-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LzVK1gVN8Ab1HpNbOrnjOSIX4deumJkG6T/e3MWduMUF9wdC8IhCFNJT5hvGx/Gv Pi5Eix/E+SHEUipbXo5qUA== 0000950109-96-004637.txt : 19960726 0000950109-96-004637.hdr.sgml : 19960726 ACCESSION NUMBER: 0000950109-96-004637 CONFORMED SUBMISSION TYPE: 424B1 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960725 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORPORATE EXPRESS INC CENTRAL INDEX KEY: 0000878130 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 840978360 STATE OF INCORPORATION: CO FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 424B1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-07909 FILM NUMBER: 96598507 BUSINESS ADDRESS: STREET 1: 325 INTERLOCKEN PKWY CITY: BROOMFIELD STATE: CO ZIP: 80021 BUSINESS PHONE: 3033732800 MAIL ADDRESS: STREET 1: 325 INTERLOCKEN PKWY CITY: BROOMFIELD STATE: CO ZIP: 80021 424B1 1 PROSPECTUS PROSPECTUS [LOGO OF CORPORATE EXPRESS APPEARS HERE] 14,000,000 SHARES OF COMMON STOCK This Prospectus covers 14,000,000 shares of Common Stock, par value $.0002 per share, of Corporate Express, Inc. (the "Company" or "Corporate Express") which the Company may issue from time to time in connection with its direct and indirect acquisition of securities and assets of other businesses. The Company expects that the terms upon which it may issue the shares will be determined through negotiations with the shareholders or principal owners of the businesses whose securities or assets are acquired. It is expected that the shares that are issued will be valued at prices reasonably related to market prices for the Common Stock prevailing either at the time an acquisition agreement is executed or at the time an acquisition is consummated. In addition, the Company may issue shares in satisfaction of currently outstanding or as yet unissued notes or warrants of the Company which have been or may be issued in connection with acquisitions, which notes or warrants are convertible into or exercisable for shares of Common Stock of the Company. The Company's Common Stock is traded on the Nasdaq National Market ("Nasdaq") under the symbol "CEXP." Application will be made to list the shares offered hereby on Nasdaq. The last reported sale price of the Common Stock on Nasdaq on July 19, 1996 was $33.38 per share. All expenses of this offering will be paid by the Company. No underwriting discounts or commissions will be paid in connection with the issuance of shares, although finder's fees may be paid with respect to specific acquisitions. Any person receiving a finder's fee may be deemed to be an underwriter within the meaning of the Securities Act of 1933, as amended. ---------------- THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- THE DATE OF THIS PROSPECTUS IS JULY 22, 1996. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OF MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO MAKE SUCH OFFER. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME SHALL NOT, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OF THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. CONTENTS
PAGE ---- Available Information................................................ 2 Incorporation of Certain Documents by Reference...................... 3 Summary.............................................................. 4 Recent Developments.................................................. 5 Important Factors Regarding Forward-Looking Statements............... 6 Selected Consolidated Financial Data................................. 7 Risk Factors......................................................... 9 Securities Covered by this Prospectus................................ 11 Price Range of Common Stock.......................................... 13 Dividend Policy...................................................... 13 Description of Capital Stock......................................... 14 Legal Matters........................................................ 15 Experts.............................................................. 16
AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-4 with respect to the Common Stock offered hereby. This Prospectus, which is included as part of the Registration Statement, does not contain all the information contained in the Registration Statement, certain portions of which have been omitted in accordance with the rules and regulations of the Commission. For further information with respect to the Company and the Common Stock offered hereby, reference is made to the Registration Statement and the exhibits and schedules thereto. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and its regional offices located at 7 World Trade Center, Suite 1300, New York, New York 10048; and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained at prescribed rates from the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. ---------------- Corporate Express (R) is a registered service mark of the Company. ---------------- As used in this Prospectus, "fiscal 1991," "fiscal 1992," "fiscal 1993," "fiscal 1994," "fiscal 1995" and "fiscal 1996" refer to the Company's fiscal years ended or ending February 29, 1992, February 29, 1993, February 28, 1994, February 25, 1995, March 2, 1996 and March 1, 1997, respectively. All information regarding the Company in this Prospectus has been adjusted to reflect a one-for-two reverse stock split on August 29, 1994 and a 50% share dividend distributed on June 21, 1995. 2 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission pursuant to the Exchange Act are incorporated herein by reference: (i) the Company's Annual Report on Form 10-K for the year ended March 2, 1996, as amended by the Form 10-K/A filed on July 10, 1996; (ii) the Company's Current Report on Form 8-K/A filed on June 19, 1996; and (iii) the Company's Proxy Statement dated July 9, 1996 for its 1996 Annual Meeting of Shareholders. All documents filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to the termination of the offering of the Common Stock offered hereby shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such documents. The Company will furnish without charge to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of the documents referred to above, excluding exhibits thereto. Requests should be made to: Corporate Express, Inc., 325 Interlocken Parkway, Broomfield, Colorado 80021, Attention: Secretary. The Company's telephone number is (303) 373-2800. