<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1998
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
AMENDMENT NO. 3
to
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
CORPORATE EXPRESS, INC.
(Name of Issuer)
CORPORATE EXPRESS, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK
(Title of Class of Securities)
219888-10-4
(CUSIP Number of Class of Securities)
RICHARD L. MILLETT, JR.
VICE PRESIDENT AND GENERAL COUNSEL
CORPORATE EXPRESS, INC.
1 ENVIRONMENTAL WAY
BROOMFIELD, COLORADO 80021
(303) 664-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of the Person(s) Filing
Statement)
Copies To:
JUSTIN P. KLEIN, ESQ.
GERALD J. GUARCINI, ESQ.
BALLARD SPAHR ANDREWS & INGERSOLL, LLP
1735 MARKET STREET, 51ST FLOOR
PHILADELPHIA, PENNSYLVANIA 19103
February 6, 1998
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
=======================================================================================================
TRANSACTION AMOUNT OF
VALUATION* FILING FEE
- -------------------------------------------------------------------------------------------------------
<S> <C>
$402,500,000 $80,500
=======================================================================================================
</TABLE>
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of 35,000,000 shares of Common Stock at the maximum tender
offer price per share of $11.50.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C>
Amount Previously Paid: $80,500 Filing Party: Corporate Express, Inc.
Form or Registration No.: Schedule 13E-4 Date Filed: February 6, 1998
</TABLE>
================================================================================
<PAGE> 2
The Issuer Tender Offer Statement on Schedule 13E-4 dated February 6, 1998,
as amended by Amendment No. 1 to Schedule 13E-4 dated March 2, 1998 and by
Amendment No. 2 to Schedule 13E-4 dated April 3, 1998, relating to the offer by
Corporate Express, Inc. (the "Company") to purchase up to 35,000,000 shares (or
the maximum of any lesser number of shares as are validly tendered and not
withdrawn) of its Common Stock, par value $.0002 per share (such shares,
together with the associated purchase rights, the "Shares"), at prices not
greater than $11.50 nor less than $10.00 net per Share in cash upon the terms
and subject to the conditions set forth in the Company's Offer to Purchase dated
February 6, 1998 and in the related Letter of Transmittal (together, the
"Offer"), is hereby amended as follows:
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth on pages 2 through 11 of the Company's
amended Quarterly Report on Form 10-Q/A for the fiscal quarter ended
November 29, 1997, filed as Exhibit (g)(3) hereto, is incorporated
herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(g) (3) Pages 2 through 11 of the Company's amended Quarterly Report on
Form 10-Q/A for the fiscal quarter ended November 29, 1997.
2
<PAGE> 3
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Amendment No. 3 to Schedule 13E-4
is true, complete and correct.
CORPORATE EXPRESS, INC.
By: /s/ SAM R. LENO
-------------------------------
Name: Sam R. Leno
Title: Executive Vice President and
Chief Financial Officer
Dated: April 6, 1998
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
(g)(3) Pages 2 through 11 of the Company's amended Quarterly Report on
Form 10-Q/A for the fiscal quarter ended November 29, 1997.
</TABLE>
<PAGE> 1
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
CORPORATE EXPRESS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
<TABLE>
<CAPTION>
November 29, March 1,
1997 1997
------------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 33,779 $ 54,499
Trade accounts receivable, net of allowance
of $15,353 and $13,004, respectively 619,268 494,199
Notes and other receivables 71,884 55,530
Inventories 242,414 187,558
Deferred income taxes 30,919 29,076
Other current assets 43,122 28,548
----------- -----------
Total current assets 1,041,386 849,410
Property and equipment:
Land 17,575 14,105
Buildings and leasehold improvements 125,733 106,824
Furniture and equipment 323,700 249,693
----------- -----------
467,008 370,622
Less accumulated depreciation (128,819) (106,891)
----------- -----------
338,189 263,731
Goodwill, net of $50,773 and $36,471 of accumulated
amortization, respectively 838,734 671,967
Other assets, net 71,346 58,869
----------- -----------
Total assets $ 2,289,655 $ 1,843,977
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-2-
<PAGE> 2
CORPORATE EXPRESS, INC.
