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PROSPECTUS
[LOGO OF CORPORATE EXPRESS APPEARS HERE]
14,000,000 SHARES OF COMMON STOCK
This Prospectus covers 14,000,000 shares of Common Stock, par value $.0002
per share, of Corporate Express, Inc. (the "Company" or "Corporate Express")
which the Company may issue from time to time in connection with its direct and
indirect acquisition of securities and assets of other businesses. The Company
expects that the terms upon which it may issue the shares will be determined
through negotiations with the shareholders or principal owners of the
businesses whose securities or assets are acquired. It is expected that the
shares that are issued will be valued at prices reasonably related to market
prices for the Common Stock prevailing either at the time an acquisition
agreement is executed or at the time an acquisition is consummated. In
addition, the Company may issue shares in satisfaction of currently outstanding
or as yet unissued notes or warrants of the Company which have been or may be
issued in connection with acquisitions, which notes or warrants are convertible
into or exercisable for shares of Common Stock of the Company.
The Company's Common Stock is traded on the Nasdaq National Market ("Nasdaq")
under the symbol "CEXP." Application will be made to list the shares offered
hereby on Nasdaq. The last reported sale price of the Common Stock on Nasdaq on
July 19, 1996 was $33.38 per share.
All expenses of this offering will be paid by the Company. No underwriting
discounts or commissions will be paid in connection with the issuance of
shares, although finder's fees may be paid with respect to specific
acquisitions. Any person receiving a finder's fee may be deemed to be an
underwriter within the meaning of the Securities Act of 1933, as amended.
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THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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THE DATE OF THIS PROSPECTUS IS JULY 22, 1996.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OF MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES
OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY
PERSON IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO MAKE SUCH OFFER. THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME SHALL NOT, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET
FORTH IN THIS PROSPECTUS OF THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
CONTENTS
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PAGE
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Available Information................................................ 2
Incorporation of Certain Documents by Reference...................... 3
Summary.............................................................. 4
Recent Developments.................................................. 5
Important Factors Regarding Forward-Looking Statements............... 6
Selected Consolidated Financial Data................................. 7
Risk Factors......................................................... 9
Securities Covered by this Prospectus................................ 11
Price Range of Common Stock.......................................... 13
Dividend Policy...................................................... 13
Description of Capital Stock......................................... 14
Legal Matters........................................................ 15
Experts.............................................................. 16
</TABLE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-4 with respect to the Common
Stock offered hereby. This Prospectus, which is included as part of the
Registration Statement, does not contain all the information contained in the
Registration Statement, certain portions of which have been omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement and the exhibits and schedules
thereto.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549 and its regional offices located at 7 World Trade Center, Suite
1300, New York, New York 10048; and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
can be obtained at prescribed rates from the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549.
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Corporate Express (R) is a registered service mark of the Company.
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As used in this Prospectus, "fiscal 1991," "fiscal 1992," "fiscal 1993,"
"fiscal 1994," "fiscal 1995" and "fiscal 1996" refer to the Company's fiscal
years ended or ending February 29, 1992, February 29, 1993, February 28, 1994,
February 25, 1995, March 2, 1996 and March 1, 1997, respectively. All
information regarding the Company in this Prospectus has been adjusted to
reflect a one-for-two reverse stock split on August 29, 1994 and a 50% share
dividend distributed on June 21, 1995.
2
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated herein by reference:
(i) the Company's Annual Report on Form 10-K for the year ended March 2,
1996, as amended by the Form 10-K/A filed on July 10, 1996;
(ii) the Company's Current Report on Form 8-K/A filed on June 19, 1996; and
(iii) the Company's Proxy Statement dated July 9, 1996 for its 1996 Annual
Meeting of Shareholders.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior
to the termination of the offering of the Common Stock offered hereby shall be
deemed to be incorporated herein by reference and to be a part hereof from the
date of filing of such documents.
The Company will furnish without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of the documents referred to above, excluding exhibits thereto. Requests
should be made to: Corporate Express, Inc., 325 Interlocken Parkway,
Broomfield, Colorado 80021, Attention: Secretary. The Company's telephone
number is (303) 373-2800.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
3
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SUMMARY
The information contained in this summary is qualified in its entirety by,
and should be read in conjunction with, the detailed information and financial
statements, including the notes thereto, appearing elsewhere in this Prospectus
or incorporated herein by reference.
