
    
    25,051
    
    25,925Total current liabilities
    
    175,768
    
    173,676Long-term debt, less current maturities
    
    260,807
    
    255,165Other long-term liabilities
    
    33,617
    
    33,727Stockholders' equity:Common Stock
    
    1,962
    
    1,962Class B Common Stock
    
    300
    
    300Additional paid-in capital
    
    26,885
    
    26,445Retained earnings
    
    74,736
    
    78,171Treasury stock
    
    (19,388)
    
    (21,398)Accumulated other comprehensive income
    
    (9,489)
    
    (7,634)Total stockholders' equity
    
    75,006
    
    77,846Total liabilities and stockholders' equity
    
    $ 545,198
      =======
    
    $ 540,414
      =======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 endedMarch 31,2005
    
    2004(Unaudited)
    
    (Unaudited)Net sales
    $ 180,152
    
    $ 170,931Costs and expenses:Cost of sales:Product cost of sales, including development and
    engineering
    112,088
    
    105,606Selling, service and administrative
    60,612
    
    56,554Equity in earnings from joint ventures
    (559)
    
    (167)Interest expense
    6,694
    
    6,792Restructuring and other:Restructuring
    1,103
    
    823Other
    2,507
    
    -Other expense, net
    991
    
    345(Loss) income before taxes
    (3,284)
    
    978Income tax expense
    151
    
    528Net (loss) income
    $ (3,435)
      ======
    
    $      450
      ======Other comprehensive (loss) income, net of taxes:Foreign currency translation adjustments
    (2,412)
    
    (406)Income on derivative financial instruments
    557
    
    878Comprehensive income
    $ (5,290)
      ======
    
    $      922
      ======Net (loss) income per common share:
    (1)Basic and Diluted
    $   (0.21)
      ======
    
    $     0.03
      ======Weighted average number of common shares outstanding (2)Basic
    16,300
    
    16,111Diluted
    16,300
    
    16,881(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 SUBSIDIARIESCONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (000 omitted)

Three months ended March 31,2005
    
    2004Cash flows from operating activities:
    
    (unaudited)
    
    (unaudited)Net (loss) income
    
    $ (3,435)
    
    $ 450Adjustments to reconcile net (loss) income to net cash used in
      operating activities:Depreciation
    
    4,031
    
    4,928Amortization
    
    1,901
    
    1,297Equity in earnings from joint ventures
    
    (559)
    
    (167)Restructuring and other expenses
    
    3,610
    
    823Provision for doubtful accounts and sales returns
    
    392
    
    731Provision for inventory reserves
    
    1,745
    
    1,498Decrease in non-current deferred taxes
    
    (1,770)
    
    (2,831)Increase in other long term assets
    
    (1,801)
    
    (951)Other
    
    
    180
    
    (85)Changes in current assets and liabilities:Increase in receivables
    
    (8,036)
    
    (2,056)Increase in inventories
    
    (5,206)
    
    (9,377)Increase in other current assets
    
    (123)
    
    (1,836)Decrease in deferred tax assets
    
    49
    
    1,907Increase in accounts payable and accrued liabilities
    
    2,793
    
    1,167Decrease in accrued income taxes
    
    (145)
    
    (100)Net cash used in operating activities
    
    (6,374)
    
    (4,602)Cash flows from investing activities:Capital expenditures
    
    (1,450)
    
    (1,576)Payments for acquisitions and investments
    
    (250)
    
    (604)Proceeds from sale of plant and equipment
    
    2,771
    
    -Net cash provided by (used in) investing activities
    
    1,071
    
    (2,180)Cash flows from financing activities:Proceeds from long-term borrowings-maturities greater than 90 days
    
    40,268
    
    17,981Repayments of long-term debt-maturities greater than 90 days
    
    (45,982)
    
    (12,492)Net change in borrowings-maturities of 90 days or less
    
    14,442
    
    45Decrease in current portion of long-term debt
    
    (5,158)
    
    (4,037)Payments for debt issuance costs
    
    (71)
    
    (78)Proceeds from the exercise of stock options
    
    1,015
    
    1,126Net cash provided by financing activities
    
    4,514
    
    2,545Effect of exchange rates on cash
    
    2,247
    
    234Net increase (decrease) in cash and cash equivalents
    
    1,458
    
    (4,003)Cash and cash equivalents at the beginning of year
    
    6,259
    
    9,568Cash and cash equivalents at the end of the period
    
    $ 7,717
      =====
    
    $ 5,565
      =====Supplemental disclosure of cash flow informationCash paid during the period for:Interest
    
    
    $ 2,825
    
    $ 3,473Income taxes
    
    1,971
    
    1,609The 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 2004 Annual Report
> on Form 10-K. In the opinion of management, all adjustments necessary to present
> the financial position of GBC as of March 31, 2005 and the results of their
> operations and cash flows for the three months ended March 31, 2005 and 2004
> 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
> 2005 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 is
recognized for the Company's fixed stock option plans.

5

> 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):

Three
      months ended March 31,2005
    2004Net (loss) income, as reported
    $(3,435)
    $450Add: Stock-based compensation expense included in reported net income,
      net of tax
    765
    432Deduct: Total stock-based compensation expense determined under the
      fair value method, net of tax
    (1,404)
    (1,120)Pro forma net loss
    $(4,074)
         ======
    $(238)
        =====(Loss) earnings per basic and diluted share:As reported
    $(0.21)
           =====
    $ 0.03
        ====Pro forma
    $(0.25)
           =====
    $(0.01)
        =====


> Pro forma compensation expense for stock options was calculated using the
> Black-Scholes model, with the following weighted-average assumptions for grants
> in 2005 and 2004 respectively: expected life of ten years for 2005 and 2004;
> expected volatility of 67% and 59%; and risk-free interest rates of 4.27% and
> 4.41%. The weighted-average fair values of stock options granted during the
> periods were $9.81 and $12.02 in 2005 and 2004, respectively.

GBC has two financing arrangements that provide the Company with the majority
of its debt capacity. A significant portion of GBC's long-term funding has been
provided through its primary senior credit facility (the "Primary Facility"). As
of March 31, 2005, the Primary Facility was comprised of a $72.5 million
multi-currency revolving credit facility and term loans totaling $109.0 million.
Outstanding borrowings under the Primary Facility at March 31, 2005 included
$109.0 million for the term loans and $9.8 million under the revolving credit
facility. In addition, there were outstanding letters of credit of $12.0
million, which further reduce GBC's availability under the revolving credit
facility. GBC's other major financing arrangement is a multi-currency revolving
credit facility in the Netherlands ("the Netherlands Facility"). As of March 31,
2005, outstanding borrowings on the Netherlands Facility were $0.8 million. GBC
also has a mortgage financing arrangement under which its real estate holdings
in Northbrook, Illinois and its real estate and equipment holdings in Addison,
Illinois are pledged as collateral ("Mortgage Financing"). During the first
quarter of 2005, GBC sold its real estate holdings in Skokie, Illinois, which
previously had also been pledged as collateral under the mortgage financing.
Approximately $1.9 million of the proceeds from the sale were used to prepay the
Mortgage Financing. As of March 31, 2005, outstanding borrowings on the Mortgage
Financing were $8.6 million.