CONSOLIDATED BALANCE SHEETS, Continued
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
November 29, March 1,
1997 1997
------------ -----------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 346,729 $ 297,119
Accrued payroll and benefits 59,119 45,512
Accrued purchase costs 10,928 12,888
Accrued merger and related costs 22,462 18,484
Other accrued liabilities 63,578 52,012
Current portion of long-term debt and capital leases 26,583 29,742
----------- -----------
Total current liabilities 529,399 455,757
Capital lease obligations 11,059 11,545
Long-term debt 745,709 621,705
Deferred income taxes 43,856 26,819
Minority interest in subsidiaries 20,955 22,015
Other non-current liabilities 15,423 12,529
----------- -----------
Total liabilities 1,366,401 1,150,370
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, 141,500,194 and 126,171,467 shares
issued and outstanding, respectively 28 25
Common stock, non-voting, $.0002 par value, 3,000,000
shares authorized, none issued or outstanding -- --
Additional paid-in capital 842,307 646,536
Retained earnings 87,220 48,222
Foreign currency translation adjustments (6,301) (1,176)
----------- -----------
Total shareholders' equity 923,254 693,607
----------- -----------
Total liabilities and shareholders' equity $ 2,289,655 $ 1,843,977
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-3-
<PAGE> 3
CORPORATE EXPRESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- -----------------------------
November 29, November 30, November 29, November 30,
1997 1996 1997 1996
----------- ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 996,160 $ 889,566 $ 2,851,133 $ 2,295,442
Cost of sales 754,225 672,363 2,172,740 1,731,096
----------- ----------- ----------- -----------
Gross profit 241,935 217,203 678,393 564,346
Warehouse operating and selling expenses 161,878 150,546 482,781 399,830
Corporate general and administrative expenses 27,695 24,931 83,300 69,056
Merger and other nonrecurring charges 15,009 12,368 14,890 12,371
----------- ----------- ----------- -----------
Operating profit 37,353 29,358 97,422 83,089
Interest expense, net 9,998 7,493 29,192 18,156
----------- ----------- ----------- -----------
Income before income taxes 27,355 21,865 68,230 64,933
Income tax expense 12,804 12,935 30,138 30,606
----------- ----------- ----------- -----------
Income before minority interest 14,551 8,930 38,092 34,327
Minority interest loss (income) 28 (360) (1,014) (462)
----------- ----------- ----------- -----------
Net income $ 14,523 $ 9,290 $ 39,106 $ 34,789
=========== =========== =========== ===========
Pro forma net income $ 14,523 $ 8,918 $ 39,106 $ 33,760
=========== =========== =========== ===========
Pro forma net income per common share $ 0.10 $ 0.07 $ 0.29 $ 0.26
=========== =========== =========== ===========
Weighted average common shares outstanding 139,999 131,283 135,932 129,387
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-4-
<PAGE> 4
CORPORATE EXPRESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------
November 29, November 30,
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 39,106 $ 34,789
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 31,737 21,595
Amortization 16,832 12,891
(Gain) loss on sale of assets 787
Non-cash portion of merger and restructuring charge 2,197 2,384
Adjustment to conform fiscal years -- 204
Minority interest (1,014) (462)
Other 2,342 (1,503)
Changes in assets and liabilities, excluding acquisitions:
(Increase) decrease in accounts receivable (94,778) (58,915)
(Increase) decrease in inventory (18,408) (6,228)
(Increase) decrease in other current assets (7,048) (6,570)
(Increase) decrease in other assets 6,258 2,667
Increase (decrease) in accounts payable 29,616 20,407
Increase (decrease) in accrued liabilities 6,069 11,948
--------- ---------
Net cash provided by operating activities 13,696 33,207