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 3 SUMMARY The information contained in this summary is qualified in its entirety by, and should be read in conjunction with, the detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus or incorporated herein by reference. Corporate Express is a leading provider of office products and services to large corporations. Since 1991, Corporate Express has expanded through acquisitions from a regional operation in Colorado to operations throughout the United States, Canada, the United Kingdom, Australia and New Zealand. Corporate Express believes it has developed a substantially different business model from traditional contract stationers, defining itself as a "Corporate Supplier" which provides a broad array of non-production goods and services to its customers while reducing overall procurement costs and providing a high level of customer service. The Company's current offering includes office supplies, computer and imaging supplies, computer software, office furniture, forms management, printing, same-day local delivery service and distribution logistics management. Corporate Express markets to its existing and prospective customers through a direct sales force and fulfills its products and services through over 400 locations and a fleet of over 7,000 owned or contracted vehicles. The Company's target customers are large corporations with over 100 employees. The Company believes that these large corporations increasingly are seeking to reduce the cost of procuring non-production goods and services and decrease the time and effort spent managing functions that are not considered core competencies. To that end, corporations are seeking to reduce the number of their suppliers in order to eliminate the internal costs associated with multiple invoices, deliveries, ordering procedures, uneven service levels and inconsistent product availability. Many large corporations operate from multiple locations and can benefit from selecting a single supplier who can service them nationally or internationally. In many non-production goods and services sectors, including office products and same-day local delivery, competition is often highly fragmented and consists primarily of smaller local or regional providers. The Company believes that the desire of large corporations to reduce their number of suppliers to a small group of reliable and cost-effective partners will lead to a further consolidation of currently fragmented sectors, as well as initiate consolidations between sectors where the ultimate requirement will be the ability to meet customers' needs rather than to supply a particular product or service. The Company's Corporate Supplier strategy is designed to reduce its customers' total costs and the internal effort necessary to manage the procurement of non-production goods and services. The Company believes that its target customers value a high level of service including account relationship managers, delivery services and customized pricing, electronic interfaces, reporting formats and product catalogs. Corporate Express' broad product and service offering permits the Company to reduce the procurement costs its customers incur in dealing with multiple vendors while servicing customers' broad geographical service and delivery requirements. Corporate Express also seeks to continually reduce its merchandise and operating costs which should permit it to offer its customers lower prices. By purchasing most of its products directly from manufacturers in large volumes and limiting the number of manufacturers represented in its In-Stock Catalog and other specialty catalogs, Corporate Express is increasingly able to earn volume discounts and advertising allowances from its vendors. Corporate Express believes its computer systems represent a key strategic advantage which differentiates the Company from its competitors and permits it to achieve cost savings, provide superior customer service and centrally manage its operations. 4 The Company historically has grown and intends to continue to grow in the future through a combination of acquisitions and internal growth. The Company plans to increase sales to existing customers by cross-selling its expanded product and service offering and developing existing customers into international, national or multi-regional accounts. Corporate Express seeks to gain new customers, including national and international accounts, through the marketing efforts of its direct sales force and through acquisitions of other suppliers and companies offering complementary products and services. Further, the recent merger with U.S. Delivery Systems, Inc. ("Delivery") has expanded the Company's delivery capabilities and geographic coverage in the United States and Corporate Express intends to develop sales efforts in these new geographic areas. In addition, the Company may open additional satellite sales offices and distribution breakpoints to serve new accounts and to continue to add new product and service capabilities. In order to better service its multi-national customers and to take advantage of the fragmented nature of many international markets, Corporate Express has devoted substantial resources to expanding outside of the United States, principally through acquisitions. The Company has acquired or made investments in companies in Canada and Australia in fiscal 1995, and the United Kingdom, New Zealand and Germany in fiscal 1996. The Company plans to enter additional international markets in the future. Over time, the Company plans to implement appropriate aspects of the Corporate Supplier business model in its international operations, including