<PAGE>
Rules 424(b)(3) and 424(c)
Registration No. 333-1928
PROSPECTUS SUPPLEMENT
TO PROSPECTUS DATED MARCH 28, 1996
AND PROSPECTUS SUPPLEMENT DATED MAY 14, 1996
U.S. OFFICE PRODUCTS COMPANY
U.S. Office Products Company (the "Company") has prepared this Prospectus
Supplement to update certain information included in the Company's Prospectus
dated March 28, 1996, covering 19,174,575 shares of the Company's common stock,
$.001 par value (the "Common Stock"), and the Prospectus Supplement dated May
14, 1996.
In February 1996, the Company acquired 51% of Blue Star Group Limited
("Blue Star"), an office products company in New Zealand, through which it is
making acquisitions in New Zealand and plans to enter other international
markets. Subsequently, the Company reached an agreement in principle to
acquire the remaining 49% of Blue Star and expects to complete such
acquisition in the near future.
Attached hereto (and made a part hereof) is pro forma financial
information as of January 31, 1996 and for the years ended April 30, 1995,
1994 and 1993 and the nine months ended January 31, 1996 and 1995,
reflecting, among other things, the Company's proposed acquisition of the
remaining 49% of Blue Star.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MAY 17, 1996.
<PAGE>
PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma combined financial statements give effect
to the following acquisitions: Fiscal Year 1995 Consummated Acquisitions --
General Office Products Company ("GOP"), acquired by Sharp Pencil Holdings, Inc.
effective September 30, 1994; Dameron Pierson Company Limited
("Dameron-Pierson") and DeKalb Office Supply ("DeKalb") effective January 31,
1995; The H.H. West Company ("H.H. West") effective February 25, 1995; Fiscal
Year 1996 Consummated Acquisitions -- Coffee Butler Service, Inc. ("Coffee
Butler") effective August 1, 1995; C.W. Mills Paper Company ("C.W. Mills")
effective August 1, 1995; The Smith-Wilson Co. ("Smith-Wilson") effective August
27, 1995; MISSCO Commercial Division ("MISSCO") effective October 6, 1995;
Emmons-Napp Office Products, Inc. -- Commercial Division ("Emmons-Napp")
effective January 16, 1996; Blue Star Group Limited ("Blue Star Group")
effective February 27, 1996; U-Bix Business Machines Limited ("U-Bix") by Blue
Star Group (assuming 100% of U-Bix shares acquired); and the Company's other
consummated acquisitions; Fiscal Year 1996 Pending Acquisitions -- as of January
31, 1996, the pending acquisitions of School Specialty, Inc., The J Thayer
Company, Radar Holding Corporation, Raleigh Office Supply, Kentwood Office
Furniture, Inc. and certain other Pending Acquisitions. The pro forma combined
financial statements also give effect to (i) the Company's initial public
offering in February 1995, (ii) the Second Offering in August 1995, (iii) the
Note Offering and the Stock Offering in February and March 1996 and (iv) the
offering of the Notes offered hereby. The pro forma combined financial
statements are based on historical financial statements of the Company, the
Fiscal Year 1995 Consummated Acquisitions, the Fiscal Year 1996 Consummated
Acquisitions and the Fiscal Year 1996 Pending Acquisitions and certain
assumptions set forth below and in the notes to the pro forma combined financial
statements. The historical financial statements of the Company give retroactive
effect to the following acquisitions which were accounted for under the pooling
of interest method of accounting: Mills Morris Arrow ("MMA"),
Carithers-Wallace-Courtenay, Inc. ("CWC"), the Costigan Companies and certain
other consummated acquisitions.
The unaudited pro forma combined balance sheet gives effect to the
combination of the Company with the Blue Star Group, other acquisitions included
in the Fiscal Year 1996 Consummated Acquisitions, consummated during February
1996 and the Fiscal Year 1996 Pending Acquisitions as if all such acquisitions
had occurred on the Company's most recent balance sheet date, January 31, 1996.
