-----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, V2jNj8I5vkGqW3vbGv+m2FtqDumN7ygAugtRFIr7V2Fw97DlATnO8O6HzNz0wZBj htmBt1SMmRfZ0nOmInfcMQ== 0000950131-96-002866.txt : 19960620 0000950131-96-002866.hdr.sgml : 19960620 ACCESSION NUMBER: 0000950131-96-002866 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960515 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960619 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-24642 FILM NUMBER: 96583157 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 8-K/A 1 AMENDED 8-K DATED MAY 15, 1996 Securities and Exchange Commission Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): May 15, 1996 ------------ CORPORATE EXPRESS, INC. - ------------------------------------------------------------------------------ (Exact Name of Registrant as Specified in Charter) Colorado 0-24642 84-0978360 - ------------------------------------------------------------------------------ (State or Other Juris- (Commission File (IRS Employer diction of Incorporation) Number) Identification No.) 325 Interlocken Parkway Broomfield, Colorado 80021 - ------------------------------------------------------------------------------ (Address of Principal (Zip Code) Executive Offices) (303) 373-2800 - ------------------------------------------------------------------------------ (Registrant's Telephone Number, Including Area Code) Not Applicable - ------------------------------------------------------------------------------ (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets On May 15, 1996, the Registrant completed the acquisition (the "Acquisition") of all of the issued and outstanding stock of ASAP Software Express, Inc., an Illinois corporation ("ASAP"), which Acquisition is effective April 22, 1996. The Acquisition was made pursuant to the terms of a certain Stock Purchase Agreement (the "Stock Purchase Agreement") dated April 22, 1996, as amended by the Amendment to Stock Purchase Agreement effective as of April 22, 1996, by and among the Registrant, ASAP and all of the Shareholders of ASAP (the "ASAP Shareholders"). Pursuant to the terms of the Stock Purchase Agreement, the Registrant purchased all of the issued and outstanding capital stock of ASAP from the ASAP Shareholders, consisting of 679,800 shares of common stock and 6,118,200 shares of non-voting common stock, in exchange for aggregate consideration of $97,611,037, subject to certain adjustments, comprised of $52,500,000 paid in cash and $45,111,037 in promissory notes issued by the Company. The source of the cash used in the transaction was the Company's cash on hand and its credit facility with Bank of America Illinois. At the time of the Acquisition, ASAP had cash on hand of approximately $13.7 million, which sum is expected to be available to finance operations of ASAP or to be used to satisfy the promissory notes issued in connection with the Acquisition. The nature and amount of consideration paid in connection with the Acquisition was determined based on negotiations between the Registrant and the ASAP Shareholders. Prior to the Acquisition, there was no material relationship between the Registrant or any of its affiliates, directors or officers or any associates thereof and the ASAP Shareholders or ASAP. The foregoing summary of the Acquisition is qualified in its entirety by reference to the Stock Purchase Agreement referenced as Exhibit 2.1 and incorporated herein by reference. Item 7. Financial Statements and Exhibits (a) Financial statements of Businesses Acquired. ASAP Software Express, Inc. . Report of Independent Auditors . Consolidated Balance Sheets . Consolidated Statements of Income . Consolidated Statements of Stockholders' Equity . Consolidated Statements of Cash Flows . Notes to Consolidated Financial Statements (b) Pro Forma Financial Information. Corporate Express, Inc. and ASAP Software Express, Inc. . Unaudited Pro Forma Combined Financial Data . Pro Forma Combined Balance Sheet . Pro Forma Combined Statement of Operations (c) Exhibits. 2.1* Stock Purchase Agreement dated April 22, 1996 by and among Corporate Express, Inc., ASAP Software Express, Inc. and the Shareholders of ASAP Software Express, Inc. 2.2* Amendment to Stock Purchase Agreement effective as of April 22, 1996 by and among Corporate Express, Inc., ASAP Software Express, Inc. and the Shareholders of ASAP Software Express, Inc. ________________________ * Previously filed. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CORPORATE EXPRESS, INC. (Registrant) /s/ Joanne Farver ----------------------- Date: June 19, 1996 By: Joanne C. Farver Title: Vice President - Controller Report of Independent Auditors The Board of Directors ASAP Software Express, Inc. We have audited the accompanying consolidated balance sheets of ASAP Software Express, Inc. as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ASAP Software Express, Inc. at December 31, 1995 and 1994, and the consolidated results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. February 19, 1996, except paragraph one of Note 9, for which the date is May 13, 1996 and paragraph two of Note 9, for which the date is May 15, 1996 ASAP Software Express, Inc. Consolidated Balance Sheets
December 31 1995 1994 ------------------------- Assets Current assets: Cash $17,004,419 $ 7,458,235 Accounts receivable, less allowance for doubtful accounts of $938,492 in 1995 and $497,384 in 1994 24,642,892 18,345,059 Inventories 4,197,481 4,650,280 Prepaid expenses and other 128,441 139,794 ------------------------- Total current assets 45,973,233 30,593,368 Property, plant and equipment: Building 1,284,954 1,279,354 Land and improvements 1,222,383 1,222,383 Equipment 1,855,768 1,562,425 Furniture and fixtures 439,541 397,652 ------------------------- 4,802,646 4,461,814 Less: Accumulated depreciation 1,356,189 948,323 ------------------------- 3,446,457 3,513,491 Other 57,828 64,955 ------------------------- Total assets $49,477,518 $34,171,814 ========================= Liabilities and stockholders' equity Current liabilities: Accounts payable $29,212,540 $20,025,907 Accrued liabilities 1,811,115 846,013 Income taxes payable (Note 3) 207,805 140,465 Current portion of long-term debt 78,616 72,339 ------------------------- Total current liabilities 31,310,076 21,084,724 Real estate mortgage (Note 7) 1,820,636 1,899,252 Minority interest (Note 2) 125,480 127,116 Stockholders' equity: Common stock, no par value; 7,500,000 and 750,000 shares authorized, and 6,798,000 and 750,000 shares issued and outstanding in 1995 and 1994, respectively 95,172 105,000 Retained earnings 16,126,154 10,955,722 ------------------------- Total stockholders' equity 16,221,326 11,060,722 ------------------------- Total liabilities and stockholders' equity $49,477,518 $34,171,814 =========================
See accompanying notes. 2 ASAP Software Express, Inc. Consolidated Statements of Income
Year ended December 31 1995 1994 1993 ----------------------------------------- Net revenues $157,794,897 $114,031,728 $73,891,655 Costs and expenses: Cost of sales 132,500,027 94,109,457 60,059,266 Selling, general, and administrative expenses 15,038,863 13,673,220 10,352,554 ----------------------------------------- 147,538,890 107,782,677 70,411,820 ----------------------------------------- Income before income taxes 10,256,007 6,249,051 3,479,835 Income taxes 200,000 150,000 56,011 ----------------------------------------- Net income $ 10,056,007 $ 6,099,051 $ 3,423,824 =========================================
See accompanying notes. 3 ASAP Software Express, Inc. Consolidated Statements of Stockholders' Equity
Number Common Retained of Shares Stock Earnings ------------------------------------ Balance, January 1, 1993 750,000 $105,000 $4,424,082 Net income - - 3,423,824 Distributions to stockholders - - (1,521,717) ------------------------------------ Balance, December 31, 1993 750,000 105,000 6,326,189 Net income - - 6,099,051 Distributions to stockholders - - (1,469,518) ------------------------------------ Balance, December 31, 1994 750,000 105,000 10,955,722 Net income - - 10,056,007 Distributions of stockholders (Note 3) - - (3,788,349) Repurchase of common stock (70,200) (9,828) (1,097,226) ------------------------------------ Balance, December 31, 1995 679,800 $ 95,172 $16,126,154 ====================================
See accompanying notes. ASAP Software Express, Inc. Consolidated Statements of Cash Flows