Corporate Express is a leading provider of office products and services to
large corporations. Since 1991, Corporate Express has expanded through
acquisitions from a regional operation in Colorado to operations throughout the
United States, Canada, the United Kingdom, Australia and New Zealand. Corporate
Express believes it has developed a substantially different business model from
traditional contract stationers, defining itself as a "Corporate Supplier"
which provides a broad array of non-production goods and services to its
customers while reducing overall procurement costs and providing a high level
of customer service. The Company's current offering includes office supplies,
computer and imaging supplies, computer software, office furniture, forms
management, printing, same-day local delivery service and distribution
logistics management. Corporate Express markets to its existing and prospective
customers through a direct sales force and fulfills its products and services
through over 400 locations and a fleet of over 7,000 owned or contracted
vehicles.
The Company's target customers are large corporations with over 100
employees. The Company believes that these large corporations increasingly are
seeking to reduce the cost of procuring non-production goods and services and
decrease the time and effort spent managing functions that are not considered
core competencies. To that end, corporations are seeking to reduce the number
of their suppliers in order to eliminate the internal costs associated with
multiple invoices, deliveries, ordering procedures, uneven service levels and
inconsistent product availability. Many large corporations operate from
multiple locations and can benefit from selecting a single supplier who can
service them nationally or internationally.
In many non-production goods and services sectors, including office products
and same-day local delivery, competition is often highly fragmented and
consists primarily of smaller local or regional providers. The Company believes
that the desire of large corporations to reduce their number of suppliers to a
small group of reliable and cost-effective partners will lead to a further
consolidation of currently fragmented sectors, as well as initiate
consolidations between sectors where the ultimate requirement will be the
ability to meet customers' needs rather than to supply a particular product or
service.
The Company's Corporate Supplier strategy is designed to reduce its
customers' total costs and the internal effort necessary to manage the
procurement of non-production goods and services. The Company believes that its
target customers value a high level of service including account relationship
managers, delivery services and customized pricing, electronic interfaces,
reporting formats and product catalogs. Corporate Express' broad product and
service offering permits the Company to reduce the procurement costs its
customers incur in dealing with multiple vendors while servicing customers'
broad geographical service and delivery requirements.
Corporate Express also seeks to continually reduce its merchandise and
operating costs which should permit it to offer its customers lower prices. By
purchasing most of its products directly from manufacturers in large volumes
and limiting the number of manufacturers represented in its In-Stock Catalog
and other specialty catalogs, Corporate Express is increasingly able to earn
volume discounts and advertising allowances from its vendors. Corporate Express
believes its computer systems represent a key strategic advantage which
differentiates the Company from its competitors and permits it to achieve cost
savings, provide superior customer service and centrally manage its operations.
4
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The Company historically has grown and intends to continue to grow in the
future through a combination of acquisitions and internal growth. The Company
plans to increase sales to existing customers by cross-selling its expanded
product and service offering and developing existing customers into
international, national or multi-regional accounts. Corporate Express seeks to
gain new customers, including national and international accounts, through the
marketing efforts of its direct sales force and through acquisitions of other
suppliers and companies offering complementary products and services. Further,
the recent merger with U.S. Delivery Systems, Inc. ("Delivery") has expanded
the Company's delivery capabilities and geographic coverage in the United
States and Corporate Express intends to develop sales efforts in these new
geographic areas. In addition, the Company may open additional satellite sales
offices and distribution breakpoints to serve new accounts and to continue to
add new product and service capabilities.
In order to better service its multi-national customers and to take advantage
of the fragmented nature of many international markets, Corporate Express has
devoted substantial resources to expanding outside of the United States,
principally through acquisitions. The Company has acquired or made investments
in companies in Canada and Australia in fiscal 1995, and the United Kingdom,
New Zealand and Germany in fiscal 1996. The Company plans to enter additional
international markets in the future. Over time, the Company plans to implement
appropriate aspects of the Corporate Supplier business model in its
international operations, including creating in-stock catalogs, consolidating
warehouses, upgrading information systems, acquiring companies offering
complementary products and services and focusing on larger customers and
national and international accounts.
The Company was incorporated under the laws of Colorado in 1985. The Company
operates its business through various subsidiaries. The Company's executive
offices are located at 325 Interlocken Parkway, Broomfield, Colorado 80021, and
its telephone number is (303) 373-2800.
RECENT DEVELOPMENTS
Acquisition Activity. Since the beginning of fiscal 1996, the Company has
completed 29 acquisitions, which acquisitions included 25 office products
companies, three delivery companies and one software reseller. Of these
acquisitions, 16 were in the United States, two were in Canada, three were in
the United Kingdom, four were in Australia, three were in New Zealand, and one
was in Germany. The largest of the Company's completed acquisitions in fiscal
1996 closed on May 15, 1996, which acquisition was effective as of April 22,
1996, when the Company acquired all of the outstanding capital stock of ASAP
Software Express, Inc. ("ASAP"), a direct reseller of computer software based
in Buffalo Grove, Illinois. The purchase price for the acquisition was
approximately $98 million. For its most recently completed fiscal year ended
December 31, 1995, ASAP had revenues and net income of approximately $158
million and $10 million, respectively. On June 19, 1996, the Company filed with
the Commission a report on Form 8-K/A containing information (including
financial statements) relating to the ASAP acquisition.