The pro forma combined statement of operations for the year ended April 30,
1995 gives effect to the Fiscal Year 1995 Consummated Acquisitions, the Fiscal
Year 1996 Consummated Acquisitions and the Fiscal Year 1996 Pending Acquisitions
as if all such acquisitions had been made on May 1, 1994.
15
<PAGE>
The pro forma combined statement of operations for the year ended April 30,
1995 includes the audited financial information of the Company for the year
ended April 30, 1995 (which includes the results of GOP, Dameron-Pierson, DeKalb
and H.H. West from their respective dates of acquisition) and the financial
information for the following companies for the periods indicated:
<TABLE>
<CAPTION>
COMPANY PERIOD
- ----------------------------------------------------------- -------------------------------------------
<S> <C>
GOP........................................................ Five Months ended September 30, 1994
Dameron-Pierson............................................ Nine Months ended January 31, 1995
DeKalb..................................................... Nine Months ended January 31, 1995
H.H. West.................................................. Ten Months ended February 24, 1995
Coffee Butler.............................................. Year ended March 31, 1995
C.W. Mills................................................. Year ended April 30, 1995
MISSCO Commercial Division................................. Year ended March 31, 1995
Copenhaver Holdings, Incorporated.......................... Year ended June 30, 1995
Emmons-Napp................................................ Year ended April 30, 1995
Blue Star.................................................. Year ended March 31, 1995
U-Bix Business Machines Limited............................ Year ended June 30, 1995
School Specialty........................................... Year ended December 31, 1994
The J Thayer Company....................................... Year ended December 31, 1994
Radar Holdings Corporation................................. Year ended June 30, 1995
Raleigh Office Supply...................................... Year ended April 30, 1995
Kentwood Office Furniture.................................. Year ended December 31, 1994
Other acquisitions and Pending Acquisitions................ Year ended April 30, 1995 (or a date within
93 days of April 30, 1995)
</TABLE>
The pro forma combined statement of operations for the nine months ended
January 31, 1996 includes the unaudited interim financial information of the
Company, the Fiscal Year 1996 Consummated Acquisitions and the Fiscal Year 1996
Pending Acquisitions for the nine months ended January 31, 1996.
The pro forma combined statement of operations for the nine months ended
January 31, 1995 includes the unaudited interim financial information of the
Company, the Fiscal Year 1995 Consummated Acquisitions, the Fiscal Year 1996
Consummated Acquisitions and the Fiscal Year 1996 Pending Acquisitions for the
nine months ended January 31, 1995.
The pro forma combined statement of operations for the years ended April 30,
1994 and 1993 gives effect to the Fiscal Year 1996 Pending Acquisitions of
School Specialty, Inc., The J Thayer Company, Radar Holdings Corporation,
Kentwood Office Furniture, Inc, certain other consummated acquisitions and other
Fiscal Year 1996 Pending Acquisitions which will be accounted for under the
pooling-of-interests method.
Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma combined financial data presented herein are not necessarily
indicative of the results the Company would have obtained had such events
occurred at the beginning of the period, as assumed, or of the future results of
the Company. The pro forma combined financial statements should be read in
conjunction with the other financial statements and notes thereto included
elsewhere in this report and other filings of the Company.