Interest rates on the Primary Facility are variable and, during 2005, were
set at LIBOR plus 3.5% for borrowings under the $72.5 million multi-currency
revolving credit line, and LIBOR plus 4.50% for the term loans. Borrowings under
the Primary Facility are subject to a pricing

6

> 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, multi-currency revolving credit line
> borrowings are subject to a "borrowing base" which is based upon certain
> formulas tied to GBC's trade receivables and inventory. With the exception of
> certain domestic assets (primarily property, plant and equipment) pledged under
> a 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.
> In January 2005, the Company entered into an amendment to the Primary
> Facility. The amendment, among other things, modifies certain financial
> covenants related to Total Leverage and Senior Leverage, as those terms are
> defined in the Primary Facility, to make them less restrictive. The
> modifications also provided for the planned disposition of certain real
> property. The Company was in compliance with the covenants of the Primary
> Facility both before and after the amendment.
> As of and for the three months ended March 31, 2005, the Company was in
> compliance with all financial covenants.
> Long-term debt consisted of the following at March 31, 2005 and December 31,
> 2004 (000 omitted):

March 31,
    December 31,2005
    2004Credit FacilitiesU.S. Dollar borrowings - Term loan -
      (weighted average floating 
      interest rate of 7.01% at March 31, 2005 and 6.70% at
      December 31, 2004)
    $ 109,000
    $ 112,000U.S. Dollar borrowings - Revolving Credit Agreement -
      (weighted average floating 
      interest rate of 6.38% at March 31,
    2005)
    9,800
    -Industrial Development Bond ("IDB")IDB, due March 2026 - (floating interest rate of 2.33%
      at March 31, 2005 and 2.06% at December 31, 2004)
    6,840
    6,840Notes PayableSenior Subordinated Notes, U.S.
      Dollar borrowing, due 2008 -
       (fixed    interest rate of 9.375%)
    150,000
    150,000Notes Payable (Mortgage Financing), U.S.
      Dollar borrowing, due monthly August 2003 to July 2008
      - (fixed interest rate of 6.62%)
    8,579
    11,133Other borrowings
    8,005
    8,905Total debt
    292,224
    288,878Less-current maturities
    (31,417)
    (33,713)Total Long-term debt
    $ 260,807
      =======
    $ 255,165
      =======


7

> (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.

The recorded value of GBC shares held by the Company ("Treasury Stock")
decreased during the period by $2.0 million as 171,308 shares were issued to
employees and directors related to restricted stock units and stock options
previously granted under the Company's stock compensation plans.

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

Three months ended March 31,2005
    2004Numerator:Net (loss) income available to common shareholders
    $(3,435)
    $   450Denominator:Denominator for basic earnings per share - Weighted average number of
      common Shares outstanding  (1)
    16,300
    16,111Effect of dilutive securities:Employee stock options (3)
    -
    539Restricted stock units (3)
    -
    231Denominator for diluted earnings per share - Adjusted weighted-average shares (1)and assumed conversions
    16,300
      =====
    16,881
      =====(Losses) earnings per share - basic and diluted
      (2)
    $(0.21)
      =====
    $  0.03
      =====


> (1) Weighted average shares includes both Common Stock and Class B Common
>   Stock.
>  (2)Amounts represent per share amounts for both Common Stock and Class B
> Common Stock.
>  (3) For the three months ended March 31, 2005 and 2004, GBC had 674,794 and
> 770,469 dilutive        shares outstanding, respectively. These dilutive shares are
> related to stock options and        restricted stock units that were granted under the
> Company's stock compensation plans.        Potentially dilutive shares were not
> included in 2005 diluted earnings per share as they would        have been
> anti-dilutive.

(5) Restructuring and Other

During the first quarter of 2005, GBC recorded restructuring charges of $1.1
million, which consisted of $0.7 million in lease costs related to exiting a
facility in the UK and $0.4 million related to workforce reductions in several
European locations. Approximately 14 employees were severed as a result of these
actions.

During the first quarter of 2004, GBC recorded restructuring charges of $0.8
million related to workforce reduction programs which were announced in 2003.

8

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

Three months ended March 31,2005
    2004Severance and early retirement benefits
    $ 403
    $   823Lease costs
    700
    -Total restructuring expenses
    $ 1,103
          =====
    $   823
          =====


Changes in the restructuring reserve for the three months ended March 31,
2005 were as follows (000 omitted):

Severance
    Asset
      Impairment
      and Other Exit Costs
    Lease
       Costs
    TotalBalance at December 31, 2004
    $ 927
    $ 99
    $ 1,856
    $ 2,882Activities during the period:Provisions
    403
    -
    700
    1,103Cash charges
    (434)
    -
    (46)
    (480)Non-cash charges
    (3)
    (1)
    (2)
    (6)Balance at March 31, 2005(1)
    $ 893
      ====
    $ 98
      ===
    $ 2,508
      =====
    $ 3,499
      =====


> (1) The restructuring reserve at March 31, 2005 consisted of
> $1.9 million related to current items       reported in the balance sheet as a separate item
> and $1.6 million related to long-term lease       agreement costs reported
> in the balance sheet as a component of other long-term
> liabilities.

Management believes that the restructuring provisions recorded will be
adequate to cover estimated restructuring costs that will be paid in future
periods. Management expects that the remaining balance of the liability for
severance and asset impairment and other exit costs will be paid in 2005. Lease
costs (lease payments in excess of the sublease income) average approximately
$0.3 million annually until the last lease terminates in 2013. The balance in
the restructuring reserve at March 31, 2005 is primarily related to severance
and lease costs.

During the first quarter of 2005, GBC recorded other charges of $2.5 million.
These expenses were primarily professional fees incurred in connection with the
pending merger with ACCO World Corporation ("ACCO"), which are not contingent
upon completion of the transaction. See note (12) for further discussion
regarding the pending merger with ACCO.

9

(6) Retirement Plans and Post-Retirement Benefits

The following table summarizes the components of net periodic pension costs
for the Company's retirement plans (000 omitted):

Three months ended March 31,2005
    
    2004Domestic
    
    International
    
    Domestic
    
    InternationalService cost
    $ 87
    
    $ 191
    
    $ 65
    
    $ 583Interest cost
    17
    
    439
    
    10
    
    947Expected return on plan assets
    -
    
    (459)
    
    -
    
    (1,156)Amortization of unrecognized:Net transaction obligation
    -
    
    -
    
    -
    
    -Recognized loss
    2
    
    84
    
    1
    
    151Prior service cost
    -
    
    -
    
    -
    
    (17)Total
    $ 106
      ====
    
    $ 255
      ====
    
    $ 76
      ===
    
    $ 508
      ====Company contributions
    $      -
      ====
    
    $ 604
      ====
    
    $    -
      ===
    
    $ 205
      ====


> The Company expects to contribute a total of $2.7 million to its pension
> plans in 2005.

