<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 1, 1998
OR
(_)TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO _______
Commission File No. 0-24642
-------
CORPORATE EXPRESS, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Colorado 84-0978360
-------------------------- ----------
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
1 Environmental Way
Broomfield, Colorado 80021
-------------------------- --------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 664-2000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---------- ----------
The number of shares of the registrant's common stock, par value $.0002 per
share, outstanding as of September 8, 1998 was 105,387,191.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - FINANCIAL STATEMENTS
CORPORATE EXPRESS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
--------------- ---------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 30,327 $ 44,362
Trade accounts receivable, net of allowance
of $14,687 and $14,523, respectively 653,190 616,574
Notes and other receivables 91,286 86,687
Inventories 269,535 251,108
Deferred income taxes 34,922 40,729
Other current assets 46,607 41,713
----------- -----------
Total current assets 1,125,867 1,081,173
Property and equipment:
Land 17,424 17,540
Buildings and leasehold improvements 133,872 126,006
Furniture and equipment 370,756 339,577
----------- -----------
522,052 483,123
Less accumulated depreciation (150,266) (131,756)
----------- -----------
371,786 351,367
Goodwill, net of $70,130 and $57,558 of accumulated
amortization, respectively 856,680 847,544
Other assets, net 100,609 69,575
----------- -----------
Total assets $ 2,454,942 $ 2,349,659
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THE CONSOLIDATED FINANCIAL STATEMENTS.
-2-
<PAGE>
CORPORATE EXPRESS, INC.
CONSOLIDATED BALANCE SHEETS, Continued
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
August 1, January 31,
1998 1998
------------- --------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable - trade $ 360,745 $ 354,915
Accounts payable - acquisitions 985 6,106
Accrued payroll and benefits 58,504 61,308
Accrued purchase costs 8,968 9,378
Accrued merger and related costs 10,323 15,512
Other accrued liabilities 88,170 80,214
Current portion of long-term debt and capital leases 64,433 36,264
------------- --------------
Total current liabilities 592,128 563,697
Capital lease obligations 7,556 9,414
Long-term debt 1,183,289 753,829
Deferred income taxes 61,175 52,515
Minority interest in subsidiaries 19,147 20,791
Other non-current liabilities 16,591 16,980
------------- --------------
Total liabilities 1,879,886 1,417,226
Contingencies (Note 7)
Shareholders' equity:
Preferred stock, $.0001 par value, 25,000,000 shares
authorized, none issued or outstanding - -
Common stock, $.0002 par value, 300,000,000 shares
authorized, 143,172,963 and 142,392,845 shares
issued and outstanding, respectively 29 28
Common stock, non-voting, $.0002 par value, 3,000,000
shares authorized, none issued or outstanding - -
Additional paid-in capital 858,498 852,507
Retained earnings 114,392 91,887
Accumulated other comprehensive expense (13,883) (11,989)
------------- --------------
959,036 932,433
Less:
Treasury stock, at cost, 35,430,000 shares at August 1, 1998 (383,980) -
------------- --------------
Total shareholders' equity 575,056 932,433
Total liabilities and shareholders' equity $ 2,454,942 $ 2,349,659
============== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THE CONSOLIDATED FINANCIAL STATEMENTS.
-3-
<PAGE>
CORPORATE EXPRESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------------ ------------------------------
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
----------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 1,118,162 $ 925,084 $ 2,226,222 $ 1,846,538
Cost of sales 858,683 708,560 1,708,973 1,412,210
----------- --------- ----------- -----------
Gross profit 259,479 216,524 517,249 434,328
Warehouse operating and selling expenses 180,262 160,426 363,087 321,183
Corporate general and administrative expenses 33,771 26,618 66,873 55,712
----------- --------- ----------- -----------
Operating profit 45,446 29,480 87,289 57,433
Interest expense and other, net 21,787 9,530 34,578 18,483
----------- --------- ----------- -----------
Income before income taxes 23,659 19,950 52,711 38,950
Income tax expense 10,623 8,298 23,667 15,798
----------- --------- ----------- -----------
Income before minority interest 13,036 11,652 29,044 23,152
Minority interest expense (income) 761 (612) 957 (1,522)
----------- --------- ----------- -----------
Income before extraordinary item 12,275 12,264 28,087 24,674
Extraordinary item, net of tax:
Loss on early extinguishment of debt 4,477 - 5,581 -
----------- --------- ----------- -----------
Net income $ 7,798 $ 12,264 $ 22,506 $ 24,674
=========== ========= =========== ===========
Net income per share - Basic:
Net income before extraordinary item $ 0.11 $ 0.10 $ 0.23 $ 0.19
Extraordinary item (0.04) - (0.04) -
----------- --------- ----------- -----------
Net income $ 0.07 $ 0.10 $ 0.19 $ 0.19
=========== ========= =========== ===========
Net income per share - Diluted:
Net income before extraordinary item $ 0.11 $ 0.09 $ 0.22 $ 0.19
Extraordinary item (0.04) - (0.04) -
----------- --------- ----------- -----------
Net income $ 0.07 $ 0.09 $ 0.18 $ 0.19
=========== ========= =========== ===========
Weighted average common shares outstanding:
Basic 107,869 128,389 121,142 127,268
Diluted 112,863 134,700 125,156 133,015
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THE CONSOLIDATED FINANCIAL STATEMENTS.