16
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED BALANCE SHEET
JANUARY 31, 1996
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FISCAL YEAR 1996 PENDING ACQUISITIONS
------------------------------------------------------
U.S. OFFICE RADAR RALEIGH
PRODUCTS BLUE STAR SCHOOL THE J THAYER HOLDINGS OFFICE
COMPANY GROUP SPECIALTY, INC. COMPANY CORPORATION SUPPLY
----------- --------- --------------- ------------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash............................. $ 4,628 $ 264
Accounts receivable.............. 83,627 24,832 11,381 3,304 6,963 3,499
Inventory........................ 34,631 12,477 6,986 429 2,388 2,643
Prepaid and other current
assets.......................... 14,499 2,032 9 202
----------- --------- ------- ------ ----------- -------
Total current assets........... 137,385 37,309 20,399 4,006 9,553 6,142
Property and equipment, net........ 29,983 11,491 7,094 460 1,265 402
Intangible assets, net............. 89,662 2,908 7,032 147 577
Other assets....................... 1,712 10,840 224 5 224 101
----------- --------- ------- ------ ----------- -------
Total assets................... $258,742 $62,548 $34,749 $4,618 $11,619 $6,645
----------- --------- ------- ------ ----------- -------
----------- --------- ------- ------ ----------- -------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term debt.................. $ 54,394 $21,558 $15,394 $ 25 $ 2,877
Accounts payable................. 35,604 12,961 4,771 2,478 4,509 726
Accrued compensation............. 7,331 161 418 208
Other accrued liabilities........ 7,796 4,987 5,684 222 927 63
----------- --------- ------- ------ ----------- -------
Total current liabilities...... 105,125 39,506 25,849 2,886 8,731 997
Long term debt..................... 6,620 9,228 13,131 619 2,003
Notes payable to officers and
shareholders...................... 241
Deferred income taxes.............. 4,988 14
Other long-term liabilities........ 121 508 48
Minority Interest in subsidiary.... 275
Stockholders' equity:
Common stock..................... 20 803 33 612
Additional paid-in capital....... 126,738 3,012
Preferred Stock.................. 1,000
Retained earnings................ 14,889 (9,554) 1,032 259
----------- --------- ------- ------ ----------- -------
141,647 (4,739) 1,065 871
Equity of acquired companies....... 13,539 5,648
----------- --------- ------- ------ ----------- -------
Total Liabilities and
Shareholders Equity........... $258,742 $62,548 $34,749 $4,618 $11,619 $6,645
----------- --------- ------- ------ ----------- -------
----------- --------- ------- ------ ----------- -------
<CAPTION>
FISCAL YEAR 1996 PENDING FISCAL YEAR
ACQUISITIONS 1996
-------------------------- ACQUISITIONS PRO FORMA PRO FORMA
KENTWOOD OFFICE PRO FORMA OFFERING COMBINED
FURNITURE, INC. OTHER ADJUSTMENTS SUBTOTAL ADJUSTMENTS TOTALS
--------------- -------- ------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash............................. $ 3,536 $(64,896)(d) $ (56,468) $ 121,600(a) $ 260,295
138,700(b)
193,500(b)
(137,037)(c)
Accounts receivable.............. 1,193 46,132 180,931 180,931
Inventory........................ 1,254 27,143 87,951 87,951
Prepaid and other current
assets.......................... 49 2,312 19,103 19,103
------ -------- ------------- ---------- -------------- -----------
Total current assets........... 2,496 79,123 (64,896) 231,517 316,763 548,280
Property and equipment, net........ 195 7,687 58,577 58,577
Intangible assets, net............. 43 235 88,845(d) 189,449 189,449
Other assets....................... 34,110 3,000(d) 50,216 11,550(b) 61,766
------ -------- ------------- ---------- -------------- -----------
Total assets................... $2,734 $121,155 $ 26,949 $ 529,759 $ 328,313 $ 858,072
------ -------- ------------- ---------- -------------- -----------
------ -------- ------------- ---------- -------------- -----------
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Short-term debt.................. $ 100 $ 52,811 $ 147,159 $(101,464)(c) 45,695
Accounts payable................. 639 21,247 82,935 $ 82,935
Accrued compensation............. 136 1,066 $ -- 9,320 9,320
Other accrued liabilities........ 74 2,360 22,113 22,113
------ -------- ------------- ---------- -------------- -----------
Total current liabilities...... 949 77,484 261,527 (101,464) 160,063
Long term debt..................... 970 1,883 34,454 143,750(b) 343,750
200,000(b)
(34,454)(c)
Notes payable to officers and
shareholders...................... 878 1,119 (1,119)(c) --
Deferred income taxes.............. 1,141 6,143 6,143
Other long-term liabilities........ 18 695 695
Minority Interest in subsidiary.... 275 275
Stockholders' equity:
Common stock..................... 50 123 (1,613)(d) 28 6(a) 34
Additional paid-in capital....... 150 459 81,360(d) 211,719 121,594(a) 333,313
Preferred Stock.................. (1,000)(d)
Retained earnings................ 615 6,558 13,799 13,799
------ -------- ------------- ---------- -------------- -----------
815 7,140 78,747 225,546 121,600 347,146
Equity of acquired companies....... 32,611 (51,798)(d)
------ -------- ------------- ---------- -------------- -----------
Total Liabilities and
Shareholders Equity........... $2,734 $121,155 $ 26,949 $ 529,759 $ 328,313 $ 858,072
------ -------- ------------- ---------- -------------- -----------
------ -------- ------------- ---------- -------------- -----------
</TABLE>
See accompanying notes to pro forma combined financial statements.