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

Three months ended March 31,2005
    
    2004Service cost
    $ 156
    
    $ 219Interest cost
    93
    
    159Amortization of unrecognized:Net transaction obligation
    -
    
    11Prior service cost
    (20)
    
    -Recognized loss
    -
    
    61Total
    $229
      ===
    
    $450
      ===Company contributions
    $ 21
      ===
    
    $   -
      ===


The Company expects to contribute a total of $0.5 million to its
post-retirement benefit plan in 2005.

(7) Business Segments and Foreign Operations

GBC is engaged in the design, manufacture and distribution of office
equipment, related supplies and laminating equipment and supplies. The Company
has three primary business groups: a) Commercial and Consumer Group ("CCG"); b)
Industrial and Print Finishing Group ("IPFG"); and c) Europe.

CCG's revenues are primarily derived from the sale of binding, punching and
laminating equipment and related supplies, visual communications products
(writing boards, bulletin

10

boards, easels, etc.), document shredders, custom
binders and folders, and desktop accessories, as well as maintenance and repair
services through both indirect channels (resellers, including office product
superstores, contract/commercial stationers, wholesalers, mail order companies,
mass marketers and other dealers) and direct channels (salespersons,
telemarketers, internet portals, etc.) The Group's products and services are
sold to customers which include the home markets and office markets, commercial
reprographic centers, educational and training markets, and government agencies
throughout North and South America and the Asia/Pacific region. The Europe Group
distributes many of the

IPFG's revenues are primarily derived through sales of thermal and pressure
sensitive films, mid-range and commercial high-speed laminators and large-format
digital print laminators. 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 (i) less cost of sales, (ii)
less selling, service and administrative expenses, and (iii) plus equity in the
earnings or losses of joint ventures.

GBC does not separately identify (i) restructuring and other expenses, (ii)
interest expense or (iii) 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 months ended March 31, 2005 and
2004 (000 omitted):

Unaffiliated Customer SalesThree months ended March 31,
    Affiliated Customer SalesThree months ended March 31,2005
    2004
    2005
    2004Commercial and Consumer Group
    $ 108,276
    $ 105,428
    $ 2,441
    $ 1,724Industrial and Print Finishing Group
    41,998
    37,803
    6,588
    6,281Europe
    29,878
    27,700
    2,869
    3,350Eliminations
    -
    -
    (11,898)
    (11,355)Total
    $ 180,152
      =======
    $ 170,931
      =======
    $ - 
      ==
    $ - 
      ==


11

Operating Income
    Total Segment AssetsThree months ended March 31,
    March 31,
    December 31,2005
    2004
    2005
    2004Commercial and Consumer Group
    $ 8,840
    $ 8,652
    $ 348,961
    $ 346,138Industrial and Print Finishing Group
    5,756
    4,858
    77,762
    78,591Europe
    1,805
    2,150
    62,355
    60,642Unallocated corporate items
    (8,390)
    (6,722)
    56,120
    55,043Total
    $ 8,011
      =====
    $ 8,938
      =====
    $ 545,198
      =======
    $ 540,414
      =======


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

Three months ended March 31,2005
    2004Total segment operating income
    
    
    $ 8,011
    $ 8,938Interest expense
    
    
    (6,694)
    (6,792)Restructuring and other expenses
    
    
    (3,610)
    (823)Other expense
    
    
    (991)
    (345)(Loss) income before taxes
    
    
    $ (3,284)
      ======
    $ 978
      ====


GBC's products are sold primarily in North America, Latin America, Europe,
Japan and Australia to office product 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 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 months ended March 31, 2005 and 2004, by
geographical area is summarized below (000 omitted):

Unaffiliated Customer Sales
    Long-lived AssetsThree months ended March 31,
    March 31,
    December 31,2005
    2004
    2005
    2004US
    $ 101,563
    $ 98,086
    $ 219,066
    $ 222,228Europe
    44,058
    40,533
    19,336
    20,223Other International
    34,531
    32,312
    25,811
    25,783$ 180,152
      =======
    $ 170,931=======
    $ 264,213
      =======
    $ 268,234
      =======


12

(8) New Accounting Standards

In December 2004, the FASB issued a revision to SFAS No. 123, "Share Based
Payment." This statement requires companies to recognize the cost of employee
services received in exchange for an award of equity instruments. Prior to the
revision to SFAS No. 123, companies had an alternative to either recognize the
cost of employee services based upon fair value at the grant date, or to use the
intrinsic value method of accounting under APB No. 25. GBC currently accounts
for stock options in accordance with APB No. 25 under which stock options issued
to employees generally result in no compensation expense. GBC's adoption of SFAS
No. 123(R) will result in compensation expense related to stock options issued.
In April 2005, the FASB approved a new rule which defers the implementation date
of SFAS No. 123(R). The new rule allows adoption for annual, rather than interim
periods that begin after June 15, 2005. The Company is in the process of
evaluating the impact of SFAS No. 123(R), and will adopt it in the first quarter
of 2006. See note 2 to the condensed consolidated financial statements for
proforma disclosure information related to stock compensation expense.

In December 2004, the FASB issued FASB Staff Position No. FAS 109-2,
"Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creation Act of 2004 ("AJCA")." The AJCA,
enacted in October 2004, introduces a temporary 85% dividends received deduction
on the repatriation of certain foreign earnings of a U.S. taxpayer, provided
certain criteria are met. FAS 109-2 provides accounting and disclosure guidance
for the repatriation provision. It allows companies time beyond the financial
reporting period of enactment to evaluate the effect of the AJCA on unremitted
earnings of foreign subsidiaries for the purpose of applying the "indefinite
reversal criterion" under APB Opinion No. 23, "Accounting for Income Taxes -
Special Areas." FAS 109-2 also requires explanatory disclosures from companies
that have not yet completed the evaluation. GBC has begun, but has not yet
completed, its evaluation of the repatriation provision and has not decided
whether, and to what extent, it will repatriate unremitted foreign earnings
under the provision.

(9) 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 2005, 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 March 31, 2005, there have been no
events or circumstances which would warrant a revision to the remaining useful
lives of these assets.

13

GBC's other intangible assets as of March 31, 2005 and December 31, 2004 are
summarized below (000 omitted):

Gross Carrying Amount at
    Accumulated Amortization atMarch 31,
    December 31,
    March 31,
    December 31,2005
    2004
    2005
    2004Customer agreements and relationships
    $5,767
    $5,767
    $(4,432)
    $(4,318)Patents
    1,544
    1,544
    (1,492)
    (1,475)Total
    $7,311
      =====
    $7,311
      =====
    $(5,924)
      ======
    $(5,793)
      ======


Amortization expense related to GBC's other intangible assets is summarized
below (000 omitted):

Fiscal year ended December 31,
    AmortizationExpense2005
    $ 5272006
    4582007
    4582008
    75


> (10) Summarized Financial Information - Joint Ventures (unaudited)

Summarized financial information for GBC's joint ventures, which are
accounted for under the equity method of accounting, is as follows (000s
omitted):

Three months endedMarch 31,2005
    2004Income statement informationNet sales
    $ 31,401
    $ 25,591Gross profit
    9,522
    7,123Net loss
    1,536
    796




March 31,
    December 31,2005
    2004Balance sheet informationCurrent assets
    $ 69,850
    $ 63,646Non-current assets
    40,391
    37,810Current liabilities
    62,983
    53,828Non-current liabilities
    17,747
    21,943


The summarized financial information is presented as of and for the end of
the first fiscal quarter for each of the joint ventures. Pelikan-Quartet and GMP
each have September 30 fiscal year ends and Neschen GBC Graphic Films
Information fiscal year end is December 31.