-4-
<PAGE>
CORPORATE EXPRESS, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Additional Other Treasury
------------------------ Paid-In Comprehensive Retained Stock
Shares Amount Capital Income (Expense) Earnings Amount
------ ------ ------- ---------------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1998 142,392,845 $ 28 $ 852,507 $ (11,989) $ 91,887
Issuance of common stock 780,118 1 5,706
Repurchase of 35,430,000 shares
common stock (383,980)
Tax benefit on non-qualified
stock options exercised 285
Net income 22,505
Other comprehensive income (1,894)
----------------------- ----------- ----------------- ---------- -------------
Balance, August 1, 1998 143,172,963 $ 29 $ 858,498 $ (13,883) $114,392 $ (383,980)
======================= =========== ================= ========== =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-5-
<PAGE>
CORPORATE EXPRESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
August 1, August 2,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 22,506 $ 24,674
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 25,860 19,734
Amortization 13,751 10,973
Loss on early extinguishment of debt 5,581 -
Minority interest (income) expense 957 (1,522)
Other 2,632 2,098
Changes in assets and liabilities, excluding acquisitions:
(Increase) decrease in accounts receivable (13,190) 10,768
(Increase) decrease in inventory (11,798) (9,778)
(Increase) decrease in other current assets (7,905) 3,250
(Increase) decrease in other assets (1,880) (541)
Increase (decrease) in accounts payable (17,704) (10,307)
Increase (decrease) in accrued liabilities 8,642 (26,147)
--------- ---------
Net cash provided by operating activities 27,452 23,202
--------- ---------
Cash flows from investing activities:
Proceeds from sale of assets 1,146 1,837
Capital expenditures (46,878) (53,609)
Payment for acquisitions, net of cash acquired (25,664) (20,484)
Investment in marketable securities (270) (3,870)
Other, net (606) (43)
--------- ---------
Net cash used in investing activities (72,272) (76,169)
--------- ---------
Cash flows from financing activities:
Issuance of common stock 2,412 10,907
Repurchase of common stock (383,980) -
Debt issuance costs (32,188) (273)
Proceeds from long-term borrowings 616,012 20,929
Repayments of long-term borrowings (20,470) (33,402)
Proceeds from short-term borrowings 5,392 4,011
Repayments of short-term borrowings (1,218) (6,749)
Net proceeds from (payments on) line of credit (61,497) 26,802
Cash paid to retire bonds (93,747) -
Other (9) 163
--------- ---------
Net cash provided by financing activities 30,707 22,388
--------- ---------
Effect of foreign currency exchange rate changes on cash 78 (572)
--------- ---------
(Decrease) increase in cash and cash equivalents (14,035) (31,151)
Cash and cash equivalents, beginning of period 44,362 58,993
--------- ---------
Cash and cash equivalents, end of period $ 30,327 $ 27,842
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THE CONSOLIDATED FINANCIAL STATEMENTS.
-6-
<PAGE>
Corporate Express, Inc.
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the accounts of Corporate
Express, Inc. ("Corporate Express" or the "Company") and its majority-owned
subsidiaries. Acquisitions accounted for as purchases are included in the
accounts and operations as of the effective date of the acquisition and
immaterial acquisitions accounted for as poolings of interests are included in
the accounts and operations as of the beginning of the fiscal quarter in which
the acquisition is effective. The Company accounts for its investments in less
than 50% owned entities using the equity or cost methods. All intercompany
balances and transactions have been eliminated.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods presented. The results of operations for these interim periods are not
necessarily indicative of the results to be expected for the full year. These
financial statements should be read in conjunction with the audited consolidated
financial statements and footnotes included in the Company's Annual Report on
Form 10-K for the eleven months ended January 31, 1998.
In January 1998, the Company changed its fiscal year end from the end of
February to January 31, 1998. The consolidated financial statements for the
previously reported prior year second quarter have been restated to conform to
the new fiscal year and, accordingly, reflect the three-month and six-month
periods ended August 2, 1997. Certain reclassifications have been made to the
consolidated financial statements for the three-month and six-month periods
ended August 2, 1997 to conform to the three-month and six-month periods ended
August 1, 1998 presentation. These reclassifications had no impact on net
income.
The Company capitalizes certain internal and external software acquisition
and development costs that benefit future years. The amortization commencement
is dependent on when the software is placed in service (for purchased software)
or when the software is ready for its intended use (for internally developed
software). All software is amortized over its economic useful life, which is
three to seven years, using the straight-line method. Capitalized costs include,
primarily, payments to outside firms for purchased software and for direct
services related to the development of proprietary software (external costs),
salaries and wages of individuals dedicated to the development of software
(internal costs), and capitalized interest. The following table summarizes the
periodic changes to capitalized software costs:
<TABLE>
<CAPTION>
External Internal Interest Gross Amortization Net
-------- -------- -------- -------- ------------- --------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 31, 1998 $62,469 $27,143 $6,070 $ 95,682 $(10,330) $ 85,352
Additions 9,629 8,676 2,393 20,698 (4,886) 15,812
------- ------- ------ -------- -------- --------
Balance, August 1, 1998 $72,098 $35,819 $8,463 $116,380 $(15,216) $101,164
</TABLE>
New Accounting Standards:
In the first quarter of fiscal 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income:" Comprehensive income consists of net income, the change in the foreign
currency translation adjustment and an unrealized holding gain or loss on
marketable securities. Total comprehensive income for the three-month and six
month-periods ended August 1, 1998 and August 2, 1997 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- ----------------------
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
---------------------- ----------------------
<S> <C> <C> <C> <C>
Net income $7,798 $12,264 $22,506 $24,674
Other comprehensive income:
Unrealized foreign currency translation loss (5,944) (4,252) (3,202) (6,192)
Unrealized gain (loss) on securities (254) 2,973 2,144 (1,066)
Income tax expense related to items of other
comprehensive income 99 (1,159) (836) 416
------ ------ ------- -------
Total comprehensive income (SFAS No. 130) $1,699 $9,826 $20,612 $17,832
====== ====== ======= =======
</TABLE>
The Company is required to adopt SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," in the fourth quarter of fiscal 1998.