17
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
PENDING FISCAL YEAR 1996 ACQUISITIONS
--------------------------------------------
U.S. OFFICE 1995 1996 RADAR
PRODUCTS CONSUMMATED CONSUMMATED SCHOOL THE J THAYER HOLDINGS
COMPANY ACQUISITIONS ACQUISITIONS SPECIALTY, INC. COMPANY CORPORATION
----------- ----------- ----------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues........................... $256,091 $83,442 $427,347 $95,370 $22,790 $19,377
Cost of revenues................... 193,256 66,949 297,427 71,967 18,416 14,230
----------- ----------- ----------- ------- ------------ -----------
Gross Profit..................... 62,835 16,493 129,920 23,403 4,374 5,147
Selling, General and Administrative
expenses.......................... 55,645 14,176 124,053 19,662 3,767 4,594
----------- ----------- ----------- ------- ------------ -----------
Operating income................. 7,190 2,317 5,867 3,741 607 553
Other (income) expense:
Interest expense................. 1,782 503 6,936 2,318 100 201
Minority interest in
subsidiary...................... (34)
Other (income) expense........... (539) (79) (9,556) (86) 2
----------- ----------- ----------- ------- ------------ -----------
Income (loss) before provision for
income taxes...................... 5,947 1,893 8,521 1,509 505 352
Provision for income taxes......... 1,545 299 2,348 198
----------- ----------- ----------- ------- ------------ -----------
Net income (loss).................. $ 4,402 $ 1,594 $ 6,173 $ 1,311 $ 505 $ 352
----------- ----------- ----------- ------- ------------ -----------
----------- ----------- ----------- ------- ------------ -----------
Weighted average shares
outstanding.......................
Net income per share...............