Year ended December 31 1995 1994 1993 ----------------------------------------- Operating activities Net income $10,056,007 $ 6,099,051 $ 3,423,824 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 427,203 346,452 213,676 Provision for uncollectible accounts 441,108 355,930 74,254 Minority interest (1,636) (56,654) 183,770 Changes in operating assets and liabilities: Accounts receivable (6,738,941) (7,938,500) (5,542,245) Inventories 452,799 (261,981) (1,192,744) Prepaid expenses and other 11,353 (96,566) 85,475 Accounts payable and accrued liabilities 10,151,735 8,769,260 6,775,647 Income taxes payable 67,340 74,184 30,463 ----------------------------------------- Total adjustments 4,810,961 1,192,125 628,296 ----------------------------------------- Net cash provided by operating activities 14,866,968 7,291,176 4,052,120 Investing activities Increase in other assets 7,127 21,908 (67,352) Proceeds from disposal of equipment 20,195 -- -- Advance to Romar Company -- -- 164,080 Acquisition of plant and equipment (380,364) (444,441) (3,143,838) ----------------------------------------- Net cash used in investing activities (353,042) (422,533) (3,047,110) Financing activities Distributions to stockholders (Note 3) (3,788,349) (1,469,518) (1,521,717) Repurchase of common stock (1,107,054) -- -- Proceeds from long-term debt -- 2,000,000 1,900,420 Payments on long-term debt (72,339) (1,928,829) -- Payments on capital lease obligations -- -- (23,072) ----------------------------------------- Net cash (used in) provided by financing activities (4,967,742) (1,398,347) 355,631 ----------------------------------------- Net increase in cash 9,546,184 5,470,296 1,360,641 Cash at beginning of year 7,458,235 1,987,939 627,298 ----------------------------------------- Cash at end of year $17,004,419 $ 7,458,235 $ 1,987,939 =========================================
See accompanying notes. ASAP Software Express, Inc. Notes to Consolidated Financial Statements December 31, 1995 1. Description of Business ASAP Software Express, Inc. (ASAP) is a distributor of various personal computer software titles and certain add-on computer hardware products. ASAP sells to a multitude of regional and national customers varying across several industry groups. 2. Summary of Significant Accounting Policies Inventories Inventories consist of goods held for resale and are stated at the lower of cost or market using the moving weighted-average method. Property, Plant and Equipment Property, plant, and equipment is carried at cost, less accumulated depreciation. Depreciation is provided using the straight-line and accelerated methods over 3 to 31.5 years. The estimated useful life on personal computers and related equipment acquired after January 1, 1994 is three years (five years for acquisitions prior to January 1, 1994). Consolidation The consolidated financial statements include the accounts of ASAP and Romar Company (Romar), a joint venture with ASAP as a 75% venturer along with a third-party venturer. Romar completed the acquisition of land and development of an office and warehouse facility for ASAP. All significant intercompany transactions have been eliminated. Revenue Recognition Net revenues include the sale of shrink wrap product and licenses for the use of software purchased from the software publishers. Revenue from product sales is recognized as shipments are made. Revenue from the sale of intangibles (software licenses and maintenance agreements) is recorded when the customer is invoiced. ASAP Software Express, Inc. Notes to Consolidated Financial Statements (continued) 2. Summary of Significant Accounting Policies (continued) Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Accounting for the Impairment of Long-Lived Assets In March 1995, the FASB issued Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of, which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset's carrying amount. Statement No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The Company will adopt Statement No. 121 in first quarter of 1996, and, based on current circumstances, does not believe the effect of adoption will be material. 