<PAGE>
Exhibit 99.1
US OFFICE PRODUCTS COMPANY
PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma financial statements give effect to
the divestiture of the Blue Star Business Supplies unit ("Blue Star Business
Supplies"), which closed on October 6, 2000, and the Company's other
acquisitions and divestitures completed during the fiscal year ended April 29,
2000 and the three months ended July 29, 2000 (the "Other Acquisitions
and Divestitures"). Blue Star Business Supplies is a division of the
Company's wholly owned Blue Star operations in New Zealand and Australia.
Blue Star Business Supplies sells office supplies, office furniture,
packaging supplies, and similar products to corporate, commercial and small
office/home office customers in New Zealand and Australia. The pro forma
financial statements are based on the historical financial statements of
the Company, Blue Star Business Supplies, and the Other Acquisitions and
Divestitures, and include certain assumptions set forth below and in the
notes to the pro forma financial statements.
The unaudited pro forma balance sheet gives effect to the divestiture of
Blue Star Business Supplies as if the divestiture had occurred on the Company's
most recent balance sheet date, July 29, 2000.
The unaudited pro forma statement of operations for the fiscal year
ended April 29, 2000 gives effect to the divestiture of Blue Star Business
Supplies and the Other Acquisitions and Divestitures as if all such
acquisitions and divestitures had been made on April 25, 1999, the first day
of the fiscal year ended April 29, 2000. The pro forma statement of
operations for the fiscal year ended April 29, 2000 includes the audited
financial information of the Company for the fiscal year ended April 29, 2000
(which includes the results of Blue Star Business Supplies and the Other
Acquisitions and Divestitures from their respective dates of acquisition or,
for divestiture, up to the respective dates of divestiture or through the end
of the fiscal year if divested after April 29, 2000, as applicable), the
financial information for Blue Star Business Supplies for the fiscal year
ended April 29, 2000 and the Other Acquisitions and Divestitures for the
period from April 25, 1999 up to their respective dates of acquisition or
divestiture.
The unaudited pro forma statement of operations for the three months
ended July 29, 2000 gives effect to the divestiture of Blue Star Business
Supplies and the Other Acquisitions and Divestitures that occurred during the
three months ended July 29, 2000, as if all such acquisition and divestitures
had been made on April 30, 2000. The unaudited pro forma statement of
operations for the three months ended July 29, 2000 includes the unaudited
interim financial information of the Company for the three months ended July 29,
2000, and the financial information of Blue Star Business Supplies and the
Other Acquisitions and Divestitures for the period from April 30, 2000 up to
their respective dates of acquisition or, for divestitures, up to the
respective dates of divestiture or through July 29, 2000, if the divestiture
was completed after July 29, 2000.
The unaudited pro forma statements of operations do not reflect the loss
of approximately $151 million, which the Company will include in its results
for the three and six months ended October 28, 2000.
<PAGE>
The pro forma adjustment to accumulated deficit in the unaudited pro forma
balance sheet reflects the loss on the sale of Blue Star Business Supplies as
if the divestiture had occurred on the Company's most recent balance sheet
date, July 29, 2000.
Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma 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 periods, as assumed, or of the future
results of the Company. The pro forma 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.