<CAPTION>
PENDING FISCAL YEAR 1996
ACQUISITIONS
----------------------------------
RALEIGH COMBINED
OFFICE KENTWOOD OFFICE PRO FORMA PRO FORMA
SUPPLY FURNITURE, INC. OTHER ADJUSTMENTS TOTALS
------- --------------- ------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Revenues........................... $27,183 $9,501 $87,846 $ -- $1,028,947
Cost of revenues................... 21,461 5,230 63,301 752,237
------- ------ ------- ----------- --------------
Gross Profit..................... 5,722 4,271 24,545 276,710
Selling, General and Administrative
expenses.......................... 5,084 3,821 22,667 4,012(e) 253,288
(4,193)(f)
------- ------ ------- ----------- --------------
Operating income................. 638 450 1,878 181 23,422
Other (income) expense:
Interest expense................. 140 134 1,829(h) 13,943
Minority interest in
subsidiary...................... -- (34)
Other (income) expense........... (153) (9) (165) (10,585)
------- ------ ------- ----------- --------------
Income (loss) before provision for
income taxes...................... 791 319 1,909 (1,648) 20,098
Provision for income taxes......... 76 3,768(i) 8,234
------- ------ ------- ----------- --------------
Net income (loss).................. $ 791 $ 319 $ 1,833 $(5,416) $ 11,864
------- ------ ------- ----------- --------------
------- ------ ------- ----------- --------------
Weighted average shares
outstanding....................... 31,093(j)
Net income per share............... $ 0.38
--------------
--------------
</TABLE>
See accompanying notes to pro forma combined financial statements
18
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FISCAL YEAR 1996 PENDING ACQUISITIONS
--------------------------------------------
U.S. OFFICE FISCAL YEAR 1996 RADAR
PRODUCTS CONSUMMATED SCHOOL THE J THAYER HOLDINGS
COMPANY ACQUISITIONS SPECIALTY, INC. COMPANY CORPORATION
----------- ---------------- --------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Revenues........................... $349,937 $311,674 $104,566 $24,846 $30,501
Cost of revenues................... 266,958 210,180 75,864 20,481 22,647
----------- -------- --------------- ------------ -----------
Gross Profit..................... 82,979 101,494 28,702 4,365 7,854
Selling, General and Administrative
expenses.......................... 77,239 93,787 25,058 3,836 7,022
----------- -------- --------------- ------------ -----------
Operating income................. 5,740 7,707 3,644 529 832
Other (income) expense:
Interest expense................. 2,194 6,309 3,382 73 386
Minority interest in
subsidiary...................... 115
Other (income) expense........... (747) (7,227) (16) 7
----------- -------- --------------- ------------ -----------
Income (loss) before provision for
income taxes...................... 4,293 8,510 278 449 446
Provision for income taxes......... 1,266 2,190 111
----------- -------- --------------- ------------ -----------
Net income (loss).................. $ 3,027 $ 6,320 $ 167 $ 449 $ 446
----------- -------- --------------- ------------ -----------
----------- -------- --------------- ------------ -----------
Weighted average shares
outstanding.......................
Net income per share...............
<CAPTION>
FISCAL YEAR 1996 PENDING
ACQUISITIONS
-----------------------------------
RALEIGH PRO FORMA
OFFICE KENTWOOD OFFICE PRO FORMA COMBINED
SUPPLY FUNRITURE, INC. OTHER ADJUSTMENTS TOTALS
-------- --------------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Revenues........................... $20,888 $9,740 $77,794 $ -- $929,946
Cost of revenues................... 15,966 5,716 58,276 676,088
-------- ------ ------- ----------- ------------
Gross Profit..................... 4,922 4,024 19,518 253,858
Selling, General and Administrative
expenses.......................... 3,863 3,395 18,452 2,305(e) 225,291
(358)(f)
(9,308)(g)
-------- ------ ------- ----------- ------------
Operating income................. 1,059 629 1,066 7,361 28,567
Other (income) expense:
Interest expense................. 61 55 (1,471)(h) 10,989
Minority interest in
subsidiary...................... 115
Other (income) expense........... (92 ) (23) (240) (8,338)
-------- ------ ------- ----------- ------------
Income (loss) before provision for
income taxes...................... 1,151 591 1,251 8,832 25,801
Provision for income taxes......... 290 7,141(i) 10,997
-------- ------ ------- ----------- ------------
Net income (loss).................. $ 1,151 $ 591 $ 961 $ 1,691 $ 14,804