creating in-stock catalogs, consolidating warehouses, upgrading information systems, acquiring companies offering complementary products and services and focusing on larger customers and national and international accounts. The Company was incorporated under the laws of Colorado in 1985. The Company operates its business through various subsidiaries. The Company's executive offices are located at 325 Interlocken Parkway, Broomfield, Colorado 80021, and its telephone number is (303) 373-2800. RECENT DEVELOPMENTS Acquisition Activity. Since the beginning of fiscal 1996, the Company has completed 29 acquisitions, which acquisitions included 25 office products companies, three delivery companies and one software reseller. Of these acquisitions, 16 were in the United States, two were in Canada, three were in the United Kingdom, four were in Australia, three were in New Zealand, and one was in Germany. The largest of the Company's completed acquisitions in fiscal 1996 closed on May 15, 1996, which acquisition was effective as of April 22, 1996, when the Company acquired all of the outstanding capital stock of ASAP Software Express, Inc. ("ASAP"), a direct reseller of computer software based in Buffalo Grove, Illinois. The purchase price for the acquisition was approximately $98 million. For its most recently completed fiscal year ended December 31, 1995, ASAP had revenues and net income of approximately $158 million and $10 million, respectively. On June 19, 1996, the Company filed with the Commission a report on Form 8-K/A containing information (including financial statements) relating to the ASAP acquisition. Announcement of Revised Results. After reviewing certain costs in accordance with its established policies relating to accounting for past acquisitions, the Company revised its accounting and reclassified certain costs from accrued purchase costs to warehouse assimilation costs which is now reported in warehouse operating and selling expenses. These adjustments resulted in an increase in reported expenses affecting net income by $0.87 million and $1.26 million in the second and third quarters of fiscal 1995, respectively. On June 14, 1996, the Company filed with the Commission amended quarterly reports to reflect these changes. In addition, on June 14, 1996, the Company announced that it had reduced the fiscal 1995 fourth quarter merger and other nonrecurring charges by $5.5 million to $42.8 million, of which $6.0 million was associated with changes in the Company's product offering and has been reclassified to a merger-related provision as part of cost of goods sold. These adjustments resulted in an increase in net income by $3.6 million for the fourth quarter of fiscal 1995. The net result of all of the above changes was an increase in net income for fiscal 1995 to $2.7 million, up from the $1.2 million previously announced in a press release. 5 First Quarter 1996 Results. The Company announced sales of $500.6 million for the first fiscal quarter ended June 1, 1996, compared to sales of $330.4 million in the first quarter of fiscal 1995. Net income and earnings per share for the first quarter of fiscal 1996 were $9.6 million and $.13, respectively, compared to $6.5 million and $.10, respectively, for the first quarter of fiscal 1995. Corporate Reorganization. As of June 18, 1996, the Company consummated a reorganization pursuant to which the Company formed CEX Holdings, Inc., a wholly-owned subsidiary organized under the laws of Colorado ("CEX Holdings"), and contributed substantially all of its assets, including the capital stock of all operating subsidiaries, and assigned substantially all of its liabilities, to CEX Holdings. CEX Holdings is the sole subsidiary of the Company. The Company believes that the reorganization will enable the Company to achieve certain tax advantages, provide the Company more flexibility to engage in certain financing transactions and allow the Company to better manage its operating subsidiaries. Convertible Note Offering. On June 24, 1996, the Company consummated an offering of $325,000,000 principal amount of 4 1/2% Convertible Notes due July 1, 2000 (the "Notes") to certain qualified institutional buyers, institutional accredited investors and non-U.S. persons (the "Note Offering"). The Note Offering was conducted pursuant to Rule 144A, Regulation D and Regulation S under the Securities Act. The Notes will be convertible into shares of Common Stock of the Company at a conversion price of $50.00 per share, subject to certain adjustments. The Notes are general unsecured obligations of the Company which will rank pari passu with the Company's other unsecured obligations and general liabilities, including trade payables, and are effectively subordinated to all of the liabilities of the Company's subsidiaries. Neither the indenture governing the Notes nor the Notes limit the Company's or any subsidiary's right to incur secured or unsecured indebtedness. IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS Some of the information presented in this Prospectus constitutes forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results of the Company's operations will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include, among others, uncertainties related to integrating recent acquisitions, uncertainties relating to the Company's new product and service offerings, uncertainties related to future domestic and international acquisitions, uncertainties related to the Company's systems and proprietary software, uncertainties related to legislation with respect to independent contract drivers, uncertainty of whether the Company's activities will continue to be successful, and uncertainties related to competition and the demand for the products and services offered for by the Company. Specific reference is made to the risks and uncertainties described under "Risk Factors." 6 SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data for fiscal 1995, fiscal 1994 and fiscal 1993 have been derived from the Company's consolidated financial statements which have been audited by independent auditors. The selected consolidated financial data for fiscal 1992 and fiscal 1991 is derived from unaudited consolidated financial statements. The unaudited consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the financial position and results of operations for these periods. The information set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of the Company contained in the Company's Annual Report on Form 10-K for the fiscal year ended March 2, 1996.