SFAS No. 131 will supercede the business segment disclosure requirements
currently in effect under SFAS No. 14. SFAS No. 131, among other things,
establishes standards regarding the information a company is required to
disclose about its operating segments and provides
-7-
<PAGE>
Corporate Express, Inc.
Notes to Consolidated Financial Statements
guidance regarding what constitutes a reportable operating segment. The Company
is currently evaluating disclosures under SFAS No. 131 compared to current
disclosures.
The Company is required to adopt the disclosure requirements of SFAS No.
132, "Employer's Disclosures about Pensions and Other Postretirement Benefits,"
in the fourth quarter of fiscal 1998. SFAS No. 132 revises disclosure
requirements for such pension and postretirement benefit plans to, among other
things, standardize certain disclosures and eliminate certain other disclosures
no longer deemed useful. SFAS No. 132 does not change the measurement or
recognition criteria for such plans.
On March 4, 1998, the Accounting Standards Executive Committee (AcSEC)
issued Statement of Position ("SOP") 98-1 providing guidance on accounting for
the costs of computer software developed or obtained for internal use. The
effective date of this pronouncement is for fiscal years beginning after
December 15, 1998. The Company is in the process of reviewing its current
policies for accounting for costs associated with internal software development
projects and how they may be affected by SOP 98-1. The Company believes its
current policies are materially consistent with the SOP; however, the ultimate
impact on the Company's future results of operations has not yet been
determined.
2. ACCRUED PURCHASE COSTS
In conjunction with acquisitions accounted for as purchases, the Company
accrues certain of the direct external costs associated with closing redundant
facilities of acquired companies, and severance and relocation payments for the
acquired companies' employees. All consolidation projects are planned to be
completed within two years of the acquisition date. Remaining balances
primarily represent international and Data Documents Incorporated ("DDI")
consolidation plans.
The following table sets forth activity in the Company's accrued purchase
costs liability account for the six months ended August 1, 1998:
<TABLE>
<CAPTION>
Disposition
Facility Redundant of Assets
Total Exit Costs Facilities Severance & Other
------------ ----------- ----------- ---------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 31, 1998 $ 9,378 $ 464 $3,128 $ 4,400 $1,386
Additions 1,840 217 494 1,095 34
Payments/Utilization (2,250) (179) (719) (1,035) (317)
-------- ----- ------ ------- ------
Balance, August 1, 1998 $ 8,968 $ 502 $2,903 $ 4,460 $1,103
======== ===== ====== ======= ======
</TABLE>
3. MERGER AND OTHER NONRECURRING CHARGES
The Company accrues, among other things, costs to complete pooling of
interests transactions, costs of merging and closing redundant facilities, and
costs associated with personnel reductions and centralizing certain
administrative functions.
-8-
<PAGE>
Corporate Express, Inc.
Notes to Consolidated Financial Statements
The following table sets forth activity in the Company's accrued merger and
other non-recurring charges liability account for the six months ended August 1,
1998:
<TABLE>
<CAPTION>
Balance Cash Non- Balance
1/31/98 Payments Cash Usage 8/1/98
-------- -------- ---------- -------
(In thousands)
<S> <C> <C> <C> <C>
Merger transaction costs (1) $ 611 $ (322) $ 289
Employee severance and
termination costs (2) 9,696 (3,431) 6,265
Facility closure and consolidation costs (3) 5,205 (1,436) 3,769
-------- ------- -------
Accrued merger and related costs, balance 15,512 (5,189) 10,323
Other asset write-downs and costs (4) 2,759 --- $(265) 2,494
-------- ------- ----- -------
Total $ 18,271 $(5,189) $(265) $12,817
======== ======= ----- =======
</TABLE>
There were no reversals of accrued merger and other non-recurring charges
during the six months ended August 1, 1998.
(1) Merger transaction costs are the direct costs from the pooling of interests
transactions and those direct costs incurred by DDI, and include legal,
accounting, investment banking, printing, contract buy-outs and other
related costs.
(2) Employee severance and termination costs are related to the elimination of
duplicate management positions, facility closures and consolidations, and
centralization of certain shared services. Of the 1,716 employees planned
to be terminated, 830 have been terminated as of August 1, 1998. The
Company expects to complete the facility closures and related terminations
for the fiscal 1995 charge, which balance totals $1,396,000, and the fiscal
1996 charge, which balance totals $649,000, by the end of fiscal 1998. The
centralization of certain shared services began in the second quarter of
fiscal 1997 and will continue through fiscal 1998. The Company expects to
complete the facility closures and related terminations for the fiscal year
1997 charge, which balance totals $4,220,000, by the end of fiscal 1998.
(3) Facility closure and consolidation costs are the estimated costs to close
redundant facilities, lease costs and other costs associated with closed
facilities. Of the 215 facilities planned to be closed or consolidated, 152
have been closed or consolidated as of August 1, 1998. The remaining
facilities included in the fiscal 1995 and 1996 charges, and the facilities
identified in the fiscal 1997 charge are expected to be closed by the end
of fiscal 1998.
(4) Other asset write-downs and costs are recorded as contra assets, and
include the expected loss on sale of assets and leasehold improvements and
equipment being abandoned or written off as a result of the exit plans.
The remaining balance primarily represents assets that will be disposed of
in conjunction with facility closures, which are expected to be completed
by the end of fiscal 1998.