Announcement of Revised Results. After reviewing certain costs in accordance
with its established policies relating to accounting for past acquisitions, the
Company revised its accounting and reclassified certain costs from accrued
purchase costs to warehouse assimilation costs which is now reported in
warehouse operating and selling expenses. These adjustments resulted in an
increase in reported expenses affecting net income by $0.87 million and $1.26
million in the second and third quarters of fiscal 1995, respectively. On June
14, 1996, the Company filed with the Commission amended quarterly reports to
reflect these changes. In addition, on June 14, 1996, the Company announced
that it had reduced the fiscal 1995 fourth quarter merger and other
nonrecurring charges by $5.5 million to $42.8 million, of which $6.0 million
was associated with changes in the Company's product offering and has been
reclassified to a merger-related provision as part of cost of goods sold. These
adjustments resulted in an increase in net income by $3.6 million for the
fourth quarter of fiscal 1995. The net result of all of the above changes was
an increase in net income for fiscal 1995 to $2.7 million, up from the $1.2
million previously announced in a press release.
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First Quarter 1996 Results. The Company announced sales of $500.6 million for
the first fiscal quarter ended June 1, 1996, compared to sales of $330.4
million in the first quarter of fiscal 1995. Net income and earnings per share
for the first quarter of fiscal 1996 were $9.6 million and $.13, respectively,
compared to $6.5 million and $.10, respectively, for the first quarter of
fiscal 1995.
Corporate Reorganization. As of June 18, 1996, the Company consummated a
reorganization pursuant to which the Company formed CEX Holdings, Inc., a
wholly-owned subsidiary organized under the laws of Colorado ("CEX Holdings"),
and contributed substantially all of its assets, including the capital stock of
all operating subsidiaries, and assigned substantially all of its liabilities,
to CEX Holdings. CEX Holdings is the sole subsidiary of the Company. The
Company believes that the reorganization will enable the Company to achieve
certain tax advantages, provide the Company more flexibility to engage in
certain financing transactions and allow the Company to better manage its
operating subsidiaries.
Convertible Note Offering. On June 24, 1996, the Company consummated an
offering of $325,000,000 principal amount of 4 1/2% Convertible Notes due July
1, 2000 (the "Notes") to certain qualified institutional buyers, institutional
accredited investors and non-U.S. persons (the "Note Offering"). The Note
Offering was conducted pursuant to Rule 144A, Regulation D and Regulation S
under the Securities Act. The Notes will be convertible into shares of Common
Stock of the Company at a conversion price of $50.00 per share, subject to
certain adjustments. The Notes are general unsecured obligations of the Company
which will rank pari passu with the Company's other unsecured obligations and
general liabilities, including trade payables, and are effectively subordinated
to all of the liabilities of the Company's subsidiaries. Neither the indenture
governing the Notes nor the Notes limit the Company's or any subsidiary's right
to incur secured or unsecured indebtedness.
IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS
Some of the information presented in this Prospectus constitutes forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Although the Company believes that its expectations are
based on reasonable assumptions within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results of the
Company's operations will not differ materially from its expectations. Factors
which could cause actual results to differ from expectations include, among
others, uncertainties related to integrating recent acquisitions, uncertainties
relating to the Company's new product and service offerings, uncertainties
related to future domestic and international acquisitions, uncertainties
related to the Company's systems and proprietary software, uncertainties
related to legislation with respect to independent contract drivers,
uncertainty of whether the Company's activities will continue to be successful,
and uncertainties related to competition and the demand for the products and
services offered for by the Company. Specific reference is made to the risks
and uncertainties described under "Risk Factors."
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SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data for fiscal 1995, fiscal
1994 and fiscal 1993 have been derived from the Company's consolidated
financial statements which have been audited by independent auditors. The
selected consolidated financial data for fiscal 1992 and fiscal 1991 is derived
from unaudited consolidated financial statements. The unaudited consolidated
financial statements have been prepared on the same basis as the audited
consolidated financial statements and, in the opinion of management, contain
all adjustments, consisting of only normal recurring adjustments, necessary for
a fair presentation of the financial position and results of operations for
these periods. The information set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the consolidated financial statements of the Company
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
March 2, 1996.