14

> (11) Income Taxes

Income tax expense in the first quarter of 2005 was $0.2 million on a pre-tax
loss of $3.3 million. The company did not record a tax benefit for the pre-tax
charge of $2.5 million related to the pending merger with ACCO because it is not
deductible for U.S. tax purposes (see section below titled "Pending Merger with
ACCO" for further discussion.) The Company also did not recognize a tax benefit for
the $1.1 million pre-tax restructuring charges due to the Company's tax position
in the jurisdictions where the charges were incurred.

On October 22, 2004, President Bush signed the American Jobs Creation Act of
2004 (the "Act"). The Act creates a temporary incentive for U.S. corporations to
repatriate accumulated income earned abroad by providing an 85% dividends
received deduction for certain dividends from controlled foreign corporations.
The deduction is subject to a number of limitations, and uncertainty remains as
to how to interpret numerous provisions in the Act. As such, GBC is not yet in a
position to decide on whether, and to what extent, it might repatriate foreign
earnings that have not yet been remitted to the U.S. GBC does not expect to be
able to complete its evaluation of the repatriation provision until after
Congress or the Treasury Department provides additional clarifying language on
key elements of the provision. Based on the Company's analysis to date, however,
the range of reasonably possible amounts that GBC may repatriate is between zero
and $69 million (of which $44 million currently is considered permanently
reinvested). While GBC estimates that the related potential range of additional
income tax liability is from zero to $9 million, this estimation is subject to
change in the event that technical correction legislation currently pending in
Congress is enacted. Also, the amount of additional income tax resulting from
repatriation of foreign earnings under the provision would be reduced by the
part of the eligible dividend that is attributable to foreign earnings on which
a deferred tax liability had been previously accrued.

> (12) Pending Merger with ACCO

On March 16, 2005, GBC, along with Fortune Brands, Inc. ("Fortune"),
announced an agreement for Fortune to spin-off its ACCO World Corporation office
products unit ("ACCO") to Fortune's stockholders to be followed immediately by
the merger of a subsidiary of ACCO with and into GBC. The merger is expected to
be completed some time during the third quarter of 2005. During the first
quarter of 2005, GBC reported $2.5 million in other expenses, consisting
primarily of professional fees, which have been incurred in connection with the
pending merger.

> (13) Condensed Consolidating Financial 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.

15

Consolidating Balance Sheets (000 omitted)

March 31, 2005Parent
    Guarantors
    Non-Guarantors
    Eliminations
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    $ 601
    $ -
    $ 7,116
    $ -
    $ 7,717Receivables, net
    76,356
    -
    70,617
    -
    146,973Inventories, net
    62,367
    482
    37,510
    -
    100,359Deferred tax assets
    13,006
    (3,239)
    2,320
    -
    12,087Other
    4,409
    -
    9,440
    -
    13,849Due from affiliates
    -
    55,212
    44,582
    (99,794)
    -Total current assets
    156,739
    52,455
    171,585
    (99,794)
    280,985Net capital assets
    44,766
    5,751
    27,448
    -
    77,965Goodwill and other intangibles, net ofaccumulated amortization
    119,768
    22,394
    8,011
    -
    150,173Other
    
    18,245
    5,784
    12,046
    -
    36,075Investment in subsidiaries
    176,339
    163,966
    -
    (340,305)
    -Total assets
    $ 515,857
      =======
    $ 250,350
      =======
    $ 219,090
      =======
    $ (440,099)
      ========
    $ 545,198
      =======Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable
    $ 30,297
    $ 1,055
    $ 19,358
    $ -
    $ 50,710Accrued liabilities
    61,789
    498
    31,354
    -
    93,641Notes payable
    -
    -
    6,366
    -
    6,366Current maturities of long-term debt
    24,931
    -
    120
    -
    25,051Due to affiliates
    44,905
    -
    19,512
    (64,417)
    -Total current liabilities
    161,922
    1,553
    76,710
    (64,417)
    175,768Long-term debt - affiliated
    73
    -
    586
    (659)
    -Long-term debt, less current maturities
    259,289
    -
    1,518
    -
    260,807Other long-term liabilities
    19,567
    82
    13,968
    -
    33,617Stockholders' equity:Common Stock
    1,962
    -
    2,332
    (2,332)
    1,962Class B Common Stock
    300
    -
    -
    -
    300Additional paid-in capital
    26,885
    95,895
    167,539
    (263,434)
    26,885Retained earnings
    74,736
    141,771
    (38,626)
    (103,145)
    74,736Treasury stock
    (19,388)
    -
    -
    -
    (19,388)Accumulated other comprehensiveincome
    (9,489)
    11,049
    (4,937)
    (6,112)
    (9,489)Total stockholders' equity
    75,006
    248,715
    126,308
    (375,023)
    75,006Total liabilities and stockholders' equity
    $ 515,857
      =======
    $ 250,350
      =======
    $ 219,090
      =======
    $ (440,099)
      ========
    $ 545,198
      =======


16

Consolidating Balance Sheets (000 omitted)

December 31, 2004Parent
    Guarantors
    Non-Guarantors
    Eliminations
    ConsolidatedAssetsCurrent assets:Cash and cash equivalents
    $ 556
    $ 1
    $ 5,702
    $ -
    $ 6,259Receivables, net
    71,593
    -
    69,852
    -
    141,445Inventories, net
    60,035
    387
    37,574
    -
    97,996Deferred tax assets
    13,228
    (3,161)
    2,370
    -
    12,437Other
    4,678
    -
    9,365
    -
    14,043Due from affiliates
    -
    51,877
    47,553
    (99,430)
    -Total current assets
    150,090
    49,104
    172,416
    (99,430)
    272,180Net capital assets
    49,737
    5,980
    28,976
    -
    84,693Goodwill and other intangibles, net ofaccumulated amortization
    119,900
    22,394
    8,089
    -
    150,383Other
    
