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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934
Date of Report (Date of earliest event report) April 10, 1998
CORPORATE EXPRESS, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-24642 84-0978360
- ----------------------------- ------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1 Environmental Way
Broomfield, CO 80021
----------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 664-2000
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Item 5 - Other Events
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The Registrant merged with Data Documents Incorporated ("DDI")
effective November 26, 1997 in a transaction which was accounted for as a
pooling of interests. During April 1998 the registrant completed a tender offer
to repurchase 35,000,000 shares of its common stock. As a result of the stock
repurchase, pursuant to Staff Accounting Bulletin No. 96, the accounting for the
merger with DDI has been changed from a pooling of interests transaction to
reflect the transaction as a purchase. Pro forma financial statements for the
eleven months ended January 31, 1998 and the twelve months ended January 31,
1998 reflecting DDI as a purchase transaction are attached. The historical
audited financial statements and unaudited interim financial statements for DDI
were previously filed with the Registrant's Form S-4 (File No. 333-35559) on
September 12, 1997. The Registrant's recently filed annual report on Form 10-K
reflects the DDI merger as a purchase transaction.
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<TABLE>
<CAPTION>
CORPORATE EXPRESS, INC. AND DATA DOCUMENTS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
ELEVEN MONTHS ENDED JANUARY 31, 1998
(Unaudited)
(in thousands, except per share data)
Corporate
Corporate Express
Express Data and
Eleven Months Documents Data Documents
Ended 270 Days Ended Historical
January 31, 1998 (1) November 26, 1997 (2) Combined
---------------------- --------------------- ----------------
<S> <C> <C> <C>
Net sales $ 3,573,311 $ 196,991 $ 3,770,302
Cost of sales 2,733,308 144,652 2,877,960
---------------------- --------------------- ----------------
Gross profit 840,003 52,339 892,342
Warehouse operating and
selling expenses 605,243 26,724 631,967
Corporate general and
admininstrative expenses 105,055 4,847 109,902
Merger and other
nonrecurring charges 14,890 - 14,890
---------------------- --------------------- ----------------
Operating profit 114,815 20,768 135,583
Interest expense, net 38,115 7,021 45,136
Other income 842 - 842
---------------------- --------------------- ----------------
Income before income taxes 77,542 13,747 91,289
Income tax expense 34,457 5,774 40,231
---------------------- --------------------- ----------------
Income before minority interest 43,085 7,973 51,058
Minority interest 1,319 - 1,319
---------------------- --------------------- ----------------
Income from
continuing operations $ 44,404 $ 7,973 $ 52,377
====================== ===================== ================
Weighted average common and common
equivalent shares outstanding:
Basic 131,423 (9) 10,740 (10)
Diluted 137,858 (9) 11,018 (10)
Pro forma income from continuing
operations per common share
Basic $ 0.34 $ .74
Diluted $ 0.32 $ .72
Corporate
Express
and
Data Documents
Pro Forma Pro Forma
Adjustments Combined
---------------- ----------------
Net sales $ 3,770,302
Cost of sales $ 1,063 (3) 2,879,023
---------------- ----------------
Gross profit (1,063) 891,279
Warehouse operating and
selling expenses 528 (4) 632,495
Corporate general and
admininstrative expenses 2,446 (5) 112,348
Merger and other
nonrecurring charges (4,490)(6) 10,400
---------------- ----------------
Operating profit 453 136,036
Interest expense, net (3,671)(7) 41,465
Other income 842
---------------- ----------------
Income before income taxes 4,124 95,413
Income tax expense 810 (8) 41,041
---------------- ----------------
Income before minority interest 3,314 54,372
Minority interest 1,319
---------------- ----------------
Income from continuing operations $ 3,314 $ 55,691
================ ================
Weighted average common and common
equivalent shares outstanding:
Basic (2,142)(11) 140,021
Diluted (2,169)(11) 146,707
Pro forma income from continuing
operations per common share
Basic $ 0.40
Diluted $ 0.38
</TABLE>
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(1) Included in the Company's audited results for the eleven months ended
January 31, 1998 are the DDI results from November 26, 1997 (the date
DDI was acquired by the Company) to January 31, 1998.
(2) Reflects the unaudited results of DDI for the period beginning March 1,
1997 and ending immediately prior to the acquisition of DDI by the
Company.
(3) To conform DDI inventory from a LIFO basis valuation to a FIFO basis
valuation ($996,000) and to conform the accounting for spare parts to be
consistent with the Company's accounting policies and to record
additional depreciation related to the write-up of buildings to fair
value.
(4) To record additional depreciation related to the write-up of equipment
to fair value.
(5) To record amortization of goodwill related to the DDI acquisition over a
40 year period. Total goodwill in connection with the DDI acquisition of
$130,438,000 includes transaction costs and other direct costs of such
acquisition of $1,672,000 and purchase accounting adjustments of
$8,659,000, net of related deferred taxes.
