UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 June 30, 1997
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 number: 1-13858
BT OFFICE PRODUCTS INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3245865
- ---------------------------------------- ---------------------------------
(State of incorporation or organization) (IRS Employer Identification No.)
2150 E. Lake Cook Road
Buffalo Grove, Illinois 60089-1877
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
(847) 793-7500
----------------------------------------------------
(Registrant's telephone number, including area code)
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 _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Class of Common Stock Shares Outstanding as of August 13, 1997
- -------------------------------------- ----------------------------------------
Common stock, par value $.01 per share 33,471,000
<PAGE>
BT Office Products International, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1997
Index of Information Included in Report
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9
Part II. Other Information 12
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<PAGE>
Part I. Financial Information
BT Office Products International, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
June 30 December 31
1997 1996
--------- -----------
Assets
Current assets:
Cash and cash equivalents $ 20,534 $ 20,163
Accounts receivable, less allowances of
$5,511 in 1997 and $4,915 in 1996 203,352 203,629
Other receivables 16,775 22,197
Inventories 110,300 119,370
Other current assets 28,527 26,647
--------- ---------
Total current assets 379,488 392,006
Other assets 27,765 29,045
Property, plant and equipment 138,075 129,898
Accumulated depreciation and amortization 59,285 51,483
--------- ---------
Net property, plant and equipment 78,790 78,415
Intangibles, net of accumulated amortization of
$48,545 in 1997 and $43,834 in 1996 226,596 243,353
--------- ---------
Total assets $ 712,639 $ 742,819
========= ==========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 23,805 $ 41,207
Accounts payable 123,047 123,306
Other current liabilities 71,788 73,548
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Total current liabilities 218,640 238,061
Long-term obligations 211,018 219,702
Other liabilities 14,828 16,404
Commitments and contingencies
Stockholders' equity:
Common stock 335 335
Additional paid-in capital 270,132 270,132
Retained earnings (deficit) 9,225 (118)
Cumulative translation adjustments (11,539) (1,697)
--------- ---------
Total stockholders' equity 268,153 268,652
Total liabilities and stockholders' equity $ 712,639 $ 742,819
========= ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
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<PAGE>
<TABLE>
BT Office Products International, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three months ended Six months ended
June 30 June 30
-------------------------------- --------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 390,668 $ 339,057 $ 792,230 $ 681,713
Cost and expenses:
Costs of products sold 278,219 240,298 564,230 485,611
Selling and administrative expenses 93,331 83,194 190,374 164,887
Depreciation and amortization 3,869 3,164 8,075 6,201
Amortization of intangibles 2,619 2,490 5,302 4,857
----------- ----------- ----------- -----------
378,038 329,146 767,981 661,556
Operating income 12,630 9,911 24,249 20,157
Other income (expense):
Interest income and other 658 257 1,309 549
Interest expense (3,888) (2,725) (7,940) (5,582)
----------- ----------- ----------- -----------
(3,230) (2,468) (6,631) (5,033)
----------- ----------- ----------- -----------
Income before income taxes 9,400 7,443 17,618 15,124
Income tax expense 4,425 3,498 8,275 7,108
----------- ----------- ----------- -----------
Net income $ 4,975 $ 3,945 $ 9,343 $ 8,016
=========== =========== =========== ===========
Net income per share $ 0.15 $ 0.12 $ 0.28 $ 0.24
=========== =========== =========== ===========
Weighted-average number of
common and common
equivalent shares 33,471 33,859 33,471 33,849
=========== =========== =========== ===========
<FN>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
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<PAGE>
<TABLE>
BT Office Products International, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
<CAPTION>
Six months ended June 30
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Operating Activities
Net income $ 9,343 $ 8,016
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 8,934 7,026
Amortization of intangibles 5,303 4,857
Other 1,716 1,220
Changes in operating assets and liabilities, net of effects of
business acquisitions:
Receivables (6,194) 1,028
Inventories 5,230 (2,749)
Other current assets 3,469 (5,052)
Accounts payable and other current liabilities 1,401 (1,415)
----------- -----------
Net cash provided by operating activities 29,202 12,931
Investing activities