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FISCAL YEAR
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1995 1994 1993 1992 1991
----------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<S> <C> <C> <C> <C> <C>
Statements of Operations
Data:(1)
Net sales............. $ 1,590,104 $927,918 $337,094 $237,473 $195,783
Cost of sales(2)...... 1,173,255 681,962 254,698 175,309 144,418
Merger related
inventory
provisions(3)........ 5,952 -- 1,146 -- --
----------- --------- --------- --------- ---------
Gross profit........ 410,897 245,956 81,250 62,164 51,365
Warehouse operating
and selling
expenses............. 297,275 188,464 69,851 49,383 38,489
Corporate general and
administrative
expenses............. 46,980 23,852 8,690 7,139 5,088
Merger and other
nonrecurring
charges(4)........... 36,838 -- 1,928 2,592 --
----------- --------- --------- --------- ---------
Operating profit.... 29,804 33,640 781 3,050 7,788
Interest expense,
net.................. 15,396 15,610 4,463 4,087 5,109
Other expenses
(income)(5).......... (724) (352) (126) 1,737 480
----------- --------- --------- --------- ---------
Income (loss) before
income taxes......... 15,132 18,382 (3,556) (2,774) 2,199
Income tax expense.... 10,952 6,164 1,894 947 1,326
----------- --------- --------- --------- ---------
Income (loss) before
minority interest.... 4,180 12,218 (5,450) (3,721) 873
Minority interest..... 1,436 69 152 -- --
----------- --------- --------- --------- ---------
Income (loss) from
continuing
operations........... 2,744 12,149 (5,602) (3,721) 873
Income (loss) from
discontinued
operations(6)........ -- -- 138 (4,571) (435)
----------- --------- --------- --------- ---------
Income (loss) before
extraordinary
item............... 2,744 12,149 (5,464) (8,292) 438
Extraordinary
item(7).............. -- 586 (1,169) -- --
----------- --------- --------- --------- ---------
Net income (loss)... $ 2,744 $ 12,735 $ (6,633) $ (8,292) $ 438
=========== ========= ========= ========= =========
Per common share:
Income (loss) from
continuing
operations......... $ .04 $ .24 $ (.21)
=========== ========= =========
Net income (loss)... $ .04 $ .25 $ (.25)
=========== ========= =========
Shares used to compute
per share amounts.... 68,057 49,195 32,265
=========== ========= =========
Balance Sheet Data:(1)
Working capital....... $ 217,243 $131,202 $ 68,084 $ 25,560 $ 21,061
Total assets.......... 910,523 568,161 387,477 108,811 83,682
Long-term debt and
capital lease
obligations.......... 137,468 166,427 161,881 38,576 39,339
Shareholders' equity
and redeemable
preferred(8)......... 496,514 240,470 100,045 25,528 14,502
</TABLE>
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(1) The Delivery acquisition (effective March 1, 1996), the acquisition of
Richard Young Journal, Inc. ("Young") (effective February 27, 1996) and the
acquisition of Lucas Bros., Inc. ("Lucas") (effective November 30, 1993)
were accounted for as poolings of interests and, accordingly, the Delivery,
Young and Lucas accounts and results are included for all periods
presented.
(2) Cost of sales includes occupancy and delivery expenses.
(3) Reflects the write-down to market value of certain inventory which the
Company has decided to eliminate from its product line in connection with
the Delivery, Young and Lucas mergers.
(4) Merger and other nonrecurring charges relate primarily to the mergers with
Delivery and Young in fiscal 1995 and Lucas in fiscal 1993 and include,
among other things, costs to complete the acquisitions, merging and closing
redundant facilities, and centralizing certain administrative functions.
(5) Includes a write-off of $1.2 million of investments in fiscal 1992.
(6) In November 1990, Corporate Express made a strategic decision to close all
of its retail operations and, in February 1993, Lucas adopted a plan to
discontinue its retail operations.
(7) Reflects extraordinary loss related to a write-off of an unamortized
discount on debt in fiscal 1993 and extraordinary gain related to the
repurchase by the Company of $10 million principal amount of Notes in
fiscal 1994.
(8) Redeemable preferred was converted to common stock in fiscal 1994.
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RISK FACTORS
In addition to other information in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the Common Stock.
Rapid Expansion; Integration of Acquisitions; Dependence on Acquisitions for
Future Growth. Through numerous acquisitions completed since 1991, Corporate
Express significantly increased the scope of its operations from a regional
operation in Colorado to operations throughout the United States, Canada, the
United Kingdom, Australia and New Zealand. The majority of these acquisitions
have occurred within the past two years. To date in fiscal 1996, the Company
(through its subsidiaries including Young and Delivery) has completed 29
acquisitions. In fiscal 1995, the Company completed 51 acquisitions. In fiscal
1994, the Company completed 26 acquisitions. There can be no assurance that
Corporate Express' management and financial controls, personnel, computer
systems and other corporate support systems will be adequate to manage the
increase in the size and scope of Corporate Express' operations and acquisition
activity.