(6) To adjust for the direct costs of the DDI acquisition. Such costs were
paid by DDI subsequent to the acquisition.
(7) To adjust for interest expense related to the revaluation of DDI debt to
fair value.
(8) Tax effects of the pro forma adjustments.
(9) Includes the weighted average common shares issued in connection with
the DDI acqisition weighted from the acquisition date to January 31,
1998.
(10) Reflects stock issued as consideration for DDI at $15.63 per share.
(11) To adjust for the DDI weighted average common shares already included
in the eleven month share calculation.
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CORPORATE EXPRESS, INC. AND DATA DOCUMENTS, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JANUARY 31, 1998
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Corporate
Corporate Express
Corporate Express Express and
------------------------------------ Data and Data
Eleven Months One Month Documents Data Documents Documents
Ended Ended 298 Days Ended Historical Pro Forma Pro Forma
January 31, 1998 (1) March 1, 1997 November 26, 1997 (2) Combined Adjustments Combined
------------------------------------ --------------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 3,573,311 $ 284,867 $ 217,857 $ 4,076,035 $ 4,076,035
Cost of sales 2,733,308 212,387 159,839 3,105,534 $ 1,558 (3) 3,107,092
------------------------------------ --------------------- -------------- ----------- -----------
Gross profit 840,003 72,480 58,018 970,501 (1,558) 968,943
Warehouse operating and
selling expenses 605,243 54,203 29,794 689,240 586 (4) 689,826
Corporate general and
admininstrative expenses 105,055 7,307 5,501 117,863 2,717 (5) 120,580
Merger and other non-
recurring charges 14,890 - - 14,890 (4,490)(6) 10,400
------------------------------------ --------------------- -------------- ----------- -----------
Operating profit 114,815 10,970 22,723 148,508 (371) 148,137
Interest expense, net 38,115 2,399 7,827 48,341 (4,078)(7) 44,263
Other income 842 92 - 934 934
------------------------------------ --------------------- -------------- ----------- -----------
Income before
income taxes 77,542 8,663 14,896 101,101 3,707 104,808
Income tax expense 34,457 2,921 6,256 43,634 754 (8) 44,388
------------------------------------ --------------------- -------------- ----------- -----------
Income before
minority interest 43,085 5,742 8,640 57,467 2,953 60,420
Minority interest 1,319 546 - 1,865 1,865
------------------------------------ --------------------- -------------- ----------- -----------
Income from
continuing
operations $ 44,404 $ 6,288 $ 8,640 $ 59,332 $ 2,953 $ 62,285
==================================== ===================== ============== =========== ===========
Weighted average common
and common equivalent
shares outstanding:
Basic 131,423 (9) (383) 10,740 (10) (2,142)(11) 139,638
Diluted 137,858 (9) (167) 11,018 (10) (2,169)(11) 146,540
Pro forma income from continuing operations
per common share
Basic $ 0.34 $ 0.80 $ 0.45
Diluted $ 0.32 $ 0.78 $ 0.43
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</TABLE>
(1) Included in the Company's audited results for the eleven months ended
January 31, 1998 are the DDI results from November 26, 1997 (the date
DDI was acquired by the Company) to January 31, 1998.
(2) Reflects the unaudited results of DDI for the period beginning February
2, 1997 and ending immediately prior to the acquisition of DDI by the
Company.
(3) To conform DDI inventory from a LIFO basis valuation to a FIFO basis
valuation ($1,502,000) and to conform the accounting for spare parts to
be consistent with the Company's accounting policies and to record
additional depreciation related to the write-up of buildings to fair
value.
(4) To record additional depreciation related to the write-up of equipment
to fair value.
(5) To record amortization of goodwill related to the DDI acquisition over a
40 year period. Total goodwill in connection with the DDI acquisition of
$130,438,000 includes transaction costs and other direct costs of such
acquisition of $1,672,000 and purchase accounting adjustments of
$8,659,000, net of related deferred taxes.
(6) To adjust for the direct costs of the DDI acquisition. Such costs were
paid by DDI subsequent to the acquisition.
(7) To adjust for interest expense related to the revaluation of DDI debt
to fair value.
(8) Tax effects of the pro forma adjustments.
(9) Includes the weighted average common shares issued in connection with
the DDI acqisition weighted from the acquisition date to January 31,
1998.
(10) Reflects stock issued as consideration for DDI at $15.63 per share.
(11) To adjust for the DDI weighted average common shares already included
in the eleven month share calculation.
4
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SIGNATURES
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 hereunto duly authorized.
CORPORATE EXPRESS, INC.
(Registrant)
Date: May 6, 1998 /s/ Sam R. Leno
-----------------------------------
By: Sam R. Leno
Title: Chief Financial Officer and
Executive Vice President
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