Purchases of property, plant and equipment (11,181) (14,048)
Acquisitions of businesses, less cash acquired (5,383) (42,480)
Other (1,155) (1,603)
----------- -----------
Net cash used for investing activities (17,719) (58,131)
Financing activities
Net repayments of notes payable (10,168) (4,784)
Net (repayments) borrowings under long-term obligations (1,795) 48,272
----------- -----------
Net cash provided by (used for) financing activities (11,963) 43,488
Effect of exchange rate changes on cash and cash equivalents 851 (109)
----------- -----------
Net increase(decrease) in cash and cash equivalents 371 (1,821)
Cash and cash equivalents at beginning of period 20,163 7,568
----------- -----------
Cash and cash equivalents at end of period $ 20,534 $ 5,747
=========== ===========
<FN>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
</FN>
</TABLE>
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<PAGE>
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Formation and Basis of Presentation
Prior to June 30, 1995, BT Office Products International, Inc. was a holding
company (the "Holding Company"), which owned and operated the U.S. office
products distribution business of N.V. Koninklijke KNP BT ("KNP BT") as well as
certain other KNP BT businesses which were unrelated to the U.S. office products
distribution business. On June 30, 1995, KNP BT and BT Office Products
International, Inc. effected a series of transactions (collectively, the
"Corporate Reorganization") in order to reorganize the legal ownership of
various of their businesses and to recapitalize the ongoing office products
distribution business which now constitutes the "Company."
The Corporate Reorganization included, among other things: (1) KNP BT's
contribution of the net assets of its European office products businesses and
one U.S. business to the Company, (2) the transfer of the Holding Company's
unrelated businesses to KNP BT, (3) a capital contribution of $118.0 million in
the form of an exchange of indebtedness of the Holding Company under interest
bearing advances by KNP BT for shares of common stock, (4) a stock split which
resulted in 23,400,000 shares issued and outstanding, and (5) the execution of
various agreements related to income tax matters, financing arrangements, and
shared services.
In July 1995, the Company completed the sale of 10 million shares of common
stock, at a price of $11.50 per share, in an initial public offering (the
"Offering"). After the Offering, KNP BT beneficially owned approximately 70% of
the Company's outstanding common stock.
The accompanying unaudited condensed consolidated financial statements present
information in accordance with generally accepted accounting principles for
interim financial information and applicable rules of Regulation S-X.
Accordingly, they do not include all information or footnotes required by
generally accepted accounting principles for complete financial statements.
Management believes the financial statements include all normal accrual
adjustments necessary for a fair presentation. Operating results for the three
month and six month periods ended June 30, 1997 do not necessarily reflect the
results that may be expected for the full year. For further information, refer
to the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 financial statement presentation.
2. Business Acquisitions
In December 1996, the Company acquired the Vinborgen I Boras AB group of
companies ("Bjorsell"), an office products distributor in Sweden, in a purchase
transaction for approximately $41.5 million in cash, subject to adjustment as
provided in the purchase agreement. The transaction resulted in goodwill of
$30.5 million.
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<PAGE>
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) - Continued
2. Business Acquisitions (Continued)
On December 31, 1996, the Company acquired Kuipers Centrum voor
Kantoorefficiency B.V. ("Kuipers"), an office products distributor in The
Netherlands, in a purchase transaction for approximately $22.0 million in cash,
subject to adjustment as provided in the purchase agreement. The transaction
resulted in goodwill of $15.4 million.
In July 1996, the Company acquired the two businesses comprising the Keller &
Roth Group, office products distributors in Germany, in a purchase transaction
for approximately $11.5 million in cash and the issuance of $3.2 million of
notes payable. The transaction resulted in goodwill of $11.1 million. The
foregoing numbers give effect to post-closing purchase price adjustments.
In July 1996, the Company assumed control of bax Burosysteme
Vertriebsgesellschaft mbH ("Bax"), an indirect wholly-owned subsidiary of KNP
BT. In October 1996, the Company completed the acquisition of Bax, an office
equipment distributor in Germany, by acquiring the shares of Bax from KNP BT for
approximately $9.8 million in cash. The excess purchase price over the net book
value of $3.6 million was charged to additional paid-in capital.