FISCAL YEAR -------------------------------------------------------- 1995 1994 1993 1992 1991 ----------- ---------- ---------- ---------- ---------- (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA) Statements of Operations Data:(1) Net sales............. $ 1,590,104 $927,918 $337,094 $237,473 $195,783 Cost of sales(2)...... 1,173,255 681,962 254,698 175,309 144,418 Merger related inventory provisions(3)........ 5,952 -- 1,146 -- -- ----------- --------- --------- --------- --------- Gross profit........ 410,897 245,956 81,250 62,164 51,365 Warehouse operating and selling expenses............. 297,275 188,464 69,851 49,383 38,489 Corporate general and administrative expenses............. 46,980 23,852 8,690 7,139 5,088 Merger and other nonrecurring charges(4)........... 36,838 -- 1,928 2,592 -- ----------- --------- --------- --------- --------- Operating profit.... 29,804 33,640 781 3,050 7,788 Interest expense, net.................. 15,396 15,610 4,463 4,087 5,109 Other expenses (income)(5).......... (724) (352) (126) 1,737 480 ----------- --------- --------- --------- --------- Income (loss) before income taxes......... 15,132 18,382 (3,556) (2,774) 2,199 Income tax expense.... 10,952 6,164 1,894 947 1,326 ----------- --------- --------- --------- --------- Income (loss) before minority interest.... 4,180 12,218 (5,450) (3,721) 873 Minority interest..... 1,436 69 152 -- -- ----------- --------- --------- --------- --------- Income (loss) from continuing operations........... 2,744 12,149 (5,602) (3,721) 873 Income (loss) from discontinued operations(6)........ -- -- 138 (4,571) (435) ----------- --------- --------- --------- --------- Income (loss) before extraordinary item............... 2,744 12,149 (5,464) (8,292) 438 Extraordinary item(7).............. -- 586 (1,169) -- -- ----------- --------- --------- --------- --------- Net income (loss)... $ 2,744 $ 12,735 $ (6,633) $ (8,292) $ 438 =========== ========= ========= ========= ========= Per common share: Income (loss) from continuing operations......... $ .04 $ .24 $ (.21) =========== ========= ========= Net income (loss)... $ .04 $ .25 $ (.25) =========== ========= ========= Shares used to compute per share amounts.... 68,057 49,195 32,265 =========== ========= ========= Balance Sheet Data:(1) Working capital....... $ 217,243 $131,202 $ 68,084 $ 25,560 $ 21,061 Total assets.......... 910,523 568,161 387,477 108,811 83,682 Long-term debt and capital lease obligations.......... 137,468 166,427 161,881 38,576 39,339 Shareholders' equity and redeemable preferred(8)......... 496,514 240,470 100,045 25,528 14,502
7 - -------- (1) The Delivery acquisition (effective March 1, 1996), the acquisition of Richard Young Journal, Inc. ("Young") (effective February 27, 1996) and the acquisition of Lucas Bros., Inc. ("Lucas") (effective November 30, 1993) were accounted for as poolings of interests and, accordingly, the Delivery, Young and Lucas accounts and results are included for all periods presented. (2) Cost of sales includes occupancy and delivery expenses. (3) Reflects the write-down to market value of certain inventory which the Company has decided to eliminate from its product line in connection with the Delivery, Young and Lucas mergers. (4) Merger and other nonrecurring charges relate primarily to the mergers with Delivery and Young in fiscal 1995 and Lucas in fiscal 1993 and include, among other things, costs to complete the acquisitions, merging and closing redundant facilities, and centralizing certain administrative functions. (5) Includes a write-off of $1.2 million of investments in fiscal 1992. (6) In November 1990, Corporate Express made a strategic decision to close all of its retail operations and, in February 1993, Lucas adopted a plan to discontinue its retail operations. (7) Reflects extraordinary loss related to a write-off of an unamortized discount on debt in fiscal 1993 and extraordinary gain related to the repurchase by the Company of $10 million principal amount of Notes in fiscal 1994. (8) Redeemable preferred was converted to common stock in fiscal 1994. 8 RISK FACTORS In addition to other information in this Prospectus, the following factors should be considered carefully in evaluating an investment in the Common Stock. Rapid Expansion; Integration of Acquisitions; Dependence on Acquisitions for Future Growth. Through numerous acquisitions completed since 1991, Corporate Express significantly increased the scope of its operations from a regional operation in Colorado to operations throughout the United States, Canada, the United Kingdom, Australia and New Zealand. The majority of these acquisitions have occurred within the past two years. To date in fiscal 1996, the Company (through its subsidiaries including Young and Delivery) has completed 29 acquisitions. In fiscal 1995, the Company completed 51 acquisitions. In fiscal 1994, the Company completed 26 acquisitions. There can be no assurance that Corporate Express' management and financial controls, personnel, computer systems and other corporate support systems will be adequate to manage the increase in the size and scope of Corporate Express' operations and acquisition activity. An important part of Corporate Express' strategy is to integrate its acquisitions in North America into its operations and implement the Corporate Express business model. The Company has not fully implemented the Corporate Express business model in many of its North American regions, which regions generally are not performing as favorably as the regions in which the