2
<PAGE>
US OFFICE PRODUCTS COMPANY
PRO FORMA BALANCE SHEET
JULY 29, 2000
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
US OFFICE BLUE STAR
PRODUCTS BUSINESS PRO FORMA PRO FORMA
COMPANY SUPPLIES SUBTOTAL ADJUSTMENTS TOTALS
------- -------- -------- ----------- ------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 45,759 $ 45,759 $ 108,592 (a) $ 45,759
(108,592) (b)
Accounts receivable, net 259,600 $ (34,183) 225,417 225,417
Inventories, net 153,239 (36,742) 116,497 116,497
Prepaid expenses and other current assets 109,424 (5,324) 104,100 5,340 (a) 109,440
---------- ---------- ---------- ---------- ----------
Total current assets 568,022 (76,249) 491,773 5,340 497,113
Property and equipment, net 205,730 (17,329) 188,401 188,401
Intangible assets, net 764,987 (132,445) 632,542 632,542
Other assets 179,182 179,182 (19,195) (c) 159,987
---------- ---------- ---------- ---------- ----------
Total assets $1,717,921 $(226,023) $1,491,898 $ (13,855) $1,478,043
========== ========== ========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 142,177 $ 142,177 $ (45,000) (b) 97,177
Accounts payable 163,332 $ (25,045) 138,287 138,287
Accrued compensation 31,957 (4,586) 27,371 27,371
Other accrued liabilities 76,159 (7,502) 68,657 68,657
---------- ---------- ---------- ---------- ----------
Total current liabilities 413,625 (37,133) 376,492 (45,000) 331,492
Long-term debt 1,051,329 1,051,329 (63,592) (b) 987,737
Other long-term liabilities and minority interests 28,627 (206) 28,421 28,421
---------- ---------- ---------- ---------- ----------
Total liabilities 1,493,581 (37,339) 1,456,242 (108,592) 1,347,650
---------- ---------- ---------- ---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock
Common stock 37 37 37
Additional paid-in capital 728,607 728,607 728,607
Accumulated other comprehensive loss (137,257) (137,257) 65,610 (d) (71,647)
Accumulated deficit (367,047) (367,047) (74,752) (a) (526,604)
(19,195) (c)
(65,610) (d)
---------- ---------- ---------- ---------- ----------
224,340 224,340 (93,947) 130,393
Equity of divested companies (188,684) (188,684) 188,684 (a)
---------- ---------- ---------- ---------- ----------
Total liabilities and stockholders' equity $1,717,921 $(226,023) $1,491,898 $ (13,855) $1,478,043
========== ========== ========== ========== ==========
</TABLE>
3
<PAGE>
US OFFICE PRODUCTS COMPANY
PRO FORMA STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED APRIL 29, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
OTHER
US OFFICE BLUE STAR ACQUISITIONS
PRODUCTS BUSINESS AND PRO FORMA PRO FORMA
COMPANY SUPPLIES DIVESTITURES SUBTOTAL ADJUSTMENTS TOTALS
------- -------- ------------ -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 2,499,393 $ (332,314) $ (168,823) $ 1,998,256 $ 1,998,256
Cost of revenues 1,826,876 (245,706) (109,733) 1,471,437 1,471,437
----------- ----------- ----------- ----------- ----------- -----------
Gross profit 672,517 (86,608) (59,090) 526,819 526,819
Selling, general and administrative expenses 637,743 (77,455) (51,199) 509,089 509,089
Amortization expense 24,002 (4,392) (258) 19,352 19,352
Impaired asset write-offs 17,429 (11,730) (2) 5,697 5,697
Operating restructuring costs 15,376 (1,512) (273) 13,591 13,591
----------- ----------- ----------- ----------- ----------- -----------
Operating income (loss) (22,033) 8,481 (7,358) (20,910) (20,910)
Interest expense 113,375 (4) (258) 113,113 $ (8,929) (e) 104,184
Interest income (2,404) 164 (1,589) (3,829) (3,829)
Unrealized foreign currency transaction loss 49,004 (27) 13 48,990 48,990
Equity in loss of affiliates 32,564 (375) 32,189 32,189
Loss on sale or closure of businesses 15,032 (93) (640) 14,299 14,299
Other expense 1,572 (25) (58) 1,489 1,489
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before provision for (benefit
from) income taxes and extraordinary items (231,176) 8,841 (4,826) (227,161) 8,929 (218,232)
Provision for (benefit from) income taxes (28,304) (2,411) (6) (30,721) 3,393 (f) (27,328)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before extraordinary items $ (202,872) $ 11,252 $ (4,820) $ (196,440) $ 5,536 $ (190,904)
=========== =========== =========== =========== =========== ===========
Basic and diluted per share amounts:
Income (loss) before extraordinary items $ (5.51) $ (5.19)
=========== ===========
</TABLE>
4
<PAGE>
US OFFICE PRODUCTS COMPANY
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JULY 29, 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
OTHER
US OFFICE BLUE STAR ACQUISITIONS
PRODUCTS BUSINESS AND PRO FORMA PRO FORMA
COMPANY SUPPLIES DIVESTITURES SUBTOTAL ADJUSTMENTS TOTALS