4. PRO FORMA ACQUISITION RESULTS
Effective November 26, 1997 the Company issued approximately 10,740,000
shares of common stock in exchange for all of the outstanding stock of DDI, a
provider of forms management services and systems, custom business forms and
pressure-sensitive labels.
The operating results of DDI are included in the Company's consolidated
statement of operations from the effective date of the acquisition. The
following pro forma financial information assumes the DDI acquisition occurred
at the beginning of the three-month and six-month periods ended August 2, 1997
and is further adjusted to reflect goodwill amortization, revaluation of debt
and the issuance of shares. These results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the transaction occurred at the beginning of the period, or of results which
may occur in the future.
-9-
<PAGE>
Corporate Express, Inc.
Notes to Consolidated Financial Statements
Three Months Ended Six Months Ended
August 2, 1997 August 2, 1997
-------------------- ------------------
(In thousands, except per share amounts)
(Unaudited)
Net sales $989,152 $1,974,455
Net income 14,494 28,884
Net income per share - Basic 0.10 0.21
Net income per share Diluted 0.10 0.20
5. REPURCHASE OF COMMON STOCK
On April 10, 1998 the Company closed the Dutch Auction tender offer and
purchased 35,000,000 shares tendered at a price of $10.75 per share. The
35,000,000 treasury shares resulting from this transaction are reflected on the
balance sheet at cost of $376,250,000 plus applicable fees and expenses of
approximately $3,000,000.
The Company's Board of Directors recently authorized the repurchase of
shares of common stock from time to time in open market transactions, block
purchases, privately negotiated transactions and otherwise, at prevailing
prices. Financing for such purchases is available through the Senior Secured
Credit Facility (see Note 6), as well as from cash flow from operations.
Accordingly, as of August 31, 1998, the Company purchased approximately
2,473,000 shares of its issued and outstanding common stock, par value $.0002
per share, of which 430,000 shares were purchased in the second fiscal quarter
of 1998, and the balance was purchased in August 1998. These treasury shares are
reflected on the balance sheet at cost. The Company intends to periodically
purchase additional shares in open market transactions.
6. DEBT
On April 22, 1998, the Company executed a new $1 billion Senior Secured
Credit Facility ("Senior Secured Credit Facility") consisting of a $250,000,000,
seven-year term loan and a $750,000,000 five-year revolving credit facility and
terminated the existing $500,000,000 Credit Facility ("Senior Credit Facility").
The Company has utilized borrowings under the new credit facility to fund the
purchase of 35,000,000 shares of its common stock pursuant to its Dutch Auction
tender offer, to repay and terminate the previously existing Senior Credit
Facility and for general corporate and working capital requirements. The Senior
Secured Credit Facility is guaranteed by substantially all domestic subsidiaries
of the Company and is collateralized by all tangible and
-10-
<PAGE>
Corporate Express, Inc.
Notes to Consolidated Financial Statements
intangible property of the guarantors, including inventory and receivables. At
the borrower's option interest rates are at a base rate or a Eurodollar rate
plus an applicable margin determined by a leverage ratio as defined in the loan
agreements. The term loan's interest rate ranges from 0.25% to 0.75% above the
revolving loan. The Company is subject to usual convenants customary for this
type of facility including restrictions on dividends, additional borrowings and
certain financial covenants. Approximately $1,810,000 of deferred financing
costs related to the terminated Senior Credit Facility were expensed in the
first quarter of fiscal 1998 and are reflected as an extraordinary item of
$1,104,000, net of tax of $706,000.
The Company settled an interest rate hedging contract based on $300,000,000
of U.S. Treasury notes related to the completed offering of the 9 5/8% Notes.
The cost of the settlement of the contract was $7,271,000 and will be amortized
over the ten-year term of the 9 5/8% Notes, bringing the effective interest rate
of the debt instrument to 9.83%.
On May 29, 1998 the Company issued at par $350,000,000 principal amount of
unsecured 9 5/8% Senior Subordinated Notes due 2008 (the "9 5/8% Notes"). The 9
5/8% Notes are guaranteed by all material domestic subsidiaries of the Company
and are subordinated in right of payment to all senior debt, which totals
approximately $540,000,000 on August 1, 1998. On or after June 1, 2003 through
maturity, the 9 5/8% Notes may be redeemed at the option of the Company, in
whole or in part, at redemption rates ranging from 104.813% to 100%. At any time
on or before June 1, 2001, the Company may redeem up to 35% of the 9 5/8% Notes
with the net cash proceeds of one or more public equity offerings at a
redemption price equal to 109.625% of the principal amount thereof, subject to
certain restrictions. Semi-annual interest payments are due on June 1 and
December 1 commencing on December 1, 1998. A portion of the proceeds from the
sale of the 9 5/8% Notes was used to repay prior to maturity substantially all
of the $90,000,000 9 1/8% Senior Subordinated Notes Series B due 2004 ("the 9
1/8% Notes") and to repay $245,000,000 on the Senior Secured Credit Facility.
As a result of the early extinguishment of the 9 1/8% Notes, the Company
recorded an extraordinary loss of $4,477,000, net of tax of $2,862,000, in the
second quarter of fiscal 1998.
7. CONTINGENCIES
In the normal course of business, the Company is subject to certain legal
proceedings. In the opinion of management, the outcome of such litigation will
not have a material adverse effect on the Company's financial position or
operating results. The Company has a dispute with a former shareholder of a
company acquired by the Company in fiscal 1996. No legal proceedings have been
commenced by the shareholder, and the Company cannot determine if any legal
action will be initiated, or the results or materiality of any such action.