    11,811
    10,390
    10,957
    -
    33,158Investment in subsidiaries
    177,359
    165,427
    -
    (342,786)
    -Total assets
    $ 508,897
      =======
    $ 253,295
      =======
    $ 220,438
      =======
    $ (442,216)
      ========
    $ 540,414
      =======Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable
    $ 30,624
    $ 878
    $ 18,256
    $ -
    $ 49,758Accrued liabilities
    53,031
    486
    36,688
    -
    90,205Notes payable
    -
    -
    7,788
    -
    7,788Current maturities of long-term debt
    25,547
    -
    378
    -
    25,925Due to affiliates
    48,077
    -
    17,210
    (65,287)
    -Total current liabilities
    157,279
    1,364
    80,320
    (65,287)
    173,676Long-term debt - affiliated
    71
    -
    595
    (666)
    -Long-term debt, less current maturities
    254,426
    -
    739
    -
    255,165Other long-term liabilities
    19,275
    174
    11,364
    -
    30,813Deferred tax liabilities
    -
    -
    2,914
    -
    2,914Stockholders' equity:Common Stock
    1,962
    -
    2,332
    (2,332)
    1,962Class B Common Stock
    300
    -
    -
    -
    300Additional paid-in capital
    26,445
    95,470
    167,539
    (263,009)
    26,445Retained earnings
    78,171
    139,360
    (44,524)
    (94,836)
    78,171Treasury stock
    (21,398)
    -
    -
    -
    (21,398)Accumulated other comprehensiveincome
    (7,634)
    16,927
    (841)
    (16,086)
    (7,634)Total stockholders' equity
    77,846
    251,757
    124,506
    (376,263)
    77,846Total liabilities and stockholders' equity
    $ 508,897
      =======
    $ 253,295
      =======
    $ 220,438
      =======
    $ (442,216)
      ========
    $ 540,414=======


17

Consolidating Income Statements (000
omitted)

Three months ended March 31, 2005Parent
    Guarantors
    Non-Guarantors
    Eliminations
    ConsolidatedUnaffiliated sales
    $ 101,563
    $ -
    $ 78,589
    $ -
    $ 180,152Affiliated sales
    12,461
    -
    9,313
    (21,774)
    -Net sales
    114,024
    -
    87,902
    (21,774)
    180,152Cost of sales, including development andengineering
    76,857
    144
    56,861
    (21,774)
    112,088Selling, service and administrative
    36,570
    -
    24,042
    -
    60,612Equity in earnings from joint ventures
    (79)
    -
    (480)
    -
    (559)Restructuring and other
    2,601
    -
    1,009
    -
    3,610Interest expense
    6,531
    1
    236
    (74)
    6,694Other (income) expense
    (450)
    (323)
    1,690
    74
    991(Loss) income before taxes and undistributedearnings of wholly owned subsidiaries
    (8,006)
    178
    4,544
    -
    (3,284)Income tax (benefit) expense
    (1,974)
    80
    2,045
    -
    151(Loss) income before undistributed earnings ofwholly owned subsidiaries
    (6,032)
    98
    2,499
    -
    (3,435)Undistributed earnings (losses) of wholly-ownedsubsidiaries
    2,597
    2,312
    -
    (4,909)
    -Net (loss) income
    $ (3,435)
      ======
    $ 2,410
      =====
    $ 2,499
      =====
    $ (4,909)
      ======
    $ (3,435)
      ======




|                                                |                                                |                     | Three months ended March 31, 2004
|----------------------------------------------- | ---------------------------------------------- | ------------------- | ---------------------------------
|                                                |                                                |                     | Parent                           
|Unaffiliated sales                              | $ 98,086                                       | $ -                 | $ 72,845                         
|Affiliated sales                                | 11,086                                         | -                   | 7,734                            
|                                                | Net sales                                      | 109,172             | -                                
|                                                | Cost of sales, including development and       |                     |                                  
|                                                | engineering                                    | 73,745              | 19                               
|                                                | Selling, service and administrative            | 34,106              | -                                
|                                                | Equity in earnings from joint ventures         | 170                 | -                                
|                                                | Restructuring                                  | 341                 | -                                
|                                                | Interest expense                               | 6,469               | 5                                
|                                                | Other (income) expense                         | (895)               | (150)                            
|                                                | (Loss) income before taxes and undistributed   |                     |                                  
|                                                | earnings of wholly owned subsidiaries          | (4,764)             | 126                              
|Income tax (benefit) expense                    | (2,573)                                        | 68                  | 3,033                            
|                                                | (Loss) income before undistributed earnings of |                     |                                  
|                                                | wholly owned subsidiaries                      | (2,191)             | 58                               
|Undistributed earnings (losses) of wholly-owned |                                                |                     |                                  
|                                                | subsidiaries                                   | 2,641               | 3,332                            
|Net income (loss)                               | $ 450
      ====                               | $ 3,390
      ===== | $ 2,583
      =====              

18

Consolidating Statement of Cash Flows (000
omitted)

|                                                       |                                                 |                                                     | Three months ended March 31, 2005
|------------------------------------------------------ | ----------------------------------------------- | --------------------------------------------------- | ---------------------------------
|                                                       |                                                 |                                                     | Parent                           
|Net cash (used in) provided by operating activities    | $ (6,954)                                       | $ 44                                                | $ 536                            
|Investing activities:                                  |                                                 |                                                     |                                  
|                                                       | Capital expenditures                            | (700)                                               | (45)                             
|                                                       | Payments of acquisitions and investments        | (250)                                               | -                                
|                                                       | Proceeds from sale of plant and equipment       | 2,748                                               | -                                
|                                                       |                                                 | Net cash provided by (used in) investing activities | 1,798                            
|Financing activities:                                  |                                                 |                                                     |                                  
|                                                       | Increase (reduction) in intercompany borrowings | 9                                                   | -                                
|                                                       | Proceeds of long-term borrowings-               |                                                     |                                  
|                                                       |                                                 | maturities greater than 90 days                     | 39,000                           
|                                                       | Repayments of long-term borrowings-             |                                                     |                                  
|                                                       |                                                 | maturities greater than 90 days                     | (43,897)                         
|                                                       | Net change in borrowings-maturities             |                                                     |                                  
|                                                       |                                                 | of 90 days or less                                  | 12,801                           
|                                                       | Decrease in current portion of long-term debt   | (3,656)                                             | -                                
|                                                       | Payments of debt issuance costs                 | (71)                                                |                                  
|                                                       | Proceeds from the exercise of stock options     | 1,015                                               | -                                
|                                                       |                                                 | Net cash provided by (used in) financing activities | 5,201                            
|Effect of exchange rates on cash                       | -                                               | -                                                   | 2,247                            
|Net increase (decrease) in cash & cash
equivalents     | 45                                              | (1)                                                 | 1,414                            
|Cash and cash equivalents at the beginning of the year | 556                                             | 1                                                   | 5,702                            
|Cash and cash equivalents at the end of the period     | $ 601
      ====                                | $ -
      ==                                        | $ 7,116
      =====              