3. Income Taxes ASAP is taxed as an S corporation under the applicable provisions of the Internal Revenue Code. No provision for federal income taxes is generally recorded in the financial statements of an S corporation as the results of its operations are includable in the income tax returns of its stockholders. Distributions to stockholders of $3,788,349 in 1995; $1,469,518 in 1994; and $1,521,717 in 1993 approximate federal and state taxes paid or to be paid by stockholders, related to operations of ASAP. ASAP remains responsible for income taxes in certain states. Cash paid for income taxes, net of refunds, was approximately $158,000 in 1995, $75,000 in 1994, and $28,000 in 1993. ASAP Software Express, Inc. Notes to Consolidated Financial Statements (continued) 4. Profit-Sharing Plan ASAP has a qualified, trusteed, profit-sharing and 401(K) plan covering substantially all employees. The plan provides for deferred salary contributions by the plan participants. Company contributions are determined at the discretion of the Company's Board of Directors but may not exceed the maximum amount deductible for federal income tax purposes. A contribution of approximately $269,000 was expensed in 1995 ($227,000 in 1994 and $203,000 in 1993). 5. Leasing Arrangements Under a 10-year lease with Romar for office and warehouse space (see Note 2), annual rental payments are $351,000 through December 2002. The Company is also responsible for certain real estate taxes, insurance, and maintenance. In addition, the Company leases space in various locations from unrelated parties under agreements with varying terms through August 1996. Rent expense was approximately $514,000, $413,000, and $255,325 for the years ended December 31, 1995, 1994, and 1993, respectively. Future rental payments under satellite office and equipment leases are approximately $64,000 in 1996; and $3,000 in 1997. 6. Line of Credit ASAP has available a $4,500,000 unsecured line of credit with a commercial bank, which was unused at December 31, 1995. The rate of interest charged by the bank under this arrangement is the bank's prime lending rate (8.5% at December 31, 1995) or a LIBOR-based option. The line of credit is renewable annually each June. 7. Real Estate Mortgage In connection with the acquisition of land and development of an office and warehouse facility, a loan agreement in the amount of $2,000,000 was entered into in June 1994. The debt, which bears interest at an annual rate of 8.35%, is collateralized by a mortgage on the property and provides for monthly principal and interest payments of $19,520 through July 2009. ASAP Software Express, Inc. Notes to Consolidated Financial Statements (continued) 7. Real Estate Mortgage (continued) At December 31, 1995 principal maturities on the long-term debt are approximately as follows:
Year ending December 31: 1996 $ 78,616 1997 85,437 1998 92,851 1999 100,908 2000 109,664 Thereafter 1,431,776 ---------- $1,899,252 ==========
Cash paid for interest was approximately $162,000 in 1995; $169,000 in 1994; and $40,000 in 1993. 8. Common Stock In 1995, the Board of Directors declared a 10 for 1 stock split. The shares issued in conjunction with the stock split are nonvoting. In November 1995, the Board of Directors adopted the 1995 Equity Incentive Plan (Plan). The Plan allows for the granting of stock appreciation rights and/or nonqualified stock options to participants at the discretion of the Compensation Committee. No options or stock appreciation rights had been granted as of December 31, 1995. 9. Subsequent Events On May 13, 1996, the Company made payments of approximately $3,600,000 in conjunction with the exercise of stock appreciation rights, which had been granted as of January 29, 1996. On May 15, 1996, the Company executed a definitive purchase agreement to sell all the outstanding common shares of the Company. CORPORATE EXPRESS, INC. UNAUDITED PRO FORMA COMBINED FINANCIAL DATA The following pro forma combined balance sheet as of March 2, 1996 is prepared assuming the ASAP acquisition occurred on such date. The pro forma statement of operations data include the ASAP results of operations assuming the acquisition occurred at the beginning of the year. The ASAP balance sheet and statement of operations included in the combined balance sheet and statement of operations is for its fiscal year ended December 31, 1995. The pro forma combined financial data are based on available information and on certain assumptions and adjustments described in the accompanying notes which Corporate Express believes are reasonable. The pro forma combined financial data are provided for informational purposes only and do not purport to present the results of operations of Corporate Express had the transactions assumed therein occurred on or as of the dates indicated, nor are they necessarily indicative of the results of operations which may be achieved in the future. CORPORATE EXPRESS, INC. AND ASAP SOFTWARE EXPRESS, INC. PRO FORMA COMBINED BALANCE SHEET MARCH 2, 1996 (Unaudited) (in thousands)