8. EARNINGS PER SHARE
Basic and diluted earnings per share are calculated as follows:
<TABLE>
<CAPTION>
(unaudited)
-----------------------------------------------
Three Months Ended Six Months Ended
----------------------- ----------------------
August 1, August 2, August 1, August 2,
1998 1997 1998 1997
----------------------- ----------------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Numerator for basic and diluted EPS:
Income before extraordinary item $ 12,275 $ 12,264 $ 28,087 $ 24,674
Extraordinary item 4,477 --- 5,581 --
----------- -------- ---------- --------
Net income $ 7,798 $ 12,264 $ 22,506 $ 24,674
=========== ======== ========== ========
Basic EPS Calculation:
Denominator:
Average common shares outstanding 107,869 (1) 128,389 121,142(1) 127,268
=========== ======== ========== ========
Earnings per common share:
Income before extraordinary item $ 0.11 $ 0.10 $ 0.23 $ 0.19
Extraordinary item (0.04) -- (0.04) --
----------- -------- ---------- --------
Net income $ 0.07 $ 0.10 $ 0.19 $ 0.19
=========== ======== ========== ========
Diluted EPS Calculation:
Denominator (2):
Basic shares 107,869 128,389 121,142 127,268
Dilutive stock options and warrants 4,994 6,311 4,014 5,747
----------- -------- ---------- --------
Diluted shares 112,863 134,700 125,156 133,015
=========== ======== ========== ========
Earnings per common share:
Income before extraordinary item $ 0.11 $ 0.09 $ 0.22 $ 0.19
Extraordinary item (0.04) --- (0.04) --
----------- -------- ---------- --------
</TABLE>
-11-
<PAGE>
Corporate Express, Inc.
Notes to Consolidated Financial Statements
<TABLE>
<S> <C> <C> <C> <C>
Net income $ 0.07 $ 0.09 $ 0.18 $ 0.19
=========== ======== ========== ========
</TABLE>
(1) Reflects the shares repurchased on the April 10, 1998 and June 16, 1998
purchase dates.
(2) The number of antidilutive stock options omitted from the denominator was
approximately 5,278,000 and 6,714,000 for the three-month periods ended
August 1, 1998 and August 2, 1997, respectively, and approximately
5,964,000 and 7,221,000 for the corresponding six-month periods. Also
excluded from the calculation are the Convertible Notes with an exercise
price of $33.33 per share which is greater than the average market price of
the common shares.
-12-
<PAGE>
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the audited
consolidated financial statements and related notes thereto included in the
Company's Annual Report on Form 10-K for the eleven months ended January 31,
1998 and the consolidated financial statements and related notes thereto
appearing elsewhere in this Form 10-Q.
Some of the information presented in this Form 10-Q 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 the Company's knowledge of
its business and operations, there can be no assurance that actual results of
the Company's operations and acquisition activities, and their effect on the
Company's results of operations, will not differ materially from its
expectations.
RESULTS OF OPERATIONS
Net Sales. Consolidated net sales increased 20.9% to $1,118,162,000 in the
three months ended August 1, 1998 from $925,084,000 in the three months ended
August 2, 1997 and increased 20.6% to $2,226,222,000 from $1,846,538,000 for the
respective six-month periods. Net sales for the Company's product distribution
segment increased 29.3% to $931,004,000 in the three months ended August 1, 1998
from $720,130,000 in the same period last year, and increased 29.8% to
$1,844,661,000 from $1,420,749,000 for the respective six-month periods. Net
sales for the services segment decreased 8.7% to $187,158,000 in the three
months ended August 1, 1998 from $204,954,000 in the same period last year and
decreased 10.4% to $381,561,000 from $425,789,000 in the respective six-month
periods. The overall increases were primarily attributable to strong internal
growth reflecting increased market penetration in the Company's product
distribution segment, the acquisition of DDI completed on November 26, 1997,
increased international sales and increased sales of computer software. The
decline in the services segment reflects the disposition of certain non-
strategic businesses, the effect of consolidating or closing facilities, and the
elimination of low margin customers.
International operations accounted for 19.8% of consolidated net sales, or
$221,724,000, in the three months ended August 1, 1998 and 18.7% of consolidated
net sales, or $173,242,000, in the same period last year and 19.9% of
consolidated net sales, or $443,651,000, for the six months ended August 1,
1998 compared to 18.8% of net sales, or $347,932,000, for the same period last
year. This growth is primarily attributable to expansion in Germany, Italy,
Ireland, and Switzerland and strong internal growth in Canada and France.
Gross Profit. Cost of sales includes merchandise, occupancy and delivery
costs. Gross profit as a percentage of sales was 23.2% for the three months
ended August 1, 1998 and 23.4% for the same period last year compared to 23.2%
and 23.5% for the respective six-month periods. The slight decrease in the
gross profit percentage reflects increased gross profit margins in the domestic
office products business primarily attributed to enhanced vendor programs offset
by lower gross profit margins in the services segment and international
operations. The decrease in the services segment gross profit margins is
primarily attributable to consolidation costs, increases in driver and vehicle
related costs, and reductions in pricing. The decrease in the international
gross profit margins primarily reflects expansions in Switzerland and Italy
which have lower gross margins on their product mix compared to the product mix
traditionally sold by the Company, and lower gross profit margins in the United
Kingdom due to continuation of inefficiencies resulting from facility and system
integration and the addition of certain lower margin accounts.
Warehouse Operating and Selling Expenses. Warehouse operating and selling
expenses primarily include labor and administrative costs associated with
operating regional warehouses and sales offices, selling expenses including
commissions related to the Company's direct sales force, and warehouse
consolidation and relocation costs and expenses. Warehouse operating and
selling expenses as a percentage of sales decreased to 16.1% for the three
months ended August 1, 1998 from 17.3% for the same period last year and
decreased to 16.3% from 17.4% for the respective six-month periods. The
improvement in operating expenses as a percentage of net sales primarily
reflects the Company's efforts to leverage and streamline its operations,
including the elimination of redundant facilities and positions.