|                                                       |                                                        |                                                     | Three months ended March 31, 2004
|------------------------------------------------------ | ------------------------------------------------------ | --------------------------------------------------- | ---------------------------------
|                                                       |                                                        |                                                     | Parent                           
|Net cash provided by (used in) operating activities    | $ 1,236                                                | $ 175                                               | $ (6,013)                        
|Investing activities:                                  |                                                        |                                                     |                                  
|                                                       | Capital expenditures                                   | (761)                                               | (175)                            
|                                                       | Payments of acquisitions and investments               | (604)                                               | -                                
|                                                       |                                                        | Net cash used in investing activities               | (1,365)                          
|Financing activities:                                  |                                                        |                                                     |                                  
|                                                       | Increase (reduction) in intercompany borrowings        | 117                                                 | -                                
|                                                       | Proceeds of long-term borrowings-                      |                                                     |                                  
|                                                       |                                                        | maturities greater than 90 days                     | 5,000                            
|                                                       | Repayments of long-term borrowings-                    |                                                     |                                  
|                                                       |                                                        | maturities greater than 90 days                     | (5,000)                          
|                                                       | Net change in borrowings-maturities of 90 days or less | -                                                   | -                                
|                                                       | Decrease in current portion of long-term debt          | (3,150)                                             | -                                
|                                                       | Payments of debt issuance costs                        | (78)                                                |                                  
|                                                       | Proceeds from the exercise of stock options            | 1,126                                               | -                                
|                                                       |                                                        | Net cash (used in) provided by financing activities | (1,985)                          
|Effect of exchange rates on cash                       | -                                                      | -                                                   | 234                              
|Net (decrease) in cash & cash equivalents              | (2,114)                                                | -                                                   | (1,889)                          
|Cash and cash equivalents at the beginning of the year | 3,749                                                  | 1                                                   | 5,818                            
|Cash and cash equivalents at the end of the period     | $ 1,635
      =====                                    | $ 1
      ==                                        | $ 3,929
      =====              

19

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, 2004. See "Management's Discussion and Analysis of Financial
> Condition and Results of Operations" contained therein.Results of Operations - Quarter Ended March 31, 2005 compared to
> Quarter Ended March 31, 2004Sales
> GBC's net sales for the first quarter of 2005 increased 5.4% to $180.1
> million compared to $170.9 million in the first quarter of 2004, as net sales
> increased in each of the Company's business units. Approximately $3.5 million of
> the net sales increase is attributable to favorable foreign currency translation
> rates in 2005 compared to 2004. Net sales by business segment are summarized
> below (000 omitted):
> Three months endedMarch
>       31,2005
>     2004Commercial and Consumer Group
>     $ 108,276
>     $ 105,428Industrial and Print Finishing Group
>     41,998
>     37,803Europe Group
>     29,878
>     27,700Net Sales
>     $ 180,152       
>       =======
>     $170,931        
>       =======

> The Commercial and Consumer Group's sales increased $2.8 million or 2.7% for
> the first quarter of 2005 when compared to 2004, primarily due to increased
> volume in the group's Office Product business resulting from end user demand.
> The Industrial and Print Finishing Group continued its recent growth trend.
> Sales within the group increased $4.2 million or 11.1% over the first quarter of
> 2004 due to strong volume growth of both equipment and supply products in both
> the U.S. Commercial Films and Digital Print Finishing businesses. Sales also
> increased in the group's European and Asian Commercial Film's businesses. Sales
> in Europe increased $2.2 million or 7.9% in 2005. The impact of foreign currency
> translation rates benefited sales in the Europe Group by $1.5 million or 5.2%.
> Europe's local currency sales increased $0.7 million or 2.7% due to volume
> growth in the Group's export and direct sales channels, and strong growth in the
> UK.Gross Margins, Costs and Expenses
> GBC's gross profit margin in the first quarter of 2005 declined 0.4 points to
> 37.8% compared to the first quarter of 2004. Gross profit margins decreased in
> all the Company's Business groups. The largest decline was in the Europe Group
> due to competitive pricing pressures.

20

> Total selling, service and administrative expenses increased $4.1 million in
> the first quarter of 2005 compared to 2004. Operating expenses in the first
> quarter of 2005 were approximately $1.1 million higher than 2004 due to the
> impact of foreign currency translation rates. In addition, higher sales volumes
> caused increases in variable selling and distribution expenses. Also, in
> comparison to the first quarter of 2004, the Company experienced significantly
> higher non-cash compensation expense tied to GBC's stock price, which increased
> considerably after the announcement of the Company's pending merger (see section
> below titled "Pending Merger with ACCO" for further discussion.) Operating
> expenses for the quarter were also unfavorably impacted by higher medical costs.Operating Income
> Segment operating income for GBC's business groups, which is calculated as
> net sales (i) less cost of sales, (ii) less selling, service and administrative
> expenses, and (iii) plus equity in the earnings or losses of joint ventures, is
> summarized below (000 omitted):
> Segment
>       Operating Income
>       Three months endedMarch
>       31,2005
>     2004Commercial and Consumer Group
>     $ 8,840
>     $ 8,652Industrial and Print Finishing Group
>     5,756
>     4,858Europe Group
>     1,805
>     2,150Unallocated corporate items
>     (8,390)
>     (6,722)Total
>     $ 8,011        
>       =====
>     $ 8,938        
>       =====

> Operating income for the first quarter of 2005 decreased 10.4% or $0.9
> million compared to 2004. Operating income in the Commercial and Consumer Group
> increased by $0.2 million in the first quarter of 2005, as higher sales offset a
> reduced gross profit margin. The Industrial and Print Finishing Group's
> operating income increased approximately $0.9 million or 18.5% in the first
> quarter of 2005 compared to 2004, as double-digit sales increases were also
> offset by a slightly reduced gross profit margin. In addition, the Group's
> Neschen joint venture reported income in 2005 compared to a loss in 2004.
> Europe's operating income decreased by $0.4 million in the first quarter of 2005
> compared to 2004, as increased operating expenses outpaced the gross profit on
> increased sales. Corporate expenses are higher in 2005 compared to 2004 due to
> the previously mentioned higher non-cash compensation expense tied to GBC's
> stock price and increased medical costs.Restructuring and Other
> During the first quarter of 2005, GBC incurred restructuring charges of $1.1
> million primarily related to the costs of exiting a facility in the UK and a
> European workforce reduction. In 2004, GBC recorded restructuring charges of

21

> $0.8 million related to workforce reduction programs which were announced in
> 2003.
> In the first quarter of 2005, GBC reported $2.5 million in other expenses
> which were primarily professional fees incurred in connection with the pending
> merger with ACCO (see section titled "Pending Merger with
> ACCO" below for further discussions.)

Interest Expense

Interest expense of $6.7 million in the first quarter of 2005 was relatively
flat when compared to 2004. Savings on significantly lower debt levels during
the first quarter of 2005 were offset by higher rates on variable rate
debt.