In addition, the Company acquired four other significant office products
businesses in the U.S., of which three were effective on January 1, 1996 and one
was effective on March 1, 1996, in purchase transactions for aggregate
consideration of $26.7 million, which included $25.9 million of cash and the
issuance of $0.8 million of notes payable. These transactions resulted in
goodwill of $22.9 million.
The pro forma unaudited results of operations for the six month period ended
June 30, 1996, assuming the above-described acquisitions had been consummated as
of January 1, 1996 and translated at historical rates, are as follows (in
thousands, except per share amounts):
Six months ended
June 30, 1996
----------------
Sales $ 782,165
Net income 8,650
Net income per share 0.26
Weighted-average number of
common and common equivalent
shares 33,849
The Company also acquired other smaller office products and furniture businesses
in 1997 and 1996. These acquisitions did not have a significant impact on the
consolidated operating results for the six month periods ended June 30, 1997 and
1996.
3. Financing Arrangements
On August 2, 1996, the Company entered into a five-year, non-amortizing, $250
million syndicated bank Competitive Advance and Revolving Credit Facility
Agreement (the "Bank Credit Agreement"). The Bank Credit Agreement, as amended
in December 1996 and May 1997, contains various loan covenants calculated
quarterly including a maximum leverage ratio based on total debt to pro forma
EBITDA (3.75 to 1 for each of the four quarter rolling periods ending on or
before March 31, 1998, and reducing to 3.25 to 1 in subsequent quarters), a
minimum EBITDA less capital expenditures to interest ratio, and a minimum net
worth requirement. In addition, under a change of control clause, an event of
default would occur if any person or group, other than KNP BT or its affiliates,
shall own more than 50% of the voting shares of the Company.
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<PAGE>
The Company also has a $35 million commitment under its credit facility with an
affiliate of KNP BT, as modified (the "Affiliate Credit Agreement"), which
commitment is available through KNP BT Europcenter N.V. for borrowings to
finance the Company's European operations. The Affiliate Credit Agreement has a
maturity date of July 1998.
In addition, in June 1997, the Company entered into revolving lines of credit
providing an aggregate of $22.5 million to fund the Company's U.S. cash
management requirements. Amounts outstanding under such lines are payable on
demand. Such lines replaced the $15 million cash management facility formerly
available under the Affiliate Credit Agreement through KNP BT Finance (USA),
Inc., an affiliate of KNP BT.
4. Per Share Data
Net income per share is calculated by dividing net income by the
weighted-average number of common shares outstanding, adjusted for dilutive
common share equivalents attributed to outstanding options to purchase common
stock, if applicable.
5. Contingencies
By a judgment entered on June 30, 1997, the United States District Court for the
Southern District of New York approved a settlement of the class action brought
against the Company, certain of its officers and KNP BT as initially disclosed
in the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended
March 31, 1996. No objections to the settlement were filed by any class member
and the action was dismissed with prejudice. The settlement amount was funded in
its entirety through insurance coverage available to the Company.
The Company is involved in various other legal actions arising in the normal
course of business. Management, after taking into consideration legal counsel's
evaluation of such actions, is of the opinion that the ultimate resolution of
these other matters over and above previously established accruals will not have
a material adverse effect on the financial position, net cash flows or results
of operations of the Company.
6. Income Taxes
The difference between the effective income tax rate and the U.S. statutory tax
rate is primarily due to the effects of foreign and state income taxes and
non-deductible goodwill amortization.
In 1996, the Company acquired the outstanding shares of Bax. Bax had
approximately $64.0 million of net operating loss carryovers available at June
30, 1997. A valuation allowance has been recorded against the deferred tax asset
relating to the tax net operating losses as a result of the uncertainty of
ultimate utilization.
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<PAGE>
BT Office Products International, Inc.
Management's Discussion and Analysis
of Financial Condition and Results of Operations
Results of Operations
Net sales increased to $390.7 million in the second quarter of 1997 from $339.1
million in the comparable period last year, an increase of $51.6 million or
15.2%. The incremental impact of the Company's 1996 acquisitions accounted for
$44.1 million of the increase. Sales at the Company's existing locations
accounted for $15.3 million of the increase, or a growth rate of 4.5%. Foreign
currency depreciation against the U.S. dollar lowered sales by $7.8 million or
2.3%. Net sales increased to $792.2 million in the first six months of 1997 from
$681.7 million in the comparable period last year, an increase of $110.5 million
or 16.2%. The incremental impact of the Company's 1996 acquisitions accounted
for $95.3 million of the increase. Sales at the Company's existing locations
accounted for $30.3 million of the increase, or a growth rate of 4.4%. Foreign
currency depreciation against the U.S. dollar lowered sales by $15.1 million or
2.2%.