-------- ------ ------- ----------- ------------
-------- ------ ------- ----------- ------------
Weighted average shares
outstanding....................... 31,323(j)
Net income per share............... $ 0.47
------------
------------
</TABLE>
See accompanying notes to pro forma combined financial statements
19
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
FISCAL YEAR 1996 PENDING
ACQUISITIONS
U.S. OFFICE FISCAL YEAR 1995 FISCAL YEAR 1996 -----------------------------
PRODUCTS CONSUMMATED CONSUMMATED SCHOOL THE J THAYER
COMPANY ACQUISITIONS ACQUISITIONS SPECIALTY INC. COMPANY
----------- ---------------- ---------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues........................... $168,989 $78,708 $319,251 $76,147 $18,609
Cost of revenues................... 125,641 63,150 221,182 54,165 15,153
----------- ------- -------- ------- ------------
Gross Profit..................... 43,348 15,558 98,069 21,982 3,456
Selling, General and Administrative
expenses.......................... 38,158 13,416 92,219 17,155 2,784
----------- ------- -------- ------- ------------
Operating income (loss).......... 5,190 2,142 5,850 4,827 672
Other (income) expense:
Interest expense................. 1,274 471 4,677 1,424 77
Minority interest in
subsidiary...................... 607
Other (income) expense........... (403) (76) (7,356) (226) 1
----------- ------- -------- ------- ------------
Income (loss) before provision for
income taxes...................... 4,319 1,747 7,922 3,629 594
Provision for income taxes......... 998 248 2,143 30
----------- ------- -------- ------- ------------
Net income (loss).................. $ 3,321 $ 1,499 $ 5,779 $ 3,599 $ 594
----------- ------- -------- ------- ------------
----------- ------- -------- ------- ------------
Weighted average shares
outstanding.......................
Net income per share...............
<CAPTION>
FISCAL YEAR 1996 PENDING ACQUISITIONS
------------------------------------------------
RADAR RALEIGH KENTWOOD PRO FORMA
HOLDINGS OFFICE OFFICE PRO FORMA COMBINED
CORPORATION SUPPLY FURNITURE INC. OTHER ADJUSTMENTS TOTALS
----------- -------- -------------- ------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues........................... $13,111 $19,939 $9,501 $56,338 $ -- $760,593
Cost of revenues................... 9,591 15,811 5,568 42,057 552,318
----------- -------- ------ ------- ----------- ------------
Gross Profit..................... 3,520 4,128 3,933 14,281 208,275
Selling, General and Administrative
expenses.......................... 3,143 3,925 3,464 14,263 3,010(e) 190,656
(881)(f)
----------- -------- ------ ------- ----------- ------------
Operating income (loss).......... 377 203 469 18 (2,129) 17,619
Other (income) expense:
Interest expense................. 134 140 47 1,663(h) 9,907
Minority interest in
subsidiary...................... -- 607
Other (income) expense........... (125 ) (8) (90) -- (8,283)
----------- -------- ------ ------- ----------- ------------
Income (loss) before provision for
income taxes...................... 243 328 337 61 (3,792) 15,388
Provision for income taxes......... 19 3,098(i) 6,536
----------- -------- ------ ------- ----------- ------------
Net income (loss).................. $ 243 $ 328 $ 337 $ 42 $(6,890) $ 8,852
----------- -------- ------ ------- ----------- ------------
----------- -------- ------ ------- ----------- ------------
Weighted average shares
outstanding....................... 30,069(j)
Net income per share............... $ 0.29
------------
------------
</TABLE>
See accompanying notes to pro forma combined financial statements
20
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
(a) Adjustment to reflect $121,600 of net proceeds from the sale of
5,543,045 shares of common stock, including the underwriters over-allotment
option of 610,000 shares which was exercised in March 1996, as part of the Stock
Offering in February 1996 (net of expenses and underwriting discount).
(b) Adjustment to reflect the $138,700 of net proceeds from the sale of
$143,750 of convertible notes of the Note Offering in February 1996, including
the underwriters over-allotment option of $18,750, which was exercised in March
1996, as part of the Note Offering in February 1996 (net of expenses and
underwriters discount). Adjustment to reflect $193,500 of net proceeds from the
sale of $200,000 of Notes offered hereby (net of expenses and underwriter's
discount).