Corporate Express business model has been implemented. In addition, there can be no assurance that Corporate Express will be able to implement key aspects of the Corporate Express business model in a timely manner without substantial costs, delays, or other problems. Recent acquisitions may not achieve sales, profitability or asset productivity commensurate with Corporate Express' more mature regions. In addition, acquisitions involve a number of special risks, including adverse short-term effects on Corporate Express' reported operating results, the diversion of management's attention, the dependence on retention, hiring and training of key personnel, the amortization of acquired intangible assets and risks associated with unanticipated problems or legal liabilities, some or all of which could have a material adverse effect on the Company's operations and financial performance. A major element of Corporate Express' business strategy is to continue to pursue acquisitions that either expand or complement its business in new or existing regions. Acquisitions have constituted, and the Company expects that acquisitions will continue to constitute in the future, a principal component of growth in revenue and operating income. There can be no assurance that Corporate Express will be able to identify and acquire acceptable acquisition candidates on terms favorable to it and in a timely manner to the extent necessary to fulfill its expansion plans. A substantial portion of Corporate Express' capital resources could be used for these acquisitions. Consequently, the Company may require additional debt or equity financing for future acquisitions, which additional financing may not be available on favorable terms, if at all. The failure to complete acquisitions and continue its expansion could have a material adverse effect on Corporate Express' financial performance. As the Company proceeds with its acquisition strategy, it will continue to encounter the risks associated with the integration of acquisitions described above. International Expansion. The Company acquired or made investments in companies in Canada and Australia in calendar 1995 and the United Kingdom and New Zealand in calendar 1996. In addition, the Company recently entered Germany and plans to enter additional international markets in the future. Over time, the Company plans to implement appropriate aspects of the Corporate Supplier business model in its international operations, including creating in-stock catalogs, consolidating warehouses, upgrading information systems, acquiring companies offering complementary products and services and focusing on larger customers and national and international accounts. Expansion into international markets may involve additional risks relating to implementing key aspects of the Corporate Express business model, as well as risks relating to currency exchange rates, new and different legal, tax, accounting and regulatory requirements, difficulties in staffing and managing foreign operations, operating difficulties and other factors. Due to a review of competition in the Australian office products market by the Australian Competition and Consumer Commission, future acquisitions of office products suppliers by the Company's majority-owned subsidiary, Corporate Express Australia, may be subject to heightened regulatory scrutiny. 9 Expanded Product and Service Offering. In recent months, the Company has significantly expanded its product and service offering through the acquisition of Young, a computer products distributor, Delivery, a same-day local delivery company, and ASAP, a direct reseller of computer software and provider of related services. Certain complementary products now offered by the Company, such as computer software, have lower gross profit margins than the products traditionally sold by the Company. The Company intends to continue to make additions to its product and service offering in the future. Moreover, the addition by the Company to its product and service offering presents certain risks and uncertainties involving the Company's relative unfamiliarity with these new products and services and the market for such new products and services. There can be no assurance that the Company will be successful in developing or integrating these or other additions, or that its existing customers will accept such additions, to the products and services currently offered by the Company. Dependence on Systems. During April 1996, Corporate Express began the implementation of a new 3.0 release of its "ISIS" computer software which is being developed to incorporate three-tier client/server architecture that is expected to permit customers and suppliers to better communicate with Corporate Express. ISIS is intended to give Corporate Express the ability to more readily customize its product offering, operating procedures and customer services. This is expected to give Corporate Express the ability to integrate various product and service offerings, enabling it to reduce procurement costs for its customers and add value as a service provider. There can be no assurance that the Company's goals with respect to the systems will be attained. Pending full introduction of the ISIS upgrades, which may take in excess of 24 months to complete in North America, various of the Company's operations will be dependent upon different hardware or software operating systems which may be costly to maintain or integrate. Further, the Company anticipates that ongoing modifications to its computer systems such as the introduction of the new release of ISIS will continue to be made in the future and such modifications may cause disruptions in operations, delay the integration of acquisitions, or cost more to design, implement or operate than currently budgeted. Any such disruptions, delays or costs could have a material adverse effect on the Company's operations and financial performance. Although Corporate Express uses computers which have been reliable to date, it does not currently have redundant computer systems