> Other Expense
> Other expenses totaled $1.0 million in the first quarter of 2005, compared to
> $0.3 million in 2004. Included in other expense during the first quarter of 2005
> was a $0.6 million loss on the sale and lease-back of an office building in
> Skokie, Illinois.Income Taxes
> Income tax expense in the first quarter of 2005 was $0.2 million on a pre-tax
> loss of $3.3 million. The Company did not record a tax benefit for the pre-tax
> charge of $2.5 million related to the pending merger with ACCO because it is not
> deductible for U.S. tax purposes (see section below titled "Pending Merger with
> ACCO" for further discussion.) The Company also did not record a tax benefit for
> the $1.1 million pre-tax restructuring charges due to the Company's tax position
> in the jurisdictions where the charges were incurred.
> In the first quarter of 2004, income tax expense was $0.5 million on pre-tax
> income of $1.0 million. The 54% effective tax rate recorded in the first quarter
> of 2004 was due to the mix of earnings between taxing jurisdictions and the tax
> impact of earnings repatriation assumptions.
> On October 22, 2004, President Bush signed the American Jobs Creation Act of
> 2004 (the "Act"). The Act creates a temporary incentive for U.S. corporations to
> repatriate accumulated income earned abroad by providing an 85% dividends
> received deduction for certain dividends from controlled foreign corporations.
> The deduction is subject to a number of limitations, and uncertainty remains as
> to how to interpret numerous provisions in the Act. As such, GBC is not yet in a
> position to decide on whether, and to what extent, it might repatriate foreign
> earnings that have not yet been remitted to the U.S. GBC does not expect to be
> able to complete its evaluation of the repatriation provision until after
> Congress or the Treasury Department provides additional clarifying language on
> key elements of the provision. Based on the Company's analysis to date, however,
> the range of reasonably possible amounts that GBC may repatriate is between zero
> and $69

22

> million (of which $44 million currently is considered permanently
> reinvested). While GBC estimates that the related potential range of additional
> income tax liability is from zero to $9 million, this estimation is subject to
> change in the event that technical correction legislation currently pending in
> Congress is enacted. Also, the amount of additional income tax resulting from
> repatriation of foreign earnings under the provision would be reduced by the
> part of the eligible dividend that is attributable to foreign earnings on which
> a deferred tax liability had been previously accrued.Net Income
> GBC reported a net loss of $3.4 million for the first quarter of 2005 ($0.21
> per share) primarily due to the restructuring and other charges recorded during
> the period, compared to net income of $0.5 million for the first quarter of 2004
> ($0.03 per share).

Liquidity and Capital Resources

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.

Primary Credit Facility

GBC has two financing arrangements that provide the Company with the majority
of its debt capacity. A significant portion of GBC's long-term funding has been
provided through its primary senior credit facility (the "Primary Facility"). As
of March 31, 2005, the Primary Facility was comprised of a $72.5 million
multi-currency revolving credit facility and term loans totaling $109.0 million.
Outstanding borrowings under the Primary Facility at March 31, 2005 included
$109.0 million of term loans and $9.8 million under the revolving credit
facility. In addition, there were outstanding letters of credit of $12.0
million, which reduce GBC's availability under the revolving credit line. GBC's
other major financing arrangement is a multi-currency revolving credit facility
in the Netherlands ("the Netherlands Facility"). As of March 31, 2005,
outstanding borrowings on the Netherlands Facility were $0.8 million. GBC also
has a mortgage financing arrangement under which its real estate holdings in
Northbrook, Illinois and its real estate and equipment holdings in Addison,
Illinois are pledged as collateral ("Mortgage Financing"). During the first
quarter of 2005, GBC sold its real estate holdings in Skokie, Illinois, which
previously had also been pledged as collateral under the Mortgage Financing.
Approximately $1.9 million of the proceeds from the sale were used to prepay the
Mortgage Financing. As of March 31, 2005, outstanding borrowings under the
Mortgage Financing were $8.6 million.

23

> Interest rates on the Primary Facility are variable and, during 2005, were
> set at LIBOR plus 3.5% for borrowings under the $72.5 million multi-currency
> 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.Primary 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, fixed charge coverage, and 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, multi-currency revolving credit line borrowings are
> subject to a "borrowing base" which is based upon certain formulas tied to GBC's
> trade receivables and inventory. With the exception of certain domestic assets
> (primarily property, plant and equipment) pledged under the Mortgage Financing,
> substantially all of the assets of General Binding Corporation and its domestic
> subsidiaries, as well as a portion of its equity in certain foreign subsidiaries
> are pledged as collateral under the Primary Facility.
> In January 2005, the Company entered into an amendment to the Primary
> Facility. The amendment, among other things, modifies certain financial
> covenants related to Total Leverage and Senior Leverage, as those terms are
> defined in the Primary Facility, to make them less restrictive. The
> modifications also provided for the planned disposition of certain real
> property. The Company was in compliance with the covenants of the Primary
> Facility both before and after the amendment.Primary Facility - Financial Covenant Compliance
> As of and for the period ended March 31, 2005, GBC was in compliance with all
> financial covenants under the Primary Facility. There can, however, be no
> assurance that the Company will continue to remain in compliance. If the Company
> were to fail one or more of its covenants and 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.Primary Facility - Borrowing Base Availability



> The Primary Facility includes a $72.5 million multi-currency borrowing
> facility that GBC uses to fund its working capital requirements. The Company's
> borrowing capacity under the facility is limited by restrictive covenants on the
> amount of Total Leverage and Senior Leverage, as well as a "borrowing base,"
> which is specifically defined in the facility and is computed as 85% of eligible
> trade receivables and 50% of eligible inventory. Eligible receivables are
> generally defined as current domestic and Canadian receivables which are reduced
> by certain obligations of the Company, and eligible inventory is generally
> defined as inventory owned by GBC's domestic and Canadian operations. At March
> 31,

24

> 2005, GBC's borrowing base was adequate to support GBC's expected future
> working capital requirements. If, however, there were to be a significant
> deterioration in the quality of GBC's eligible receivables or inventory, there
> can be no assurance that adequate liquidity would be available under the
> Facility.Cash Flows
> Cash used in operating activities was $6.4 million for the three months ended
> March 31, 2005 compared to $4.6 million in 2004. Changes in receivables caused a
> $6.0 million increase in the amount of cash used in 2005 versus 2004, while
> changes in inventories caused a $4.2 million decrease in cash used. The larger
> increase in receivables in 2005 was due to higher level of sales in February and
> March of 2005 compared to 2004. While inventory levels were increased in the
> first quarter of both 2005 and 2004 in order to improve customer service levels,
> the need to facilitate the transition of certain manufacturing operations from
> the Company's facility in Booneville, Mississippi to Nuevo Laredo, Mexico caused
> additional increases in 2004. This transition was completed in the third quarter
> of 2004.
> Net cash provided by investing activities was $1.1 million during 2005,
> compared to cash used of $2.2 million in 2004. The change was due primarily to
> $2.7 million in proceeds from the sale of GBC's real estate holdings in Skokie,
> Illinois.Net cash provided by financing activities was $4.5 million during 2005,
> compared to $2.5 million of cash used in financing activities during 2004.
> Increased borrowings due primarily to higher levels of receivables and
> inventories were partially offset by a $1.9 million prepayment of the mortgage
> financing from proceeds of the sale of GBC's real estate holdings in Skokie,
> Illinois.Pending Merger with ACCO
> On March 16, 2005, GBC, along with Fortune Brands, Inc. ("Fortune"),
> announced an agreement for Fortune to spin-off its ACCO World Corporation office
> products unit ("ACCO") to Fortune's stockholders to be followed immediately by
> the merger of a subsidiary of ACCO with and into GBC. The merger is expected to
> be completed some time during the third quarter of 2005. During the first
> quarter of 2005, GBC reported $2.5 million in other expenses, consisting
> primarily of professional fees, which have been incurred in connection with the
> pending merger.New Accounting Standards
> In December 2004, the FASB issued a revision to SFAS No. 123, "Share Based
> Payment." This statement requires companies to recognize the cost of employee
> services received in exchange for an award of equity instruments. Prior to the
> revision to SFAS No. 123, companies had an alternative to either recognize the
> cost of employee services based upon fair value at the grant date, or to use the
> intrinsic value method of accounting under APB No. 25. GBC currently accounts
> for stock options in accordance with APB No. 25 under which stock options