Net sales in the United States increased to $278.7 million in the second quarter
of 1997 from $264.2 million in the comparable period last year, an increase of
$14.5 million or 5.5%. Net sales in the United States increased to $567.1
million in the first six months of 1997 from $530.7 million in the comparable
period last year, an increase of $36.4 million or 6.9%. Increased sales at the
Company's existing locations accounted for the entire increase of $14.5 million
in the second quarter and $30.6 million of the increase in the first six months,
or growth rates of 5.5% and 5.8%, respectively. The incremental impact of the
Company's 1996 U.S. acquisitions, which occurred in the first quarter of 1996,
accounted for the remaining $5.8 million of the increase in the first six
months. The Company believes the principal factors contributing to this internal
growth were increased sales to existing and new accounts and "add-on"
acquisitions. Net sales in the United States were negatively impacted by the
softness in certain U.S. markets and lower paper prices.
Net sales in Europe increased to $112.0 million in the second quarter of 1997
from $74.9 million in the comparable period last year, an increase of $37.1
million or 49.5%. Net sales in Europe increased to $225.1 million in the first
six months of 1997 from $151.0 million in the comparable period last year, an
increase of $74.1 million or 49.1%. The incremental impact of the Company's 1996
acquisitions accounted for $44.1 million and $89.5 million of the increases in
the second quarter and first six months of 1997, respectively. Sales in the
second quarter at the Company's existing locations, excluding the effects of
foreign currency depreciation against the U.S. dollar which reduced sales by
$7.8 million, increased $0.8 million. Sales in the first six months at the
Company's existing locations, excluding the effects of foreign currency
depreciation against the U.S. dollar which reduced sales by $15.1 million,
decreased by $0.3 million. The Company believes the relatively flat internal
growth in Europe has been attributable to the continued slowness in the German
economy, where approximately 50% of the Company's European sales originate.
Gross profit as a percentage of net sales was 28.8% in the second quarter of
1997 as compared to 29.1% in the comparable period last year. Gross profit as a
percentage of net sales was 28.8% for the first six months of 1997 and for the
comparable period last year. The decrease in the second quarter of 1997 was
attributable primarily to lower margins on paper and related product sales and a
higher LIFO charge associated with inventory cost increases in the United
States.
Selling and administrative expenses as a percentage of net sales were 23.9% in
the second quarter of 1997 as compared to 24.5% in the comparable period last
year. Selling and administrative expenses as a percentage of net sales were
24.0% in the first six months of 1997 as compared to 24.2% in the comparable
period last year. The decreases in the second quarter and first six months of
1997 were attributable to a higher U.S. sales level with a relatively fixed
administrative expense base, offset slightly by lower selling prices on paper
and related products in the United States and the impact of higher operating
expenses expressed as a percentage of net sales relating to the 1996 European
acquisitions.
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<PAGE>
Operating income as a percentage of net sales was 3.2% in the second quarter of
1997 as compared to 2.9% in the comparable period last year. Operating income as
a percentage of net sales was 3.1% in the first six months of 1997 as compared
to 3.0% in the comparable period last year. Operating income as a percentage of
net sales in the United States was 3.8% in the second quarter 1997 as compared
to 3.1% in the comparable period last year. Operating income as a percentage of
net sales in the United States was 3.6% in the first six months of 1997 as
compared to 3.4% in the comparable period last year. Operating income as a
percentage of net sales in Europe was 1.8% in the second quarter of 1997 as
compared to 2.3% in the comparable period last year. Operating income as a
percentage of net sales in Europe was 1.6% in the first six months of 1997 and
in the comparable period last year. The growth in operating income reflects the
effects of the Company's 1996 European acquisitions, which were accretive to
earnings, and cost containment as the Company rationalizes existing operations
and integrates acquisitions.