or redundant dedicated communication lines linking one of its computers to each regional warehouse. Corporate Express has taken precautions to protect itself from events that could interrupt its operations, including back-up power supplies that allow its computer system to function in the event of a power outage, off-site storage of back-up data, fire protection, physical security systems and an early warning detection and fire extinguishing system. Notwithstanding these precautions, there can be no assurance that a fire, flood or other natural disaster affecting Corporate Express' system or its dedicated communication line would not disable the system or prevent the system from communicating with the regional warehouses. The occurrence of any of these events could have a material adverse effect on the Company's operations and financial performance. Substantial Competition. Corporate Express operates in a highly competitive environment. The Company's principal competitors in North America for office supplies and computer products are regional and national contract stationers, including the contract stationer operations of office products superstores, large direct resellers, privately-held companies that generally operate in only one location, and distributors of business software for personal computers. In the delivery services sector, the Company also has numerous competitors. Certain of these competitors have financial or other capabilities which may be equal to or greater than the Company's and others which provide different types or levels of service. Each of the Company's major product and service categories are within fragmented industries which are currently experiencing a trend toward consolidation. Certain of the Company's competitors have greater financial resources than Corporate Express. In addition, there may be increasing competition for acquisition candidates and there can be no assurance that acquisitions will continue to be available on favorable terms, if at all. 10 Fluctuations in Quarterly Operating Results. Corporate Express' product distribution business is subject to seasonal influences. In particular, net sales and profits in the United States and Canada are typically lower in the three months ending in late August due to lower levels of business activity during the summer months. Because cost of sales includes delivery and occupancy expenses, gross profit as a percentage of net sales may be impacted by seasonal fluctuations in net sales and the acquisition of less efficient operations. Quarterly results may be materially affected by the timing of acquisitions and the timing and magnitude of acquisition assimilation costs. Therefore, the operating results for any three-month period are not necessarily indicative of the results that may be achieved for any subsequent fiscal quarter or for a full fiscal year. Dependence on Key Management. Corporate Express' success will continue to depend to a significant extent on its executive officers and other key management. Corporate Express has entered into employment agreements with certain executive officers. There can be no assurance that Corporate Express will be able to retain its executive officers and key personnel or attract additional qualified members of management in the future. In addition, the success of certain of Corporate Express' acquisitions may depend, in part, on Corporate Express' ability to retain management personnel of the acquired companies. The loss of the services of any key managers could have a material adverse effect upon Corporate Express' business. Possible Volatility of Stock Price. The market price of the Company's Common Stock has been and can be expected to continue to be subject to significant fluctuations caused by variations in quarterly operating results, litigation involving the Company, announcements by the Company or its competitors, general conditions in the office products and services industry and other factors. Since the beginning of fiscal 1996, the Common Stock has traded in the range of $28.88 to $46.75. The stock market in recent years has experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of publicly traded companies. These broad fluctuations may adversely affect the market price of the Common Stock. SECURITIES COVERED BY THIS PROSPECTUS This Prospectus covers shares of Common Stock which the Company may issue from time to time in connection with its direct and indirect acquisition of securities and assets of other businesses. The Company expects that the terms upon which it may issue the shares will be determined through negotiations with the shareholders or principal owners of the businesses whose securities or assets are acquired. It is expected that the shares that are issued will be valued at prices reasonably related to market prices for the Common Stock prevailing either at the time an acquisition agreement is executed or at the time an acquisition is consummated. In addition, the Company may issue shares in satisfaction of currently outstanding or as yet unissued notes or warrants of the Company which have been or may be issued in connection with acquisitions, which notes or warrants are convertible into or exercisable for shares of Common Stock of the Company. With the consent of the Company, this Prospectus may also be used by persons who have received or will receive from the Company shares of Common Stock covered by this Prospectus and who may wish to sell such stock under circumstances requiring or making desirable its use. In addition, this Prospectus may be used, with the Company's consent, by pledgees, donees, or assignees of such persons. The Company's consent to any such use may be conditioned upon such persons' agreeing not to offer more than a specified number of shares following supplements or amendments to this Prospectus, which the Company may agree to use its best efforts to prepare and file at certain intervals. The Company may require that any such offering be effected in an organized manner through securities dealers. Sales by means