An important part of Corporate Express' strategy is to integrate its
acquisitions in North America into its operations and implement the Corporate
Express business model. The Company has not fully implemented the Corporate
Express business model in many of its North American regions, which regions
generally are not performing as favorably as the regions in which the Corporate
Express business model has been implemented. In addition, there can be no
assurance that Corporate Express will be able to implement key aspects of the
Corporate Express business model in a timely manner without substantial costs,
delays, or other problems. Recent acquisitions may not achieve sales,
profitability or asset productivity commensurate with Corporate Express' more
mature regions. In addition, acquisitions involve a number of special risks,
including adverse short-term effects on Corporate Express' reported operating
results, the diversion of management's attention, the dependence on retention,
hiring and training of key personnel, the amortization of acquired intangible
assets and risks associated with unanticipated problems or legal liabilities,
some or all of which could have a material adverse effect on the Company's
operations and financial performance.
A major element of Corporate Express' business strategy is to continue to
pursue acquisitions that either expand or complement its business in new or
existing regions. Acquisitions have constituted, and the Company expects that
acquisitions will continue to constitute in the future, a principal component
of growth in revenue and operating income. There can be no assurance that
Corporate Express will be able to identify and acquire acceptable acquisition
candidates on terms favorable to it and in a timely manner to the extent
necessary to fulfill its expansion plans. A substantial portion of Corporate
Express' capital resources could be used for these acquisitions. Consequently,
the Company may require additional debt or equity financing for future
acquisitions, which additional financing may not be available on favorable
terms, if at all. The failure to complete acquisitions and continue its
expansion could have a material adverse effect on Corporate Express' financial
performance. As the Company proceeds with its acquisition strategy, it will
continue to encounter the risks associated with the integration of acquisitions
described above.
International Expansion. The Company acquired or made investments in
companies in Canada and Australia in calendar 1995 and the United Kingdom and
New Zealand in calendar 1996. In addition, the Company recently entered Germany
and plans to enter additional international markets in the future. Over time,
the Company plans to implement appropriate aspects of the Corporate Supplier
business model in its international operations, including creating in-stock
catalogs, consolidating warehouses, upgrading information systems, acquiring
companies offering complementary products and services and focusing on larger
customers and national and international accounts. Expansion into international
markets may involve additional risks relating to implementing key aspects of
the Corporate Express business model, as well as risks relating to currency
exchange rates, new and different legal, tax, accounting and regulatory
requirements, difficulties in staffing and managing foreign operations,
operating difficulties and other factors. Due to a review of competition in the
Australian office products market by the Australian Competition and Consumer
Commission, future acquisitions of office products suppliers by the Company's
majority-owned subsidiary, Corporate Express Australia, may be subject to
heightened regulatory scrutiny.
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Expanded Product and Service Offering. In recent months, the Company has
significantly expanded its product and service offering through the acquisition
of Young, a computer products distributor, Delivery, a same-day local delivery
company, and ASAP, a direct reseller of computer software and provider of
related services. Certain complementary products now offered by the Company,
such as computer software, have lower gross profit margins than the products
traditionally sold by the Company. The Company intends to continue to make
additions to its product and service offering in the future. Moreover, the
addition by the Company to its product and service offering presents certain
risks and uncertainties involving the Company's relative unfamiliarity with
these new products and services and the market for such new products and
services. There can be no assurance that the Company will be successful in
developing or integrating these or other additions, or that its existing
customers will accept such additions, to the products and services currently
offered by the Company.
Dependence on Systems. During April 1996, Corporate Express began the
implementation of a new 3.0 release of its "ISIS" computer software which is
being developed to incorporate three-tier client/server architecture that is
expected to permit customers and suppliers to better communicate with Corporate
Express. ISIS is intended to give Corporate Express the ability to more readily
customize its product offering, operating procedures and customer services.
This is expected to give Corporate Express the ability to integrate various
product and service offerings, enabling it to reduce procurement costs for its
customers and add value as a service provider. There can be no assurance that
the Company's goals with respect to the systems will be attained. Pending full
introduction of the ISIS upgrades, which may take in excess of 24 months to
complete in North America, various of the Company's operations will be
dependent upon different hardware or software operating systems which may be
costly to maintain or integrate. Further, the Company anticipates that ongoing
modifications to its computer systems such as the introduction of the new
release of ISIS will continue to be made in the future and such modifications
may cause disruptions in operations, delay the integration of acquisitions, or
cost more to design, implement or operate than currently budgeted. Any such
disruptions, delays or costs could have a material adverse effect on the
Company's operations and financial performance.
Although Corporate Express uses computers which have been reliable to date,
it does not currently have redundant computer systems or redundant dedicated
communication lines linking one of its computers to each regional warehouse.