Interest expense, including affiliated interest expense, increased to $3.9
million in the second quarter of 1997 from $2.7 million in the comparable period
last year. Interest expense, including affiliated interest expense, increased to
$7.9 million in the first six months of 1997 from $5.6 million in the comparable
period last year. The increases in the second quarter and the first six months
of 1997 were attributable to interest expense on debt associated with the new
acquisitions and capital investments in 1997 and 1996.
Net income increased to $5.0 million in the second quarter of 1997 from $3.9
million in the comparable period last year. Net income increased to $9.3 million
in the first six months of 1997 from $8.0 million in the comparable period last
year. The increases in net income in the second quarter and first six months of
1997 were due to increased operating income at existing operations and
acquisitions offset by higher interest costs. The effective income tax rate was
approximately 47.0% for the first six months of 1997 and 1996.
Liquidity and Capital Resources
Cash provided by operating activities in the first six months of 1997 of $29.2
million was the result of $25.3 million of net income, depreciation,
amortization and other non-cash items and $3.9 million of net reductions in
working capital. Significant cash requirements in the first six months of 1997
included $11.2 million for capital expenditures, $5.4 million related to
acquisitions of businesses and $12.0 million for net repayments of notes payable
and long-term obligations.
On August 2, 1996, the Company entered into a five-year, non-amortizing $250
million Bank Credit Agreement. The Bank Credit Agreement was used to pay down
existing debt owed to affiliates of the Company and is being used for working
capital needs and general corporate purposes, including acquisitions. Total
borrowings under the Bank Credit Agreement at June 30, 1997 were $181.2 million.
The most restrictive covenant in the Bank Credit Agreement currently limits, and
may in the future limit, the Company's ability to fully utilize the available
capacity remaining under the Bank Credit Agreement and other credit facilities
of the Company.
The Company believes that internally generated funds and borrowings under its
credit agreements will be sufficient to meet its presently anticipated cash
requirements for capital expenditures and working capital. The Company continues
to integrate the 1996 acquired companies and to identify and review acquisition
candidates on a selective basis. The Company anticipates significant future
acquisition funding, to the extent required, will necessitate obtaining
additional debt and/or equity capital resources. The Company continues to
examine and evaluate several alternatives.
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<PAGE>
Other
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
No. 125 ("SFAS 125"), "Accounting for Transfers and Services of Financial Assets
and Extinguishments of Liabilities", which requires an entity to recognize the
financial and servicing assets it controls and the liabilities it has incurred
and to derecognize financial assets when control has been surrendered in
accordance with the criteria provided in SFAS 125. The Company has not yet
determined the impact of SFAS 125 on the financial statements.
In February 1997, the FASB issued Statement No. 128 ("SFAS 128"), "Earnings per
Share," which specifies the computation, presentation, and disclosure
requirements for earnings per share. SFAS 128, which has an effective date of
December 15, 1997, is not expected to have a significant impact on the Company's
reported earnings per share.
In June 1997, the FASB issued Statement No. 130 ("SFAS 130"), "Reporting
Comprehensive Income" which establishes standards for reporting and display of
comprehensive income and its components. SFAS 130, which is effective for
financial statement periods beginning after December 15, 1997, is not expected
to have a significant impact on the Company's financial statement disclosures.
Also in June 1997, the FASB issued Statement No. 131 ("SFAS 131"), "Disclosure
about Segments of an Enterprise and Related Information" which requires the
reporting of selected segment information quarterly and entity-wide disclosures
about products and services, major customers, and the material countries in
which the entity holds assets and reports revenues. The Company intends to make
appropriate disclosures upon adoption of SFAS 131, which is effective for
financial statement periods beginning after December 15, 1997.
Forward Looking Statements
Various statements made within this Management's Discussion and Analysis of
Financial Condition and Results of Operations and elsewhere in this Quarterly
Report on Form 10-Q constitute "forward looking statements" for purposes of the
Securities and Exchange Commission's "safe harbor" provisions under the Private
Securities Litigation Reform Act of 1995 and Rule 3b-6 under the Securities
Exchange Act of 1934, as amended. Investors are cautioned that all forward
looking statements involve risks and uncertainties, including those detailed in
the Company's filings with the Securities and Exchange Commission. There can be
no assurance that actual results will not differ from the Company's
expectations. Factors which could cause materially different results include,
among others, uncertainties related to the introduction of the Company's
products and services; the successful completion and integration of
acquisitions; and competitive and general economic conditions.