--------- ---------
Cash flows from investing activities:
Proceeds from sale of assets 20,200 1,829
Capital expenditures (64,125) (88,092)
Payment for acquisitions, net of cash acquired (21,693) (227,026)
Investment in marketable securities (10,902) (18,273)
Other 2,670 (8,730)
--------- ---------
Net cash used in investing activities (73,850) (340,292)
--------- ---------
Cash flows from financing activities:
Issuance of common stock 7,513 9,096
Issuance of subsidiary common stock 2,434 --
Debt issuance costs (704) (8,428)
Proceeds from long-term borrowings 8,324 344,834
Repayments of long-term borrowings (29,082) (15,059)
Proceeds from short-term borrowings 9,267 1,840
Repayments of short-term borrowings (6,247) (22,537)
Net proceeds from line of credit 110,558 5,913
Cash paid to retire bonds (62,178) --
Other (14) (4,666)
--------- ---------
Net cash provided by financing activities 39,871 310,993
Net cash used in discontinued operations (10) (177)
Effect of foreign currency exchange rate changes on cash (427) 232
--------- ---------
(Decrease) increase in cash and cash equivalents (20,720) 3,963
Cash and cash equivalents, beginning of period 54,499 29,813
--------- ---------
Cash and cash equivalents, end of period $ 33,779 $ 33,776
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
-5-
<PAGE> 5
CORPORATE EXPRESS, INC.
NOTES TO CONSOLIDATED STATEMENTS
Supplemental schedule of noncash investing and financing activities:
Capital lease obligations in the amount of $3,504,000 and $5,853,000 were
incurred during the nine months ended November 29, 1997 and November 30, 1996,
respectively, for equipment and vehicles.
During the nine months ended November 29, 1997, the Company invested
$14,546,000 in net cash and 13,887,842 shares of common stock in its acquisition
program. During the nine months ended November 30, 1996, the Company invested
$219,917,000 in net cash and approximately 2,421,000 shares of common stock for
acquisitions. In conjunction with these acquisitions, liabilities were assumed
as follows:
<TABLE>
<CAPTION>
Nine Months Ended
--------------------------
November 29, November 30,
1997 1996
------------- -----------
(In thousands)
(Unaudited)
<S> <C> <C>
Fair value of assets and goodwill acquired $ 340,964 $ 541,469
Cash paid, net of cash acquired (14,546) (219,917)
Issuance of notes payable -- (4,325)
Issuance of stock (176,257) (75,620)
Purchase price payable, included
in current liabilities (3,361) (4,724)
--------- ---------
Liabilities assumed $ 146,800 $ 236,883
========= =========
</TABLE>
In addition to the amounts set forth above, during the nine months ended
November 29, 1997, the Company paid $7,147,000 and issued approximately 61,932
shares of common stock for prior period acquisitions, and acquired the remaining
49% interest in Corporate Express United Kingdom for shares of common stock of
the Company. During the nine months ended November 30, 1996, the Company paid
$4,820,000 for prior period acquisitions, $2,289,000 to dissenting shareholders
of a pooled company, purchased a warehouse facility for 135,000 shares of common
stock and issued 71,471 shares of common stock to retire convertible debt of
$1,449,400 previously issued by one of the Company's acquired subsidiaries.
The accompanying notes are an integral part of the consolidated financial
statements.
-6-
<PAGE> 6
CORPORATE EXPRESS, INC.
NOTES TO CONSOLIDATED 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. The following acquisitions were accounted for as poolings of
interests and, accordingly, the accompanying financial statements have been
restated to include their accounts and operations:
. Nimsa S.A. ("Nimsa") was acquired by the Company on October 31, 1996.
. Bevo Acquisition Corp., Inc., a wholly-owned subsidiary of the Company, was
merged with and into United TransNet, Inc. ("UT") on November 8, 1996.