-13-
<PAGE>
Corporate General and Administrative Expenses. Corporate general and
administrative expenses include the central expense incurred to provide
corporate oversight and support for regional operations, goodwill amortization
and certain depreciation. Consolidated corporate general and administrative
expenses increased slightly to 3.0% of net sales in the three months ended
August 1, 1998 from 2.9% in the three months ended August 2, 1997 (the increase
of 0.1% reflects increased goodwill amortization expense primarily from the DDI
acquisition) and were consistent at 3.0% of net sales for the respective six-
month periods. Consolidated corporate general and administrative expenses
increased to $33,771,000 in the three months ended August 1, 1998 from
$26,618,000 in the three months ended August 2, 1997 and to $66,873,000 from
$55,712,000 for the respective six-month periods reflecting increased support
for the Company's expanded operations.
Operating Profit. Consolidated operating profit increased to $45,446,000, or
4.1% of net sales, for the three months ended August 1, 1998 from $29,480,000,
or 3.2% of net sales, in the same period last year. Consolidated operating
profit increased to $87,289,000, or 3.9% of net sales, for the six months ended
August 1, 1998 from $57,433,000, or 3.1% of net sales, in the same period last
year. Operating profit for the product distribution segment increased to
$47,010,000, or 5.0% of product distribution net sales, in the three months
ended August 1, 1998 from $23,478,000, or 3.3% in the three months ended August
2, 1997, and increased to $86,908,000, or 4.7% from $45,261,000, or 3.2% for the
corresponding six-month periods. The increase in operating profit as a
percentage of net sales for the product distribution segment primarily reflects
successful consolidation of operations which decreased expenses and continued
focus on vendor support. Operating losses for the services segment of
$1,564,000, or 0.8% of services net sales, in the three months ended August 1,
1998 compared to operating profit of $6,002,000, or 2.9% in the three months
ended August 2, 1997, and operating profit decreased to $381,000, or 0.1% of
services net sales, from $12,172,000, or 2.9% in the corresponding six-month
periods. The decrease in operating profit as a percentage of net sales for the
services segment reflects lower than expected performance at several delivery
locations, expenses related to integration projects, enhanced employee benefit
plans, and investments to hire and relocate many new members of the management
team, partially offset by cost savings from the elimination of redundant
personnel.
Operating profit for international operations increased to 2.4% of
international net sales in the three months ended August 1, 1998 from 1.2% in
the three months ended August 2, 1997, and to 2.5% from 1.0% in the respective
six-month periods, primarily reflecting improved performance in Australia,
Germany and Canada, partially offset by reduced operating profits in the United
Kingdom reflecting business disruptions from prior consolidation efforts.
Interest Expense. Net interest expense of $21,787,000 in the three months
ended August 1, 1998 increased from $9,530,000 in the three months ended August
2, 1997 and to $34,578,000 from $18,483,000 in the respective six-month periods
primarily due to issuance of the new $350,000,000 9 5/8% Notes and increased
borrowings under the new Senior Secured Credit Facility to fund the borrowings
to finance the repurchase of common stock.
Minority Interest. Minority interest expense of $761,000 in the three months
ended August 1, 1998 compares to $612,000 in the three months ended August 2,
1997, and expense of $957,000 compares to income of $1,522,000 in the
corresponding six-month periods. Minority interest for the current year reflects
a 47.6% minority interest in Corporate Express Australia and in the prior period
it also reflects a 49.0% minority interest in Corporate Express United Kingdom.
The Company acquired the remaining ownership interest in Corporate Express
United Kingdom in June 1997.
Extraordinary Item. The extraordinary loss of $4,477,000, net of tax of
$2,862,000, in the three months ended August 1, 1998 represents the cost of
early repayment of the 9 1/8% Senior Subordinated Notes Series B due 2004. The
extraordinary loss of $5,581,000 in the six months ended August 1, 1998 also
includes $1,104,000, net of tax of $706,000, reflecting the first quarter write-
off of deferred financing costs related to the early extinguishment of the
Company's former Senior Credit Facility.
Net Income. Excluding the extraordinary item, net income of $12,275,000 in
the three months ended August 1, 1998 compared to $12,264,000 for the three
months ended August 2, 1997 and increased to $28,087,000 from $24,674,000 in the
corresponding six-month periods. Including the extraordinary item, net income of
$7,798,000 in the three months ended August 1, 1998 compared to $12,264,000 for
the three months ended August 2, 1997 and $22,506,000 compared to $24,674,000 in
-14-
<PAGE>
the corresponding six-month periods. The increase in the effective tax rate
primarily reflects increased amortization of non-deductible goodwill and the
absence of operating loss carryforwards which were recorded in prior year
periods.
Other. Goodwill at August 1, 1998 of $856,680,000 increased from $847,544,000
at January 31, 1998 reflecting net additions from acquisitions offset by current
year amortization.
The inventory balance at August 1, 1998 of $269,535,000 increased $18,427,000
from $251,108,000 at January 31, 1998 as a result of acquired inventories and
inventory growth to support increased sales.
Accrued purchase costs at August 1, 1998 of $8,968,000 decreased by $410,000
from the January 31, 1998 balance of $9,378,000, reflecting acquisition
additions of $1,840,000 and usage of $2,250,000.
The accrued merger and related costs balance at August 1, 1998 of $10,323,000
decreased by $5,189,000 from the January 31, 1998 balance of $15,512,000,
reflecting current period usage.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through internally
generated funds and borrowings from commercial banks and has financed its
acquisitions through the use of such funds and the issuance of equity and debt
securities.