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<PAGE>
Part II. Other Information
BT Office Products International, Inc.
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders (the "Annual Meeting"), for which
proxies were solicited pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, was held on May 29, 1997 for the purposes of (1)
electing directors of the Company to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified and (2)
ratifying the appointment by the Board of Directors of the Company of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the fiscal year
ending December 31, 1997. The nominees for director listed in the proxy
statement, each of whom was elected at the Annual Meeting, received the number
of votes for such election, and had the number of votes for such election
withheld, as indicated below (with each share of the Company's common stock
being entitled to one vote):
Number of Votes Number of Votes
For Withheld
Frank J. de Wit 28,335,974 153,304
Rudolf A.J. Huyzer 28,325,274 164,004
Rob W. J.M. Bonnier 28,335,639 153,639
Lorrence T. Kellar 28,335,839 153,439
Frans H.J. Koffrie 28,328,209 161,069
Philip E. Beekman 28,335,974 153,304
There were 28,471,930 votes for the resolution ratifying the appointment of
Coopers & Lybrand L.L.P. as the Company's independent accountants for the fiscal
year ending December 31, 1997, 12,383 votes against such resolution and 4,965
abstentions.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
10.1 Amendment No. 2 dated as of May 28, 1997 to the
Competitive Advance and Revolving Credit Facility
Agreement
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
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<PAGE>
BT Office Products International, Inc.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BT OFFICE PRODUCTS INTERNATIONAL, INC.
/s/ Francis J. Leonard
---------------------------------------------------------
Francis J. Leonard
Vice President-Finance and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Date: August 13, 1997
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<PAGE>
BT OFFICE PRODUCTS INTERNATIONAL, INC.
INDEX TO EXHIBITS
Filed with the Quarterly Report on Form 10-Q
for the Quarterly Period Ended June 30, 1997
Exhibit No. Description
10.1 Amendment No. 2 dated as of May 28, 1997 to the
Competitive Advance and Revolving Credit Facility
Agreement
27.1 Financial Data Schedule
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EXECUTION COPY
AMENDMENT No. 2 dated as of May 28, 1997 (this "Amendment") to the
Competitive Advance and Revolving Credit Facility Agreement dated as
of August 2, 1996, as amended by Amendment No. 1 thereto dated as of
December 20, 1996 (the "Credit Agreement"), among BT OFFICE PRODUCTS
INTERNATIONAL, INC. (the "Company"), the Borrowing Subsidiaries and
Guarantors named in the Credit Agreement, the lenders named in the
Credit Agreement (the "Lenders"), THE CHASE MANHATTAN BANK, as
administrative agent (the "Administrative Agent"), and ABN AMRO BANK
N.V., as documentation agent.
A. Pursuant to the Credit Agreement, the Lenders have agreed to
extend credit to the Company, in each case pursuant to the terms and
subject to the conditions set forth therein.
B. The Company has requested that certain provisions contained in
the Credit Agreement be amended as set forth herein.
C. The Lenders are willing to so amend the Credit Agreement
pursuant to the terms and subject to the conditions set forth herein.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties hereto agree
as follows (all capitalized terms used and not otherwise defined
herein having the meanings given them in the Credit Agreement as
amended hereby):
SECTION 1. (a) Amendment to Section 6.08 of the Credit Agreement.
Section 6.08 of the Credit Agreement is hereby amended and restated as
follows:
SECTION 6.08. Consolidated Leverage Ratio. The Consolidated
Leverage Ratio will not at any time (i) on or before March 31, 1998
exceed 3.75 to 1.0, and (ii) after March 31, 1998 exceed 3.25 to 1.0.