. IMS Acquisition, Inc., a wholly-owned subsidiary of the Company, was merged
with and into Sofco Mead, Inc. ("Sofco") on January 24, 1997.
. H.M. Acquisition Corp., a wholly-owned subsidiary of the Company, was
merged with and into Hermann Marketing, Inc. ("HMI") on January 30, 1997.
Acquisitions accounted for as purchases are included in the accounts and
operations as of the effective date of the transaction 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
transaction 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/A
for the year ended March 1, 1997.
Certain of the Company's locations calculate cost of sales using an estimated
gross profit method for interim periods. Cost of sales at these locations are
adjusted based on physical inventories which are performed no less than once a
year.
The Company capitalizes certain salaries and wages and payments to outside
firms for direct services related to the development and implementation of its
software. All software is amortized over its economic useful life of three to
seven years using the straight-line method.
New Accounting Standards:
In the fourth quarter of fiscal 1997, the Company will adopt SFAS No. 128,
"Earnings per Share." This statement simplifies the standards for computing
earnings per share found in APB Opinion No. 15, "Earnings per Share" and makes
them comparable to international earnings per share standards. Had SFAS No. 128
been effective during the nine months ended November 29, 1997 and November 30,
1996, (i) "Basic earnings per share" under SFAS No. 128 would have been $.30 and
$.28, respectively, and (ii) "Dilutive earnings per share" under SFAS No. 128
would have been $.29 and $.26, respectively. Had SFAS No. 128 been effective
during the three months ended November 29, 1997 and November 30, 1996, (i)
"Basic earnings per share" under SFAS No. 128 would have been $.11 and $.07,
respectively, and (ii) "Dilutive earnings per share" under SFAS No. 128 would
have been $.10 and $.07, respectively.
-7-
<PAGE> 7
CORPORATE EXPRESS, INC.
NOTES TO CONSOLIDATED STATEMENTS
2. Changes in Reported Amounts
The Company has revised its previously issued financial statements for the
three and nine-month periods ended November 29, 1997 and November 30, 1996 to
reclassify the Data Documents Incorporated ("DDI") acquisition from a pooling of
interests transaction to a purchase acquisition. Subsequent to the merger with
DDI, the Company announced its intention to repurchase up to 35,000,000 shares
of its common stock and, in accordance with current accounting practices, such
announcement precludes the Company from recording the DDI merger as a pooling of
interests transaction. The following table summarizes the changes to the
previously reported amounts.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ---------------------------
November 29, November 30, November 29, November 30,
1997 1996 1997 1996
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Income before income taxes, minority
interest, and extraordinary item:
As previously reported $ 29,198 $ 25,345 $ 78,426 $ 75,750
As revised 27,355 21,865 68,225 64,936
Extraordinary item:
As previously reported (7,108) -- (7,108) --
As revised -- -- -- --
Pro forma net income:
As previously reported 7,709 10,974 37,255 40,100
As revised 14,523 8,918 39,106 33,760
Pro forma net income per common share:
Continuing operations:
As previously reported 0.10 0.08 0.30 0.29
As revised 0.10 0.07 0.29 0.26
Extraordinary item:
As previously reported (0.05) -- (0.05) --
As revised -- -- -- --
Net income:
As previously reported 0.05 0.08 0.25 0.29
As revised $ 0.10 $ 0.07 $ 0.29 $ 0.26
Weighted average common shares:
As previously reported 150,636 142,235 146,789 140,321
As revised 139,999 131,283 135,932 129,387
</TABLE>
<TABLE>
<CAPTION>
November 29, March 1,
1997 1997
------------- ------------
<S> <C> <C>
Total Assets
As previously reported 2,151,053 1,973,258
As revised 2,289,655 1,843,977
Total Equity
As previously reported 788,958 727,150
As revised 923,254 693,607
</TABLE>
-8-
<PAGE> 8
CORPORATE EXPRESS, INC.