25

> issued
> to employees generally result in no compensation expense. GBC's adoption of SFAS
> No. 123 (R) will result in compensation expense related to stock options issued.
> In April 2005, the FASB approved a new rule which defers the implementation date
> of SFAS No. 123(R). The new rule allows adoption for annual, rather than interim
> periods that begin after June 15, 2005. The Company is in the process of
> evaluating the impact of SFAS No. 123(R), and will adopt it in the first quarter
> of 2006. See note 2 to the condensed consolidated financial statements for
> pro-forma disclosure information related to stock compensation expense.
> In December 2004, the FASB issued FASB Staff Position No. FAS 109-2,
> "Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
> Provision within the American Jobs Creation Act of 2004 ("AJCA"). The AJCA,
> enacted in October 2004, introduces a temporary 85% dividends received deduction
> on the repatriation of certain foreign earnings of a U.S. taxpayer, provided
> certain criteria are met. FAS 109-2 provides accounting and disclosure guidance
> for the repatriation provision. It allows companies time beyond the financial
> reporting period of enactment to evaluate the effect of the AJCA on unremitted
> earnings of foreign subsidiaries for the purpose of applying the "indefinite
> reversal criterion" under APB Opinion No. 23, "Accounting for Income Taxes -
> Special Areas." FAS 109-2 also requires explanatory disclosures from companies
> that have not yet completed the evaluation. GBC has begun, but has not yet
> completed, its evaluation of the repatriation provision and has not decided
> whether, and to what extent, it will repatriate unremitted foreign earnings
> under the provision.
> During 2004, GBC revised certain disclosures about pension plans and other
> post retirement benefit plans in accordance with the December 2003 FASB revision
> to SFAS No. 132, "Employers Disclosures about Pensions and Other Post-retirement
> Benefits." The additional disclosures required by this statement include:
> information describing the types of plan assets, investment strategy,
> measurement date(s), plan obligations and cash flows.Forward - Looking Statements
> "Management's Discussion and Analysis of Financial Condition and Results of
> Operations" and elsewhere in this report contain, 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

26

> results may differ from those predicted. The Company undertakes no obligation
> to update these forward-looking statements in the future.

Item 3.

> Foreign Exchange Risk Management

As a result of GBC's global activities, the Company has assets, liabilities,
loans and cash flows denominated in currencies other than the U.S. dollar. From
time to time, GBC utilizes a foreign exchange risk management program to manage
its foreign exchange exposures to help minimize the adverse impact of currency
movements. Certain loans and cash flows in the U.S. and in foreign countries are
currently hedged through foreign currency forward contracts.

The majority of GBC's exposures to currency movements are in Europe, the
Asia/Pacific region, Canada and Mexico, and the significant hedging transactions
related to these areas outstanding as of March 31, 2005 are presented below. All
of the outstanding contracts have maturity dates in 2005 and 2006. Increases and
decreases in the fair market values of the forward agreements are completely
offset by changes in the values of the net underlying foreign currency
transaction exposures. GBC's contracts are primarily for the sale or purchase of
foreign currencies in exchange for U.S. dollars. Selected information related to
GBC's foreign exchange contracts as of March 31, 2005 is as follows (all items
except exchange rates in millions):

Forward contracts as of March 31, 2005
    Average ExchangeRate
    NotionalAmount
    FairMarketValue
    Gain(Loss) (1)Currency sold (2)Sell Euro/Buy USD
    0.77
    $ 7.4
    $ 7.9
    $(0.5)Sell CAD/Buy USD
    1.21
    11.5
    12.5
    (1.0)Sell GBP/Buy USD
    0.53
    3.5
    3.7
    (0.2)Sell USD/Buy Euro
    1.30
    3.7
    4.0
    0.3Sell USD/Buy MXN
    0.09
    4.8
    5.0
    0.2Sell GBP/Buy Euro
    0.69
    3.0
    3.0
    0.0Sell Euro/Buy CAD
    1.57
    12.6
    12.1
    0.5Other
    
    8.2
    8.3
    (0.1)Total
    
    
    
    $(0.8)          
      ====


> (1) As of March 31, 2005, GBC recorded cumulative unrealized gains of
> approximately  $0.6 million in its
> consolidated statement of income related to hedges of intercompany
> 
> loans (hedge accounting has not been applied
> to these transactions). Unrealized losses of
> approximately $1.4 million related to hedges of intercompany inventory purchases
> 
> have been recorded in Other Comprehensive
> Income.
> (2) CAD = Canadian Dollars; GBP = Pound Sterling; MXN = Mexican
> Pesos

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> Interest Rate Risk Management
> As of March 31, 2005, there were no changes with regard to interest rate risk
> since December 31, 2004 that would require further quantitative or qualitative
> disclosure. For GBC's quantitative and qualitative disclosures about interest
> rate risk for the fiscal year ended December 31, 2004, refer to pages 27-28 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
> effectiveness of the design and operation of GBC's disclosure controls and
> procedures pursuant to the 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 March 31, 2005 that has
> materially affected, or is reasonable likely to materially affect, the Company's
> internal control over financial reporting.

Part II

Item 6. Exhibits



Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit
Index hereto.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

GENERAL BINDING CORPORATIONBy:
    /s/ Dennis J. MartinDennis J. MartinChairman, President and Chief
      Executive OfficerBy:
    /s/ Don CivginDon CivginSenior Vice President and Chief
      Financial OfficerMay 10, 2005




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Exhibits Filed with the Securities and Exchange Commssion

|Number | Description of Exhibit                                                                                                                                                                                                                                                   
|------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1    | Agreement and Plan of Merger dated March 15,
    2005 among the Company, Fortune Brands, Gemini Acquisitions Sub Inc. and
    ACCO World Corporation incorporated by refernece hereinto Exhibit 2.1 to the
    Company's Current Report on Form 8-K dated March 15, 2005.
|31.1   | Certification of the Chief Executive Officer
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              
|31.2   | Certification of the Chief Financial Officer
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              
|32.1   | Certification of the Chief Executive Officer
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              
|32.2   | Certification of the Chief Financial Officer
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                          



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