Corporate Express has taken precautions to protect itself from events that
could interrupt its operations, including back-up power supplies that allow its
computer system to function in the event of a power outage, off-site storage of
back-up data, fire protection, physical security systems and an early warning
detection and fire extinguishing system. Notwithstanding these precautions,
there can be no assurance that a fire, flood or other natural disaster
affecting Corporate Express' system or its dedicated communication line would
not disable the system or prevent the system from communicating with the
regional warehouses. The occurrence of any of these events could have a
material adverse effect on the Company's operations and financial performance.
Substantial Competition. Corporate Express operates in a highly competitive
environment. The Company's principal competitors in North America for office
supplies and computer products are regional and national contract stationers,
including the contract stationer operations of office products superstores,
large direct resellers, privately-held companies that generally operate in only
one location, and distributors of business software for personal computers. In
the delivery services sector, the Company also has numerous competitors.
Certain of these competitors have financial or other capabilities which may be
equal to or greater than the Company's and others which provide different types
or levels of service.
Each of the Company's major product and service categories are within
fragmented industries which are currently experiencing a trend toward
consolidation. Certain of the Company's competitors have greater financial
resources than Corporate Express. In addition, there may be increasing
competition for acquisition candidates and there can be no assurance that
acquisitions will continue to be available on favorable terms, if at all.
10
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Fluctuations in Quarterly Operating Results. Corporate Express' product
distribution business is subject to seasonal influences. In particular, net
sales and profits in the United States and Canada are typically lower in the
three months ending in late August due to lower levels of business activity
during the summer months. Because cost of sales includes delivery and occupancy
expenses, gross profit as a percentage of net sales may be impacted by seasonal
fluctuations in net sales and the acquisition of less efficient operations.
Quarterly results may be materially affected by the timing of acquisitions and
the timing and magnitude of acquisition assimilation costs. Therefore, the
operating results for any three-month period are not necessarily indicative of
the results that may be achieved for any subsequent fiscal quarter or for a
full fiscal year.
Dependence on Key Management. Corporate Express' success will continue to
depend to a significant extent on its executive officers and other key
management. Corporate Express has entered into employment agreements with
certain executive officers. There can be no assurance that Corporate Express
will be able to retain its executive officers and key personnel or attract
additional qualified members of management in the future. In addition, the
success of certain of Corporate Express' acquisitions may depend, in part, on
Corporate Express' ability to retain management personnel of the acquired
companies. The loss of the services of any key managers could have a material
adverse effect upon Corporate Express' business.
Possible Volatility of Stock Price. The market price of the Company's Common
Stock has been and can be expected to continue to be subject to significant
fluctuations caused by variations in quarterly operating results, litigation
involving the Company, announcements by the Company or its competitors, general
conditions in the office products and services industry and other factors.
Since the beginning of fiscal 1996, the Common Stock has traded in the range of
$28.88 to $46.75. The stock market in recent years has experienced extreme
price and volume fluctuations that often have been unrelated or
disproportionate to the operating performance of publicly traded companies.
These broad fluctuations may adversely affect the market price of the Common
Stock.
SECURITIES COVERED BY THIS PROSPECTUS
This Prospectus covers shares of Common Stock which the Company may issue
from time to time in connection with its direct and indirect acquisition of
securities and assets of other businesses. The Company expects that the terms
upon which it may issue the shares will be determined through negotiations with
the shareholders or principal owners of the businesses whose securities or
assets are acquired. It is expected that the shares that are issued will be
valued at prices reasonably related to market prices for the Common Stock
prevailing either at the time an acquisition agreement is executed or at the
time an acquisition is consummated. In addition, the Company may issue shares
in satisfaction of currently outstanding or as yet unissued notes or warrants
of the Company which have been or may be issued in connection with
acquisitions, which notes or warrants are convertible into or exercisable for
shares of Common Stock of the Company.
With the consent of the Company, this Prospectus may also be used by persons
who have received or will receive from the Company shares of Common Stock
covered by this Prospectus and who may wish to sell such stock under
circumstances requiring or making desirable its use. In addition, this
Prospectus may be used, with the Company's consent, by pledgees, donees, or
assignees of such persons. The Company's consent to any such use may be
conditioned upon such persons' agreeing not to offer more than a specified
number of shares following supplements or amendments to this Prospectus, which
the Company may agree to use its best efforts to prepare and file at certain
intervals. The Company may require that any such offering be effected in an
organized manner through securities dealers.
Sales by means of this Prospectus may be made from time to time privately at
prices to be individually negotiated with the purchasers, or publicly through
transactions in the over-the-counter market (which may involve block
transactions), at prices reasonably related to market prices at the time of
sale or at negotiated prices. Broker-dealers participating in such transactions
may act as agent or as principal and, when acting as agent, may receive
commissions from the purchasers as well as from the sellers (if also acting as
agent for the
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purchasers). The Company may indemnify any broker-dealer participating in such
transactions against certain liabilities, including liabilities under the
Securities Act. Profits, commissions, and discounts on sales by persons who may
be deemed to be underwriters within the meaning of the Securities Act may be
deemed underwriting compensation under the Securities Act.