NOTES TO CONSOLIDATED STATEMENTS
3. Accrued Purchase Costs
In conjunction with purchase acquisitions, the Company accrues certain of the
direct costs associated with closing redundant facilities of acquired companies,
and severance and relocation payments for the acquired company's employees.
The following table sets forth activity in the Company's accrued purchase
costs liability account for the nine months ended November 29, 1997:
<TABLE>
<CAPTION>
Disposition
Facility Redundant of Assets
Total Exit Costs Facilities Severance & Other
------------ ----------- ----------- ---------- ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Balance, March 1, 1997 $12,888 $ 1,845 $ 3,269 $ 6,149 $1,625
Additions/Adjustments 5,578 724 1,349 3,494 11
Payments (7,275) (1,525) (1,065) (4,420) (265)
Reversals to goodwill (263) -- (72) (166) (25)
------- ------- ------- ------- ------
Balance, November 29, 1997 $10,928 $ 1,044 $ 3,481 $ 5,057 $1,346
======= ======= ======= ======= ======
</TABLE>
4. Merger and Other Nonrecurring Charges
During the third quarter of fiscal 1997, the Company recorded a net merger and
other nonrecurring charge of $15,009,000. This net charge is comprised of
$18,073,000 in merger and other nonrecurring charges in connection with the
Company's acquisition of DDI, the continued integration of delivery and certain
provisions for reductions in force and facility closures at other locations,
offset by $3,064,000 in revisions to the merger and other nonrecurring charges
established in previous periods to reflect the final transaction and exit costs
incurred. These revisions reflect the finalization of contract buyouts and
delays in closing certain facilities and disposition of related assets. The
current quarter charge includes the closure of 34 facilities and the reduction
of approximately 720 employees.
During the second quarter of fiscal 1997, the Company incurred $754,000 of
merger transaction costs related to second quarter acquisitions accounted for as
immaterial poolings of interests. Additionally, the Company reduced previous
charges by $874,000 to reflect actual exit costs to be incurred.
During the third and fourth quarters of fiscal 1996, the Company recorded an
estimated net merger and other nonrecurring charge of $19,840,000 in connection
with the Company's acquisition of UT, Nimsa, HMI and Sofco.
During the fourth quarter of fiscal 1995, the Company recorded a merger and
other nonrecurring charge primarily in conjunction with the U.S. Delivery
Systems, Inc. ("Delivery") and Richard Young Journal, Inc. acquisitions. This
liability was adjusted in fiscal 1996 to reflect the actual merger transaction
costs incurred and revised plans primarily as a result of the integration of UT
with Delivery. The Company expected to complete this plan within two years;
however, due to the acquisition of UT in the third quarter of fiscal 1996, the
revised exit plan is expected to be completed by the end of the first quarter of
fiscal 1998. The following table summarizes the merger and other nonrecurring
charges and sets forth their usage for the nine months ended November 29, 1997:
-9-
<PAGE> 9
CORPORATE EXPRESS, INC.
NOTES TO CONSOLIDATED STATEMENTS
<TABLE>
<CAPTION>
Balance FY 97 Cash Non-Cash Balance
3/1/97 Net Charge Payments Usage 11/29/97
------- ---------- -------- -------- ---------
(In thousands)
<S> <C> <C> <C> <C> <C>
Merger transaction costs (1) $ 4,082 $ 4,485 $(3,444) $ 5,123
Severance and terminations (2) 7,665 7,745 (3,732) 11,678
Facility closure and consolidation (3) 6,737 463 (1,539) 5,661
------- ------- ------- ---------
Accrued merger and related costs, balance 18,484 12,693 (8,715) 22,462
Other asset write-downs and costs (4) 4,152 2,197 -- $(1,955) 4,394
------- ------- ------- ------- ---------
Total $22,636 $14,890 $(8,715) $(1,955) $ 26,856
======= ======= ======= ======= =========
</TABLE>
(1) Merger transaction costs are the direct costs from the pooling transactions
and those direct costs incurred by DDI, and include legal, accounting,
investment banking, printing, contract buy-outs and other related costs.