------- -------- ------------ -------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 545,771 $ (71,750) $ (3,280) $ 470,741 $ 470,741
Cost of revenues 402,283 (53,120) (2,830) 346,333 346,333
--------- --------- -------- --------- --------- ---------
Gross profit 143,488 (18,630) (450) 124,408 124,408
Selling, general and administrative expenses 136,483 (18,132) (463) 117,888 117,888
Amortization expense 11,856 (1,234) 10,622 10,622
Operating restructuring costs 2,795 (235) 2,560 2,560
--------- --------- -------- --------- --------- ---------
Operating income (loss) (7,646) 971 13 (6,662) (6,662)
Interest expense 29,785 (1) 29,784 (2,707) (e) 27,077
Interest income (370) 64 (306) (306)
Unrealized foreign currency transaction loss 19,668 20 19,688 19,688
Equity in loss of affiliates 2,167 (75) 2,092 2,092
Loss on sale or closure of businesses 1,700 16 (82) 1,634 1,634
Other expense (2,628) (12) (2,640) (2,640)
--------- --------- -------- --------- --------- ---------
Income (loss) before provision for (benefit
from) income taxes (57,968) 959 95 (56,914) 2,707 (54,207)
Provision for (benefit from) income taxes (12,853) (99) 62 (12,890) 1,029 (f) (11,861)
--------- --------- -------- --------- --------- ---------
Net income (loss) $ (45,115) $ 1,058 $ 33 $ (44,024) $ 1,678 $ (42,346)
========= ========= ======== ========= ========= =========
Basic and diluted per share amounts:
Net income (loss) $ (1.22) $ (1.14)
========= =========
</TABLE>
5
<PAGE>
US OFFICE PRODUCTS COMPANY
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
1. UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS
(a) Adjustment to reflect $113,932 of net proceeds, including $108,592 in
cash and $5,340 held in escrow, related to the sale of Blue Star
Business Supplies' net assets of $188,684, resulting in a loss on the
sale of business of $74,752. The proceeds from the sale have been
converted from Australian dollars to U.S. dollars using the exchange
rate on the date of closing, October 6, 2000.
(b) Adjustment to reflect the use of cash proceeds to repay $45,000 of
short-term debt outstanding under the Company's revolving credit
facility and $63,592 of long-term debt outstanding under the Company's
seven-year term loan due 2005, eight-year term loan due 2006, and
seven-year multi-draw term loan due 2005. The proceeds were applied
to the long-term debt instruments on a pro rata basis.
(c) Adjustment to reflect the write-off of the Company's 40% investment in
Blue Star Business Solutions of $19,195. As part of the Blue Star
Business Supplies transaction, the Company's 40% interest in
Blue Star Business Solutions companies was transferred to companies
controlled by Eric Watson, the former CEO of the Blue Star Group. In
consideration for the Company's interest in this business, Mr. Watson
agreed to relinquish potential claims against the Company that could
have delayed or blocked the Blue Star Business Supplies transaction and
agreed to limitations on his contractual rights to participate in any
future divestitures by the Blue Star Group.
(d) Adjustment to reflect the realization of $65,610 in currency
translation losses related to the decline in the New Zealand dollar
since the dates Blue Star Business Supplies' businesses were acquired
to April 24, 1999. During the fourth quarter of the fiscal year
ended April 24, 1999, as part of a strategic review of operations, the
Company changed its perspective on the Blue Star Group operations and
no longer considered its intercompany loans with the Blue Star Group
to be long-term in nature. Accordingly, effective April 25, 1999, the
Company began recording the currency transaction gain (loss) related
to its intercompany loans with the Blue Star Group as a component of
net income. Such amounts were previously recorded as accumulated other
comprehensive loss, a component of stockholders' equity.
2. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS
(e) Adjustment to reflect the decrease in interest expense resulting from
the utilization of the cash proceeds to repay $45,000 of short-term
debt at annual interest rates of 8.3% and 9.7%, for the year ended
April 29, 2000 and the three months ended July 29, 2000, respectively,
and $63,592 of long-term debt at annual interest rates of 8.1% and
10.2%, for the year ended April 29, 2000 and the three months ended
July 29, 2000, respectively.
6
<PAGE>
(f) Adjustment to calculate the provision for income taxes on the pro forma
results using a statutory tax rate of 35%. The difference between the
statutory tax rate of 35% and the effective tax rate represents the
effect of state taxes, net of federal benefit, and non-deductible
goodwill.
7