<PAGE>
(b) The definition of "Applicable Margin" is hereby amended and
restated as follows:
"Applicable Margin" shall mean on any date, with respect to
Eurocurrency Standby Loans, the applicable percentage set forth below
based upon the Consolidated Leverage Ratio as set forth below:
- ----------------------------------------------------------------- --------------
Consolidated Applicable
Leverage Margin
Ratio
- ----------------------------------------------------------------- --------------
Category 1
Less than or equal to 2.0 .225%
- ----------------------------------------------------------------- --------------
Category 2
Greater than 2.0 but less than or equal to 3.0 .225%
- ----------------------------------------------------------------- --------------
Category 3
Greater than 3.0 .325%
- ----------------------------------------------------------------- --------------
Except as set forth below, the Consolidated Leverage Ratio utilized
for purposes of determining the Applicable Margin shall be that in
effect as of the last Financial Statement Delivery Date. From the date
hereof until the initial delivery of financial statements pursuant to
Section 5.01(a) or (b), the Applicable Margin shall be determined by
reference to Category 2. Each change in the Applicable Margin
resulting from a change in the Consolidated Leverage Ratio shall be
effective with respect to all Loans and Commitments outstanding on and
after the date of such change. Notwithstanding the foregoing, (i) at
any time when the Company has failed to deliver the financial
statements required by Section 5.01(a) or (b) and a certificate
pursuant to Section 5.01(c), the Applicable Margin shall be determined
by reference to Category 3 and (ii) at all times (A) until March 31,
1998 during which (I) the Consolidated Leverage Ratio is greater than
3.25 or (II) the Company has failed to deliver the financial
statements required by Section 5.01(a) or (b) and a certificate
pursuant to Section 5.01(c), and (B) from and after March 31, 1998
during which the Company has failed to deliver the financial
statements required by Section 5.01(a) or (b) and a certificate
pursuant to Section 5.01(c), the Applicable Margin Percentage shall be
0.450%.
-2-
<PAGE>
(c) The definition of "Facility Fee Percentage" is hereby amended
and restated as follows:
"Facility Fee Percentage" shall mean on any date the applicable
percentage set forth below based upon the Consolidated Leverage Ratio
as set forth below:
- ----------------------------------------------------------------- --------------
Consolidated Facility
Leverage Fee
Ratio
- ----------------------------------------------------------------- --------------
Category 1
Less than or equal to 2.0 .125%
- ----------------------------------------------------------------- --------------
Category 2
Greater than 2.0 but less than or equal to 3.0
.175%
- ----------------------------------------------------------------- --------------
Category 3
Greater than 3.0 .225%
- ----------------------------------------------------------------- --------------
Except as set forth below, the Consolidated Leverage Ratio utilized
for purposes of determining the Facility Fee Percentage shall be that
in effect as of the last Financial Statement Delivery Date. From the
date hereof until the initial delivery of financial statements
pursuant to Section 5.01(a) or (b) and a certificate pursuant to
Section 5.01(c), the Facility Fee Percentage shall be determined by
reference to Category 2. Each change in the Facility Fee Percentage
resulting from a change in the Consolidated Leverage Ratio shall be
effective with respect to all Loans and Commitments outstanding on and
after the date of such change. Notwithstanding the foregoing, (i) at
any time when the Company has failed to deliver the financial
statements required by Section 5.01(a) or (b) and a certificate
pursuant to Section 5.01(c), the Facility Fee Percentage shall be
determined by reference to Category 3, and (ii) at all times (A) until
March 31, 1998 during which (I) the Consolidated Leverage Ratio is
greater than 3.25 or (II) the Company has failed to deliver the
financial statements required by Section 5.01(a) or (b) and a
certificate pursuant to Section 5.01(c), and (B) from and after March
31, 1998 during which the Company has failed to deliver the financial
statements required by Section 5.01(a) or (b) and a certificate
pursuant to Section 5.01(c), the Facility Fee Percentage shall be
0.300%.
SECTION 2. Representations and Warranties. To induce the other
parties hereto to enter into this Amendment, the Company represents
and warrants to each of the Lenders and the Administrative Agent that,
after giving effect to this Amendment, (a) the representations and
warranties set forth in Article IV of the Credit Agreement are true
and correct on and as of the date hereof with the same effect as
though made on and as of the date hereof, except to the extent such
representations and warranties expressly relate to an earlier date,
and (b) no Default or Event of Default has occurred and is continuing.
SECTION 3. Conditions to Effectiveness. This Amendment shall
become effective on the date hereof upon the Administrative Agent's
receipt of counterparts of this Amendment that, when taken together,
bear the signatures of the Borrowers and the Required Lenders.