Remaining merger transactions costs for the fiscal 1996 charge are
primarily for the UT acquisition and include contract buy-outs for certain
employees which are expected to be resolved by the end of fiscal 1997.
(2) Severance and employee termination costs are related to the elimination of
duplicate management positions, facility closures and consolidations, and
centralization of certain shared services. Of the 1,717 employees currently
planned to be terminated, 392 have been terminated as of November 29, 1997.
The Company expects to complete the facility closures and related
terminations for the fiscal 1995 charge, which totals $1,839,000, by the
end of the first quarter in fiscal 1998 and the fiscal 1996 charge, which
totals $2,879,000, 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
totals $6,960,000, 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. One hundred thirty four of the 215 facilities currently planned
to be closed or consolidated have been closed or consolidated. The
remaining facilities in the fiscal 1995 charge are expected to be closed by
the end of the first quarter in fiscal 1998, the remaining facilities in
the fiscal 1996 charge are expected to be closed by the end of fiscal 1998,
and the facilities identified in the 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 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.
5. 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 for large corporate customers. This acquisition was
originally accounted for as a pooling of interest transaction. Subsequent to
completing this merger, the Company announced its intention to repurchase up to
35,000,000 shares of its common stock and in accordance with current accounting
practices, this announcement precluded the Company from accounting for the DDI
acquisition as a pooling of interests transaction. This amended Form 10-Q
reflects the DDI acquisition as a purchase transaction; accordingly, the excess
of the purchase price over the fair market value of the net tangible assets
acquired was allocated to goodwill and is amortized over 40 years.
On May 15, 1996, the Company acquired all of the outstanding capital stock of
ASAP Software Express, Inc. ("ASAP"), a leading distributor of software to large
corporations, for a purchase price of approximately $98,000,000. In addition,
the Company purchased all of the outstanding capital stock of Boulevard Produits
De Bureau, Inc. ("Boulevard"), a seller of office supplies, furniture and
equipment, for a net cash purchase price of
-10-
<PAGE> 10
CORPORATE EXPRESS, INC.
NOTES TO CONSOLIDATED STATEMENTS
$16,102,000. The Company also repaid $9,498,000 of Boulevard promissory notes
with cash of $731,900 and 356,832 shares of the Company's common stock. The
excess of the purchase price over the fair market value of the net tangible
assets acquired in both acquisitions was allocated to goodwill and is being
amortized over 40 years.
The operating results of DDI, ASAP and Boulevard are included in the Company's
consolidated statement of operations from the effective date of each
acquisition. The following pro forma financial information assumes the DDI, ASAP
and Boulevard acquisitions occurred at the beginning of the nine-month period
ended November 30, 1996. These results have been prepared for comparative
purposes only and do not purport to be indicative of what would have occurred
had the transactions occurred at the beginning of the period, or of results
which may occur in the future. The pro forma results listed below are unaudited
and reflect purchase price adjustments.
<TABLE>
<CAPTION>
Nine months Ended
----------------------------------------
November 29, 1997 November 30, 1996
------------------- -------------------
(In thousands, except per share amounts)
<S> <C> <C>
Net sales $3,048,124 $2,532,520
Net income 46,648 38,647
Net income per share 0.32 0.28
</TABLE>
6. Pro Forma Net Income:
The pro forma net income and pro forma net income per share reflect the tax
adjustment for a fiscal 1996 acquisition accounted for as a pooling of interests
that was previously an S corporation for income tax purposes, as if the acquired
company had filed a C corporation tax return for all periods presented. The
effect is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
November 30, 1996 November 30, 1996
------------------ -----------------
<S> <C> <C>
Net income before pro forma adjustments, per
consolidated statements of operations $9,290 $34,789
Pro forma provision for income taxes 372 1,029
------ -------
Pro forma net income $8,918 $33,760
====== =======
</TABLE>
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.
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