(c) Adjustment to reflect the use of the proceeds from the issuance of
common stock and the notes in the 1996 Offerings to (i) repay short-term debt of
$101,464, (ii) repay long-term debt of $34,454 and (iii) repay notes payable to
officers and stockholders of $1,119.
(d) Adjustment to reflect purchase price adjustments associated with certain
Fiscal Year 1996 Consummated Acquisitions and the Fiscal Year 1996 Pending
Acquisitions noted below. Except as noted, the Company has entered into
agreements or non-binding letters of intent with respect to its acquisition of
all of the outstanding common stock of the companies listed below:
<TABLE>
<CAPTION>
STOCK
----------------------
COMPANY CONSIDERATIONS CASH SHARES VALUE GOODWILL (1)
- ------------------------------------------------- ------------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Poolings:
School Specialties, Inc........................ $ 40,000 1,538,462 $ 40,000
The J Thayer Company........................... 20,000 1,226,054 20,000
Radar Holding Corporation...................... 19,000 863,636 19,000
Kentwood Office Furniture, Inc................. 6,000 261,362 6,000
Other Acquisitions and Pending Acquisitions.... 26,660 1,543,305 26,660
------------- ---------- ----------
Total Poolings............................... $ 111,660 5,432,819 $ 111,660
------------- ---------- ----------
------------- ---------- ----------
Purchases:
Blue Star Group................................ $ 68,000 $ 10,000 2,264,753 $ 58,000 $ 54,461
U-Bix Business Machines........................ 19,000 19,000 1,181
Raleigh Office Supply.......................... 12,788 12,788 7,140
Other acquisitions and Pending Acquisitions.... 43,855 23,108 1,007,688 20,747 26,063
------------- --------- ---------- ---------- -----------
Total Purchases.............................. $ 143,643 $ 64,896 3,272,441 $ 78,747 $ 88,845
------------- --------- ---------- ---------- -----------
------------- --------- ---------- ---------- -----------
</TABLE>
- ------------------------
(1) The portion of the consideration assigned to goodwill in transactions
accounted for as purchases represents the excess of the cost over the fair
value of the net assets acquired. The Company amortizes goodwill over a
period of 40 years. The recoverability of the unamortized goodwill will be
assessed on an ongoing basis by comparing anticipated undiscounted future
cash flows from operations to net book value.
21
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
2. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS
(e) Adjustment to reflect the increase in amortization expense relating to
the goodwill recorded in purchase accounting related to the following
acquisitions and the amortization of such goodwill over an estimated life of 40
years:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED JANUARY 31,
APRIL 30 --------------------
1995 1996 1995
----------- --------- ---------
<S> <C> <C> <C>
Fiscal Year 1995 Consummated Acquisitions.................................. $ 348 $ 261
Fiscal Year 1996 Consummated Acquisitions.................................. 2,225 $ 1,226 1,670
Fiscal Year 1996 Pending Acquisitions...................................... 1,439 1,079 1,079
----------- --------- ---------
$ 4,012 $ 2,305 $ 3,010
----------- --------- ---------
----------- --------- ---------
</TABLE>
(f) Adjustment to reflect the reduction in executive compensation, as a
result of the elimination of certain executive positions and the renegotiation
of executive compensation arrangements, made in conjunction with the acquisition
of Andrews (1995: $731; January 1995: $224; January 1996: $0), BAT (1995: $269;
January 1995: $80; January 1996: $0), Coffee Butler (1995: $1,058; January 1995:
$265; January 1996: $216), Reliable (1995: $187; January 1995: $47; January
1996: $47), MMA (1995: $1,508; January 1995: $326; January 1996: $95), and the
MISSCO Commercial Division (1995: $1,257; January 1995: $189; January 1996: $0).
The reduction is partially offset by increased corporate overhead (1995: $817;
January 1995: $250; January 1996: $0) related to the newly formed public entity.