SECTION 4. Effect of Amendment. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit,
impair, constitute a waiver of or otherwise affect the rights and
remedies of the Lenders or the Administrative Agent or of the
Borrowers or the Guarantors under the Credit Agreement, and shall not
alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the
Credit Agreement, which is ratified and affirmed in all respects and
shall continue in full force and effect. Nothing herein shall be
deemed to entitle the Company to a consent to, or a waiver, amendment,
modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement
in similar or different circumstances.
SECTION 5. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall
constitute but one and the same instrument. Delivery of any executed
counterpart of a signature page of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.
-3-
<PAGE>
SECTION 6. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed by their duly authorized officers, all as of the
date and year first above written.
BT OFFICE PRODUCTS INTERNATIONAL, INC.,
By /s/ Francis J. Leonard
-----------------------------------
Name: Francis J. Leonard
Title: Vice President of Finance and
Chief Financial Officer
BT OFFICE PRODUCTS SWEDEN AB,
By /s/ Janhein H. Pieterse
-----------------------------------
Name: Janhein H. Pieterse
Title: President
BT OPE HOLDINGS, INC.,
By /s/ Francis J. Leonard
-----------------------------------
Name: Francis J. Leonard
Title: Vice President of Finance and
Chief Financial Officer
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent,
By /s/ Timothy J. Storms
-----------------------------------
Name: Timothy J. Storms
Title: Managing Director
ABN AMRO BANK N.V., individually and
as Documentation Agent,
By /s/ Nancy L. Capecci
-----------------------------------
Name: Nancy L. Capecci
Title: Assistant Vice President
By /s/ Douglas R. Elliott
-----------------------------------
Name: Douglas R. Elliott
Title: Vice President
BANK OF AMERICA ILLINOIS,
By /s/ Richard J. Kerbis
-----------------------------------
Name: Richard J. Kerbis
Title: Vice President
-4-
<PAGE>
BAYERISCHE VEREINSBANK-AG,
NEW YORK BRANCH,
By /s/ Alexander M. Blodi
-----------------------------------
Name: Alexander M. Blodi
Title: Vice President
BAYERISCHE VEREINSBANK-AG,
NEW YORK BRANCH,
By /s/ Carolyn Gutbrod
-----------------------------------
Name: Carolyn Gutbrod
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
By /s/ Susan L. Comstock
-----------------------------------
Name: Susan L. Comstock
Title: Vice President
THE FUJI BANK LIMITED,
By /s/ Tetsuo Kamatsu
-----------------------------------
Name: Tetsuo Kamatsu
Title: Joint General Manager
MELLON BANK,
By /s/ Irene Burczynski
-----------------------------------
Name: Irene Burczynski
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
CHICAGO BRANCH,
By /s/ Hajime Watanabe
----------------------------------
Name: Hajime Watanabe
Title: Deputy General Manager
CREDIT LYONNAIS, NEW YORK BRANCH,
By /s/ Xavier Roux
-----------------------------------
Name: Xavier Roux
Title: First Vice President
FIRST NATIONAL BANK OF MARYLAND,
By /s/ Roy S. Lewis
-----------------------------------
Name: Roy S. Lewis
Title: Vice President
NORTHERN TRUST COMPANY,
By /s/ Michelle M. Teteak
-----------------------------------
Name: Michelle M. Teteak
Title: Vice President
-5-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from BT Office
Products International, Inc. Form 10-Q for the quarterly period ended June 30,
1997 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 20,534
<SECURITIES> 0
<RECEIVABLES> 208,863
<ALLOWANCES> (5,511)
<INVENTORY> 110,300
<CURRENT-ASSETS> 379,488
<PP&E> 138,075
<DEPRECIATION> (59,285)
<TOTAL-ASSETS> 712,639
<CURRENT-LIABILITIES> 218,640
<BONDS> 211,018
<COMMON> 335
0
0
<OTHER-SE> 267,818
<TOTAL-LIABILITY-AND-EQUITY> 712,639
<SALES> 390,668
<TOTAL-REVENUES> 390,668
<CGS> 278,219
<TOTAL-COSTS> 378,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,888
<INCOME-PRETAX> 9,400
<INCOME-TAX> 4,425
<INCOME-CONTINUING> 4,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,975
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