The Company's Board of Directors recently authorized the repurchase of shares
of common stock from time to time in open market transactions, block purchases,
privately negotiated transactions and otherwise, at prevailing prices.
Financing for such purchases is available through the Senior Secured Credit
Facility (described below), as well as from cash flow from operations. In
addition to the 35,000,000 shares repurchased on April 10, 1998 (described
below), the Company repurchased (through August 31, 1998) approximately
2,473,000 shares in total, of which 430,000 shares were purchased in the second
fiscal quarter of 1998.
On April 10, 1998, the Company closed the Dutch Auction tender offer it
commenced on February 5, 1998, and purchased 35,000,000 shares tendered at a
price of $10.75 per share. The Company funded the purchase of such shares and
the payment of related fees and expenses through its new $1.0 billion Senior
Secured Credit Facility. This Senior Secured Credit Facility consists of a
$250,000,000 seven-year term loan and a $750,000,000 five-year revolving credit
facility. The Senior Secured Credit Facility is guaranteed by substantially all
domestic subsidiaries of the Company and is collateralized by all tangible and
intangible property of the guarantors including inventory and receivables. At
the borrower's option interest rates are at a base rate or a Eurodollar rate
plus an applicable margin determined by a leverage ratio as defined in the loan
agreements. The term loan's interest rate ranges from 0.25% to 0.75% above the
revolving loan interest rate. The Company is subject to usual covenants
customary for this type of facility including financial covenants. The available
funds may be used for general corporate purposes including permitted
acquisitions and permitted share repurchases. As of August 31, 1998, the Company
had $480,597,000 outstanding under the Senior Secured Credit Facility and an
unused borrowing commitment of $519,403,000.
On April 22, 1998 the Company's previous Senior Credit Facility was replaced
and paid in full with proceeds from the new Senior Secured Credit Facility.
Approximately $1,810,000 of deferred financing costs related to the previous
Senior Credit Facility were expensed in the first quarter of fiscal 1998 and are
shown as an extraordinary item of $1,104,000, net of tax of $706,000.
-15-
<PAGE>
On May 29, 1998 the Company issued at par $350,000,000 principal amount of
unsecured 9 5/8% Senior Subordinated Notes due 2008 (the "9 5/8% Notes"). The
notes are guaranteed by all material domestic subsidiaries of the Company and
are subordinated in right of payment to all senior debt which totaled
approximately $540,000,000 at August 1, 1998. On or after June 1, 2003 through
maturity, the notes may be redeemed at the option of the Company, in whole or in
part, at redemption rates ranging from 104.813% to 100%. At any time on or
before June 1, 2001, the Company may redeem up to 35% of the notes with the net
cash proceeds of one or more public equity offerings at a redemption price equal
to 109.625% of the principal amount thereof, subject to certain restrictions.
Semi-annual interest payments are due on June 1 and December 1 commencing on
December 1, 1998. A portion of the proceeds from the sale of these notes was
used to repay prior to maturity substantially all of the $90,000,000 9 1/8%
Senior Subordinated Notes Series B due 2004 (the "9 1/8% Notes") and to repay
$245,000,000 on the Senior Secured Credit Facility. As a result of the early
extinguishment of the 9 1/8% Notes, the Company recorded an extraordinary loss
of $4,477,000, net of tax of $2,862,000, in the second quarter of fiscal 1998.
The Company settled an interest rate hedging contract based on $300,000,000 of
U.S. Treasury notes related to the completed offering of the 9 5/8% Notes. The
cost of the settlement of the contract was $7,271,000 and will be amortized over
the ten-year term of the 9 5/8% Notes, bringing the effective interest rate of
the debt instrument to 9.83%.
The Company does not enter into financial instrument contracts for trading or
speculative purposes. The counterparties to all contracts are major financial
institutions and the Company does not have significant exposure to any one
counterparty. The Company has no financial instrument contracts currently
outstanding.
During the six months ended August 1, 1998, the Company had capital
expenditures of $46,878,000,for computer systems and software, warehouse
reconfigurations, telecommunications equipment, delivery vehicles, leasehold
improvements and investments in facilities. The Company continues to invest in
advanced facilities, the development of its proprietary computer software, and
the upgrade of its computer systems.
Significant uses of cash in the six months ended August 1, 1998 were as
follows: repurchase of common stock of $383,980,000, capital expenditures of
$46,878,000, cash paid for acquisitions of $25,664,000, debt issuance costs of
$32,188,000, net payments on lines of credit of $61,497,000 and other uses of
$2,246,000, partially offset by net proceeds from debt of $510,966,000, and
operating activities of $27,452,000.
The Company expects net capital expenditures for fiscal 1998 of approximately
$80,000,000 comprised of approximately $59,000,000 for upgrading and
enhancing its information systems and telecommunications equipment and
approximately $21,000,000 for warehouse reconfiguration and equipment. Actual
capital expenditures for fiscal 1998 may be greater or less than expected
amounts.
The Company believes that the borrowing capacity under the Senior Secured
Credit Facility, together with proceeds from future debt and equity financings,
in addition to the Company's cash on hand, capital resources and cash flows from
operations, will be sufficient to fund the Company's ongoing operations,
anticipated capital expenditures and acquisition activity for the next twelve
months. However, actual capital needs may change, particularly in connection
with acquisitions which the Company may complete in the future.
INFLATION
Certain of the Company's product offerings, particularly paper products, have
been and are expected to continue to be subject to significant price
fluctuations due to inflationary and other market conditions. The Company
generally is able to pass such increased costs on to its customers through price
increases, although it may not be able to adjust its prices immediately.