of this Prospectus may be made from time to time privately at prices to be individually negotiated with the purchasers, or publicly through transactions in the over-the-counter market (which may involve block transactions), at prices reasonably related to market prices at the time of sale or at negotiated prices. Broker-dealers participating in such transactions may act as agent or as principal and, when acting as agent, may receive commissions from the purchasers as well as from the sellers (if also acting as agent for the 11 purchasers). The Company may indemnify any broker-dealer participating in such transactions against certain liabilities, including liabilities under the Securities Act. Profits, commissions, and discounts on sales by persons who may be deemed to be underwriters within the meaning of the Securities Act may be deemed underwriting compensation under the Securities Act. Shareholders may also offer shares of stock covered by this Prospectus by means of prospectuses under other registration statements or pursuant to exemptions from the registration requirements of the Securities Act, including sales which meet the requirements of Rule 144 or Rule 145(d) under the Securities Act, and shareholders should seek the advice of their own counsel with respect to the legal requirements for such sales. This Prospectus may be supplemented or amended from time to time to reflect its use for resales by persons who have received shares of Common Stock for whom the Company has consented to the use of this Prospectus in connection with such resales. 12 PRICE RANGE OF COMMON STOCK The Common Stock is traded on Nasdaq under the symbol "CEXP." The following table sets forth the high and low sales prices for the Common Stock from September 23, 1994, the date of the Company's initial public offering, through July 19, 1996.
HIGH LOW ------ ------ 1994 Third Quarter (from September 23, 1994)....................... $15.83 $12.83 Fourth Quarter................................................ 17.50 11.00 1995 First Quarter................................................. $20.00 $15.33 Second Quarter................................................ 25.75 19.00 Third Quarter................................................. 29.88 20.00 Fourth Quarter................................................ 31.63 23.13 1996 First Quarter................................................. $42.25 $28.88 Second Quarter (through July 19, 1996)........................ 45.81 32.75
On July 19, 1996, the closing sale price of the Common Stock on Nasdaq was $33.38 per share. On July 19, 1996, there were approximately 570 shareholders of record of Common Stock. DIVIDEND POLICY Corporate Express has not paid cash dividends since its inception. It is anticipated that Corporate Express will retain all earnings for use in the expansion of the business and therefore does not anticipate paying any cash dividends in the foreseeable future. Any future payment of dividends will be at the discretion of the Corporate Express Board of Directors and will depend upon, among other things, earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends and other relevant factors. Corporate Express' senior credit facility (the "Senior Credit Facility") prohibits the distribution of dividends without the prior written consent of the lenders. Additionally, the indenture (the "Indenture") governing Corporate Express' 9 1/8% Senior Subordinated Notes (the "Notes") prohibits any dividend which would cause a default under the Indenture or which would cause the failure to comply with certain financial covenants. 13 DESCRIPTION OF CAPITAL STOCK GENERAL The Company is authorized to issue 100,000,000 shares of common stock, par value $.0002 per share, 25,000,000 shares of preferred stock, par value $.0001 per share (the "Preferred Stock") and 3,000,000 shares of nonvoting common stock, par value $.0002 per share. All outstanding shares of Common Stock are fully paid and nonassessable. As of July 19, 1996, there were approximately 69,700,000 shares of Common Stock outstanding and no shares of Preferred Stock or nonvoting common stock outstanding. The following summary description of the Company's capital stock does not purport to be complete and is subject to and qualified in its entirety by the description of the Company's capital stock contained in the Articles of Amendment and Restatement, a copy of which has been filed with the Commission. Reference is made to the Articles for a detailed description of the provisions summarized below. COMMON STOCK Each holder of Common Stock is entitled to one vote for each share owned of record on all matters submitted to the vote of shareholders. There are no cumulative voting rights. Accordingly, the holders of a majority of the shares voting for the election of directors can elect all the directors if they choose to do so, subject to voting rights, if any, of holders of Preferred Stock, if any, to elect directors. Subject to preferences that may be applicable to any Preferred Stock that may be issued in the future and the restrictions on payment of dividends imposed by credit facilities and other agreements, the holders of Common Stock will be entitled to such dividends as may be declared from time to time by the Board of Directors from funds legally available therefor and will be entitled, after payment of all prior claims, to receive, on a pro rata basis, all assets of Corporate Express upon its liquidation, dissolution or winding up. The Common Stock is not redeemable, does not have any conversion rights and is not subject to call. Holders of shares of the Common Stock generally have no preemptive rights to maintain their respective percentage of ownership in future offers and sales of stock by the Company. The rights, preferences and privileges of holders of Common Stock are subject to the rights, preferences and privileges of any Preferred Stock which may be issued in the future. The Common Stock is listed on the Nasdaq National Market and trades under the symbol "CEXP". NONVOTING COMMON STOCK