Shareholders may also offer shares of stock covered by this Prospectus by
means of prospectuses under other registration statements or pursuant to
exemptions from the registration requirements of the Securities Act, including
sales which meet the requirements of Rule 144 or Rule 145(d) under the
Securities Act, and shareholders should seek the advice of their own counsel
with respect to the legal requirements for such sales.
This Prospectus may be supplemented or amended from time to time to reflect
its use for resales by persons who have received shares of Common Stock for
whom the Company has consented to the use of this Prospectus in connection with
such resales.
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<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock is traded on Nasdaq under the symbol "CEXP." The following
table sets forth the high and low sales prices for the Common Stock from
September 23, 1994, the date of the Company's initial public offering, through
July 19, 1996.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1994
Third Quarter (from September 23, 1994)....................... $15.83 $12.83
Fourth Quarter................................................ 17.50 11.00
1995
First Quarter................................................. $20.00 $15.33
Second Quarter................................................ 25.75 19.00
Third Quarter................................................. 29.88 20.00
Fourth Quarter................................................ 31.63 23.13
1996
First Quarter................................................. $42.25 $28.88
Second Quarter (through July 19, 1996)........................ 45.81 32.75
</TABLE>
On July 19, 1996, the closing sale price of the Common Stock on Nasdaq was
$33.38 per share. On July 19, 1996, there were approximately 570 shareholders
of record of Common Stock.
DIVIDEND POLICY
Corporate Express has not paid cash dividends since its inception. It is
anticipated that Corporate Express will retain all earnings for use in the
expansion of the business and therefore does not anticipate paying any cash
dividends in the foreseeable future. Any future payment of dividends will be at
the discretion of the Corporate Express Board of Directors and will depend
upon, among other things, earnings, financial condition, capital requirements,
level of indebtedness, contractual restrictions with respect to the payment of
dividends and other relevant factors. Corporate Express' senior credit facility
(the "Senior Credit Facility") prohibits the distribution of dividends without
the prior written consent of the lenders. Additionally, the indenture (the
"Indenture") governing Corporate Express' 9 1/8% Senior Subordinated Notes (the
"Notes") prohibits any dividend which would cause a default under the Indenture
or which would cause the failure to comply with certain financial covenants.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company is authorized to issue 100,000,000 shares of common stock, par
value $.0002 per share, 25,000,000 shares of preferred stock, par value $.0001
per share (the "Preferred Stock") and 3,000,000 shares of nonvoting common
stock, par value $.0002 per share. All outstanding shares of Common Stock are
fully paid and nonassessable. As of July 19, 1996, there were approximately
69,700,000 shares of Common Stock outstanding and no shares of Preferred Stock
or nonvoting common stock outstanding.
The following summary description of the Company's capital stock does not
purport to be complete and is subject to and qualified in its entirety by the
description of the Company's capital stock contained in the Articles of
Amendment and Restatement, a copy of which has been filed with the Commission.
Reference is made to the Articles for a detailed description of the provisions
summarized below.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for each share owned of
record on all matters submitted to the vote of shareholders. There are no
cumulative voting rights. Accordingly, the holders of a majority of the shares
voting for the election of directors can elect all the directors if they choose
to do so, subject to voting rights, if any, of holders of Preferred Stock, if
any, to elect directors. Subject to preferences that may be applicable to any
Preferred Stock that may be issued in the future and the restrictions on
payment of dividends imposed by credit facilities and other agreements, the
holders of Common Stock will be entitled to such dividends as may be declared
from time to time by the Board of Directors from funds legally available
therefor and will be entitled, after payment of all prior claims, to receive,
on a pro rata basis, all assets of Corporate Express upon its liquidation,
dissolution or winding up. The Common Stock is not redeemable, does not have
any conversion rights and is not subject to call. Holders of shares of the
Common Stock generally have no preemptive rights to maintain their respective
percentage of ownership in future offers and sales of stock by the Company. The
rights, preferences and privileges of holders of Common Stock are subject to
the rights, preferences and privileges of any Preferred Stock which may be
issued in the future.
The Common Stock is listed on the Nasdaq National Market and trades under the
symbol "CEXP".