(g) Adjustment to reflect the reduction in one-time nonrecurring costs
related to pooling-of-interests business combinations, certain discontinued
printing operations, and restructuring charges. The adjustment includes: (i)
$3,962 related to payments to certain key employees in conjunction with
agreements entered into by MMA which required the payment of a percentage of the
gain recognized as a result of the business combination of MMA with the Company,
(ii) $2,132 of legal, accounting and finders' fees related to these business
combinations, (iii) $682 related to the discontinuation of the printing division
at a subsidiary and (iv) $2,532 related to restructuring charges accrued for one
of the pending acquisition.
(h) Adjustment to reflect the increase (decrease) in interest expense
resulting from the utilization of the proceeds from the sale of the Notes
offered hereby and the notes issued in the Note Offering in February 1996 at an
interest rate of 5.5% plus amortization of debt issuance costs of $11,550 over
the five year term of the notes. (1995: $1,939; January 1995: $1,455; January
1996: $1,455).
(i) Adjustment to calculate the provision of income taxes on the combined
pro forma results at the effective statutory rate of 43%. The difference between
the effective tax rate of 43% and the statutory tax rate of 35% represents the
effect of state taxes and non-deductible goodwill.
(j) The weighted average shares outstanding used to calculate pro forma
earnings per share is based on 31,093, 31,323 and 31,069 shares of Common Stock
and Common Stock equivalents outstanding for the year ended April 30, 1995 and
the nine months ended January 31, 1996 and 1995, respectively. These amounts are
22
<PAGE>
U.S. OFFICE PRODUCTS COMPANY
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
2. UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS ADJUSTMENTS (CONTINUED)
based on the following shares and 92, 322 and 68 Common Stock equivalents
considered to be outstanding related to stock options, for the year ended April
30, 1995 and the nine month periods ended January 31, 1996 and 1995,
respectively.
<TABLE>
<S> <C>
Shares issued in conjunction with the formation of the Company...... 3,878
Shares issued in the Initial Public Offering........................ 3,738
Shares issued to acquire H.H. West.................................. 875
Shares issued to acquire Coffee Butler.............................. 757
Shares issued to acquire C.W. Mills................................. 373
Shares issued to acquire MMA........................................ 1,751
Shares issued to acquire Copenhaver Holdings, Incorporated.......... 323
Shares issued in the Second Offering (August 1995).................. 4,025
Shares issued to acquire CWC........................................ 1,161
Shares issued to acquire Costigan Companies......................... 1,515
Shares issued to acquire Blue Star Group............................ 2,265
Shares issued to acquire Emmons-Napp................................ 515
Shares issued in the Third Offering (March 1996) to cover the
purchase price to be paid in connection with Fiscal Year 1996
Pending Acquisitions............................................... 2,482
Shares to be issued to acquire School Specialty, Inc................ 1,538
Shares to be issued to acquire The J Thayer Company................. 1,226
Shares to be issued to acquire Radar Holdings Corporation........... 864
Shares to be issued to acquire Kentwood Office Furniture, Inc....... 261
Shares issued for other acquisitions and to be issued for Pending
Acquisitions....................................................... 3,454
---------
31,001
---------
---------
</TABLE>
(k) Adjustment to reflect the income taxes for certain acquisitions
accounted for under the pooling-of-interests method which were taxed as
subchapter S corporations as if these companies had been subject to taxation as
C corporations. As a result of being subchapter S corporations, any tax
liabilities prior to acquisition were the responsibility of the individual
company stockholders.
Various of the Company's acquisitions since April 30, 1995 have been
significant as defined in Rule 3-05 of Regulation S-X. The Company's pro forma
assets as of April 30, 1995 and the Company's pro forma income before provision
for income taxes for the fiscal year ended April 30, 1995, assuming in the case
of the pro forma assets that the Company's significant acquisitions had been
consummated as of April 30, 1995 and in the case of the pro forma income before
provision for income taxes that the Company's significant acquisitions had been
consummated as of May 1, 1994, would have been $365,900 and $15,000
respectively.
23