Corporate Express, J.P. Morgan and certain other designated shareholders are parties to Recapitalization Agreements dated as of December 3, 1991 and August 29, 1992, pursuant to which J.P. Morgan, or any transferee of J.P. Morgan, may exchange its voting shares of Corporate Express' capital stock for nonvoting shares of the same number and class to comply with regulatory constraints. If such exchange rights are exercised, the voting shares held by J.P. Morgan, or its transferee, would be exchanged for an equal number of shares of nonvoting common stock. The rights of any holder of nonvoting common stock, if issued, would be identical to the rights of the holders of Common Stock, except that there would be no voting rights with respect to the nonvoting common stock. No shares of nonvoting common stock have been issued. PREFERRED STOCK None of Corporate Express' authorized Preferred Stock is issued or outstanding. The Corporate Express Board of Directors is authorized to divide the Preferred Stock into one or more series and to determine the preferences and rights and the qualifications, limitations or restrictions thereof, including any dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund provisions, the number of shares constituting the series and the designation of such series. The Company's Board of Directors may, without shareholder approval, issue Preferred Stock with voting and other rights that could adversely affect the voting power of the holders of Common Stock and could have certain anti-takeover effects. Corporate Express has no present plans to issue any shares of Preferred Stock. 14 REGISTRATION RIGHTS OF CERTAIN HOLDERS The holders of certain shares of Common Stock (the "Registrable Securities"), or their transferees, are entitled to certain rights with respect to the registration under the Securities Act of their shares. These rights are provided under the terms of agreements between the Company and the holders of Registrable Securities. Whenever the Company proposes to register any shares of Common Stock, it is required to give notice to the holders of Registrable Securities and to include their shares of Common Stock in the registration statement ("Piggyback Registration Rights"). A holder's Piggyback Registration Rights are subject to certain conditions, including the ability of the underwriters for a public offering to limit the number of shares included in the offering or to exclude certain Registrable Securities from the offering. Subject to certain limitations in the agreements, the holders of certain Registrable Securities are also entitled, on no more than two occasions (three occasions, in limited circumstances), to require that the Company use its reasonable best efforts to file a registration statement under the Securities Act, at Company expense, covering the registration of the Registrable Securities. All registration expenses, other than the fees of the holder's own counsel and any transfer taxes and underwriting discounts and commissions, incurred in connection with a registration of the Registrable Securities required by the holder shall be borne by the Company. The Company will indemnify the holder against all claims resulting from any untrue statement of a material fact or material omission made in connection with any registration statement covering the Registrable Securities. INFORMATION RIGHTS Corporate Express is obligated to provide certain holders of Common Stock and warrants exercisable for Common Stock, with copies of all proxy statements, registration statements, publicly filed notifications, information provided to security holders of Corporate Express or the financial community generally, and a detailed budget for each fiscal year. LIMITATIONS ON DIRECTORS' LIABILITIES AND INDEMNIFICATION As permitted by the Colorado Business Corporation Act, the Articles and By- Laws provide that no director or officer will be liable to the Company or its shareholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability (i) for any breach of the director's or officer's duty of loyalty to the Company or its shareholders, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) in respect of certain unlawful dividend payments or stock redemptions or repurchases, and (iv) for any transaction from which the director or officer derives an improper personal benefit. The effect of this provision is to eliminate the rights of Corporate Express and its shareholders to recover monetary damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except in the situations described in clauses (i), (ii), (iii) and (iv) above. This provision does not limit or eliminate the rights of Corporate Express or any shareholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director's or officer's duty of care. The Articles of Amendment and Restatement and By-Laws also provide that Corporate Express shall, to the fullest extent permitted by law, indemnify and advance expenses to each of its currently acting and former directors and officers and may indemnify and advance expenses to each of its currently acting and former employees and agents. Corporate Express has entered into agreements to provide indemnification for its directors and certain officers consistent with the Articles of Amendment and Restatement and By-Laws and has obtained director's and officer's liability insurance. LEGAL MATTERS The validity of the Common Stock offered hereby will be passed upon for Corporate Express by Ballard Spahr Andrews & Ingersoll, Philadelphia, Pennsylvania. EXPERTS The consolidated financial statements and financial statement schedule of Corporate Express, Inc. included in the Form 10-K have been audited by Coopers & Lybrand L.L.P., independent accountants, as set forth in their report included therein. In their report, that firm states that with respect to Corporate Express of the East, Inc. (formerly Corporate Express of Delaware, Inc.) and subsidiaries, its opinion is based on the report of Arthur Andersen LLP, independent public accountants. 15 -----END PRIVACY-ENHANCED MESSAGE-----