NONVOTING COMMON STOCK
Corporate Express, J.P. Morgan and certain other designated shareholders are
parties to Recapitalization Agreements dated as of December 3, 1991 and August
29, 1992, pursuant to which J.P. Morgan, or any transferee of J.P. Morgan, may
exchange its voting shares of Corporate Express' capital stock for nonvoting
shares of the same number and class to comply with regulatory constraints. If
such exchange rights are exercised, the voting shares held by J.P. Morgan, or
its transferee, would be exchanged for an equal number of shares of nonvoting
common stock. The rights of any holder of nonvoting common stock, if issued,
would be identical to the rights of the holders of Common Stock, except that
there would be no voting rights with respect to the nonvoting common stock. No
shares of nonvoting common stock have been issued.
PREFERRED STOCK
None of Corporate Express' authorized Preferred Stock is issued or
outstanding. The Corporate Express Board of Directors is authorized to divide
the Preferred Stock into one or more series and to determine the preferences
and rights and the qualifications, limitations or restrictions thereof,
including any dividend rights, conversion rights, voting rights, redemption
rights, liquidation preferences, sinking fund provisions, the number of shares
constituting the series and the designation of such series. The Company's Board
of Directors may, without shareholder approval, issue Preferred Stock with
voting and other rights that could adversely affect the voting power of the
holders of Common Stock and could have certain anti-takeover effects. Corporate
Express has no present plans to issue any shares of Preferred Stock.
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<PAGE>
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of certain shares of Common Stock (the "Registrable Securities"),
or their transferees, are entitled to certain rights with respect to the
registration under the Securities Act of their shares. These rights are
provided under the terms of agreements between the Company and the holders of
Registrable Securities. Whenever the Company proposes to register any shares of
Common Stock, it is required to give notice to the holders of Registrable
Securities and to include their shares of Common Stock in the registration
statement ("Piggyback Registration Rights"). A holder's Piggyback Registration
Rights are subject to certain conditions, including the ability of the
underwriters for a public offering to limit the number of shares included in
the offering or to exclude certain Registrable Securities from the offering.
Subject to certain limitations in the agreements, the holders of certain
Registrable Securities are also entitled, on no more than two occasions (three
occasions, in limited circumstances), to require that the Company use its
reasonable best efforts to file a registration statement under the Securities
Act, at Company expense, covering the registration of the Registrable
Securities. All registration expenses, other than the fees of the holder's own
counsel and any transfer taxes and underwriting discounts and commissions,
incurred in connection with a registration of the Registrable Securities
required by the holder shall be borne by the Company. The Company will
indemnify the holder against all claims resulting from any untrue statement of
a material fact or material omission made in connection with any registration
statement covering the Registrable Securities.
INFORMATION RIGHTS
Corporate Express is obligated to provide certain holders of Common Stock and
warrants exercisable for Common Stock, with copies of all proxy statements,
registration statements, publicly filed notifications, information provided to
security holders of Corporate Express or the financial community generally, and
a detailed budget for each fiscal year.
LIMITATIONS ON DIRECTORS' LIABILITIES AND INDEMNIFICATION
As permitted by the Colorado Business Corporation Act, the Articles and By-
Laws provide that no director or officer will be liable to the Company or its
shareholders for monetary damages for breach of fiduciary duty as a director or
officer, except for liability (i) for any breach of the director's or officer's
duty of loyalty to the Company or its shareholders, (ii) for acts or omissions
not in good faith or that involve intentional misconduct or a knowing violation
of law, (iii) in respect of certain unlawful dividend payments or stock
redemptions or repurchases, and (iv) for any transaction from which the
director or officer derives an improper personal benefit. The effect of this
provision is to eliminate the rights of Corporate Express and its shareholders
to recover monetary damages against a director or officer for breach of the
fiduciary duty of care as a director or officer (including breaches resulting
from negligent or grossly negligent behavior), except in the situations
described in clauses (i), (ii), (iii) and (iv) above. This provision does not
limit or eliminate the rights of Corporate Express or any shareholder to seek
non-monetary relief such as an injunction or rescission in the event of a
breach of a director's or officer's duty of care. The Articles of Amendment and
Restatement and By-Laws also provide that Corporate Express shall, to the
fullest extent permitted by law, indemnify and advance expenses to each of its
currently acting and former directors and officers and may indemnify and
advance expenses to each of its currently acting and former employees and
agents. Corporate Express has entered into agreements to provide
indemnification for its directors and certain officers consistent with the
Articles of Amendment and Restatement and By-Laws and has obtained director's
and officer's liability insurance.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
Corporate Express by Ballard Spahr Andrews & Ingersoll, Philadelphia,
Pennsylvania.
EXPERTS
The consolidated financial statements and financial statement schedule of
Corporate Express, Inc. included in the Form 10-K have been audited by Coopers
& Lybrand L.L.P., independent accountants, as set forth in their report
included therein. In their report, that firm states that with respect to
Corporate Express of the East, Inc. (formerly Corporate Express of Delaware,
Inc.) and subsidiaries, its opinion is based on the report of Arthur Andersen
LLP, independent public accountants.
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