Significant increases in paper, fuel and other costs in the future could
materially affect the Company's profitability if these costs cannot be passed on
to customers. In general, the Company does not believe that inflation has had a
material effect on its results of operations in recent years. However, there
can be no assurance that the Company's business will not be affected by
inflation in the future.
-16-
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is a result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
computer programs that have date-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a
system or job failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar business activities.
The Company's ISIS computer software has been designed with the Year 2000
issue in mind, and the Company believes it is Year 2000 compliant; however,
Corporate Express utilizes many different systems and software programs to
process and summarize business transactions. The Company is continuing the
evaluation of its various operating systems and determining the additional
remediation efforts required to ensure that its computer systems will properly
utilize dates beyond December 31, 1999. Preliminary results of this assessment
have revealed that remediation efforts required will vary from system to system.
For example, it appears some systems will not require any additional programming
efforts, while others may require significant programming changes.
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company is
vulnerable to those third parties' failure to remediate their own Year 2000
issue. However, there can be no guarantee that the systems of other companies
on which the Company's systems rely will be timely converted, or that a failure
to convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.
For those systems identified as non-compliant, the Company has begun and, in
certain cases, completed remediation efforts. The Company will utilize both
internal and external resources to reprogram, or replace, and test the software
for Year 2000 modifications. The Company plans to complete the Year 2000
project before January 31, 1999. The total estimated cost of the Year 2000
project is estimated to be between $6,000,000 and $8,000,000 and is being funded
through operating cash flows. These costs are not expected to be material to
the Company's consolidated results of operations. Of the total project cost,
approximately $2,000,000 is attributable to the purchase of new software or
equipment which will be capitalized. The remaining $4,000,000 to $6,000,000
will be expensed as incurred. In a number of instances, the Company may decide
to install new software or upgraded versions of current software programs which
are Year 2000 compliant. In these instances, the Company may capitalize certain
costs of the new system in accordance with current accounting guidelines.
The Company presently believes that, with modifications to existing software
and conversions to new software for those sites which it believes may be
affected, the Year 2000 issue can be mitigated. However, if such modifications
and conversions are not made, or are not completed timely, the Year 2000 issue
could have a material adverse impact on the operations of the Company.
The costs of the project and the date on which the Company plans to complete
the Year 2000 modifications are based on management's best estimates, which were
derived utilizing numerous assumptions of future events including the continued
availability of certain resources, third party modification plans and other
factors. However, there can be no assurance that these estimates will be
achieved, and actual results could differ materially from those plans. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.
-17-
<PAGE>
ITEM 3 -- QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Pursuant to Regulation S-K, registrants are required to disclose certain
information about market risk. The Company is primarily exposed to currency
exchange-rate risk with respect to its transactions and net assets denominated
in Canadian and Australian Dollars, U.K. Pound Sterling, French Francs, German
Marks, Irish Pounds, Swiss Francs and Italian Lira. Business activities in
various currencies expose the Company to the risk that the eventual net dollar
cash inflows resulting from transactions with foreign customers and suppliers
denominated in foreign currencies may be adversely affected by changes in
currency exchange rates. Based on debt balances at August 1, 1998, a
hypothetical 10% change in the Company's weighted average interest rate on its
variable rate debt would have an immaterial effect on the Company's fiscal 1998
pretax earnings and on the fair value of the Company's fixed-rate financial
instruments.
-18-
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
On May 18, 1998, CEX Holdings, Inc. ("CEX"), a wholly-owned subsidiary of the
Company, entered into a Second Supplemental Indenture with respect to its 9 1/8%
Senior Subordinated Notes Series B due 2004 (the "Notes"), which supplemental
indenture amended the Indenture governing the Notes (the "Indenture") to
eliminate certain covenants in the Indenture that restricted the activities of
CEX for the benefit of the holders of the Notes. The amendments to the
Indenture were consented to by a majority of the holders of the outstanding
Notes pursuant to a consent solicitation that was commenced by CEX on April 29,
1998 and which terminated on May 13, 1998. The consent solicitation was
conducted in conjunction with a tender offer for all of the outstanding Notes.
Approximately 98% of the outstanding Notes consented to the aforementioned
amendments to the Indenture, which amendments were effective upon the acceptance
for payment of all Notes tendered pursuant to the tender offer on May 28, 1998.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the shareholders of the Company was held on
July 14, 1998. Of the 108,031,021 shares of the Company's common stock issued
and outstanding and entitled to vote at the meeting, there were present, in
person or by proxy, the holders of 92,362,618 shares, or 85.5% of those shares
eligible to vote, such percentage representing a quorum.
The matter voted upon at the annual meeting was the election of
directors of the Company to serve until the next meeting of shareholders or
until their successors are duly elected and qualified. The votes cast for and
withheld were as follows:
Name Votes For Votes Withheld
---- --------- --------------
Jirka Rysavy 87,668,058 4,694,560
Janet A. Hickey 87,706,756 4,655,862
Robert L. King 87,676,768 4,685,850
Mo Siegel 87,842,215 4,520,403
James P. Argyropoulos 87,861,426 4,501,192
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed on July 29, 1998.
-19-
<PAGE>
SIGNATURE
Pursuant to the requirements 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.
CORPORATE EXPRESS, INC.
By: /s/ Sam R. Leno
------------------
Sam R. Leno
Executive Vice President and Chief Financial
Officer
Date: September 14, 1998 (Principal Financial Officer and
Duly Authorized Officer)
-20-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CORPORATE
EXPRESS CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-START> FEB-01-1998
<PERIOD-END> AUG-01-1998
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