Corporate Express and ASAP Corporate Pro Forma Pro Forma ASSETS Express ASAP Adjustments Combined --------- -------- ----------- ---------- Current assets: Cash and cash equivalents $ 28,664 $17,004 ($39,882)(1) $ 5,786 Receivables, net 293,420 24,643 318,063 Inventories 101,995 4,197 106,192 Other current assets 35,391 129 35,520 -------- ------- -------- ---------- Total current assets 459,470 45,973 (39,882) 465,561 Property and Equipment, net 109,499 3,446 112,945 Goodwill, net 324,603 94,983 (2) 419,586 Other assets, net 16,951 58 17,009 -------- ------- -------- ---------- Total assets $910,523 $49,477 $ 55,101 $1,015,101 ======== ======= ======== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $137,132 $29,213 $166,345 Accrued liabilities 56,796 1,811 1,500 (3) 60,107 Accrued purchase costs 3,049 1,000 (4) 4,049 Accrued merger and related costs 24,880 24,880 Current portion of long-term debt and capital leases 20,151 79 45,111 (5) 65,341 Other non-current liabilities 219 208 427 -------- ------- -------- ---------- Total current liabilities 242,227 31,311 47,611 321,149 Capital lease obligations 9,568 9,568 Long-term debt 127,900 1,820 23,836 153,556 Deferred income taxes 7,374 7,374 Minority interest in subsidiaries 24,843 125 (125)(6) 24,843 Other non-current liabilities 2,097 2,097 -------- ------- -------- ---------- Total liabilities 414,009 33,256 71,322 518,587 Shareholders' equity: Common stock 14 95 (95)(7) 14 Additional paid-in capital 502,559 502,559 Retained earnings (deficit) (6,712) 16,126 (16,126)(7) (6,712) Foreign currency translation adjustment 653 653 -------- ------- -------- ---------- Total shareholders' equity 496,514 16,221 (16,221) 496,514 -------- ------- -------- ---------- Total liabilities and shareholders' equity $910,523 $49,477 $ 55,101 $1,015,101 ======== ======= ======== ==========
- ------------------- (1) Use of cash and line of credit to finance initial payment of the ASAP acquisition and payment of ASAP shareholder distributions (2) Increase to goodwill due to ASAP acquisition (3) Increase in liabilities to reflect acquisition expense for transaction (4) Reflects accruals for severance and closure of redundant facilities (5) Increase in notes payable for subsequent payment due on ASAP acquisition (6) Elimination of ASAP minority interest upon acquisition of ASAP and ASAP minority interest (7) Reflects elimination of ASAP historical shareholders' equity CORPORATE EXPRESS, INC. AND ASAP SOFTWARE EXPRESS, INC. PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED MARCH 2, 1996 (Unaudited) (in thousands, except per share data)
Corporate Express and ASAP Corporate Pro Forma Pro Forma Express ASAP Adjustments Combined ----------- --------- ----------- ---------- Net sales $1,590,104 $ 157,795 $1,747,899 Cost of sales 1,173,255 132,500 1,305,755 Merger related inventory provisions 5,952 5,952 ---------- --------- ----------- ---------- Gross profit 410,897 25,295 436,192 Warehouse operating and selling expenses 297,275 3,834 301,109 Corporate general & administrative expenses 46,980 11,205 2,312 (1) 60,497 Merger and other non-recurring charges 36,838 36,838 ---------- --------- ----------- ---------- Operating profit (loss) 29,804 10,256 (2,312) 37,748 Interest expense, net 15,396 225 (2) 15,621 724 724 Other income ---------- --------- ----------- ---------- Income (loss) before income taxes 15,132 10,256 (2,537) 22,851 Income tax expense (benefit) 10,952 200 2,805 (3) 13,957 ---------- --------- ----------- ---------- Income (loss) before minority interest 4,180 10,056 (5,342) 8,894 Minority interest 1,436 1,436 ---------- --------- ----------- ---------- Income (loss) from continuing operations $ 2,744 $ 10,056 $ (5,342) $ 7,458 ========== ========= =========== ========== Net income (loss) per common share Continuing operations $ 0.040 $ 0.110 ========== ========== Weighted average common shares outstanding 68,057 68,057 ========== ========== - ---------------- (1) Adjustment to reflect amortization of goodwill related to ASAP acquisition (2) Adjustment to reflect interest expense on notes payable for subsequent payment due on ASAP acquisition (3) Adjustment to reflect income tax expense at the Company's statutory tax rate
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