-----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, HZQy/rn+yGi0P9q6UMzxwqOm5qkZ31uXiVYAEhtrggHw8kUzdMB1ab+FVe+PanFJ 60iZLdvW5MNWq8a60khZwQ== 0000950134-98-002993.txt : 19980408 0000950134-98-002993.hdr.sgml : 19980408 ACCESSION NUMBER: 0000950134-98-002993 CONFORMED SUBMISSION TYPE: SC 13E4/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980407 SROS: NASD SUBJECT COMPANY: 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: 0131 FILING VALUES: FORM TYPE: SC 13E4/A SEC ACT: SEC FILE NUMBER: 005-44931 FILM NUMBER: 98588509 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 FILED BY: 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: 0131 FILING VALUES: FORM TYPE: SC 13E4/A 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 SC 13E4/A 1 SCHEDULE 13E4 AMENDMENT NO. 3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1998 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------- AMENDMENT NO. 3 to SCHEDULE 13E-4 ISSUER TENDER OFFER STATEMENT (PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934) CORPORATE EXPRESS, INC. (Name of Issuer) CORPORATE EXPRESS, INC. (Name of Person(s) Filing Statement) COMMON STOCK (Title of Class of Securities) 219888-10-4 (CUSIP Number of Class of Securities) RICHARD L. MILLETT, JR. VICE PRESIDENT AND GENERAL COUNSEL CORPORATE EXPRESS, INC. 1 ENVIRONMENTAL WAY BROOMFIELD, COLORADO 80021 (303) 664-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of the Person(s) Filing Statement) Copies To: JUSTIN P. KLEIN, ESQ. GERALD J. GUARCINI, ESQ. BALLARD SPAHR ANDREWS & INGERSOLL, LLP 1735 MARKET STREET, 51ST FLOOR PHILADELPHIA, PENNSYLVANIA 19103 February 6, 1998 (Date Tender Offer First Published, Sent or Given to Security Holders) CALCULATION OF FILING FEE
======================================================================================================= TRANSACTION AMOUNT OF VALUATION* FILING FEE - ------------------------------------------------------------------------------------------------------- $402,500,000 $80,500 =======================================================================================================
* Calculated solely for the purpose of determining the filing fee, based upon the purchase of 35,000,000 shares of Common Stock at the maximum tender offer price per share of $11.50. [X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: $80,500 Filing Party: Corporate Express, Inc. Form or Registration No.: Schedule 13E-4 Date Filed: February 6, 1998
================================================================================ 2 The Issuer Tender Offer Statement on Schedule 13E-4 dated February 6, 1998, as amended by Amendment No. 1 to Schedule 13E-4 dated March 2, 1998 and by Amendment No. 2 to Schedule 13E-4 dated April 3, 1998, relating to the offer by Corporate Express, Inc. (the "Company") to purchase up to 35,000,000 shares (or the maximum of any lesser number of shares as are validly tendered and not withdrawn) of its Common Stock, par value $.0002 per share (such shares, together with the associated purchase rights, the "Shares"), at prices not greater than $11.50 nor less than $10.00 net per Share in cash upon the terms and subject to the conditions set forth in the Company's Offer to Purchase dated February 6, 1998 and in the related Letter of Transmittal (together, the "Offer"), is hereby amended as follows: ITEM 7. FINANCIAL INFORMATION. (a) The information set forth on pages 2 through 11 of the Company's amended Quarterly Report on Form 10-Q/A for the fiscal quarter ended November 29, 1997, filed as Exhibit (g)(3) hereto, is incorporated herein by reference. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. (g) (3) Pages 2 through 11 of the Company's amended Quarterly Report on Form 10-Q/A for the fiscal quarter ended November 29, 1997. 2 3 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No. 3 to Schedule 13E-4 is true, complete and correct. CORPORATE EXPRESS, INC. By: /s/ SAM R. LENO ------------------------------- Name: Sam R. Leno Title: Executive Vice President and Chief Financial Officer Dated: April 6, 1998 4 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION ------- ----------- (g)(3) Pages 2 through 11 of the Company's amended Quarterly Report on Form 10-Q/A for the fiscal quarter ended November 29, 1997.
EX-99.G.3 2 FINANCIALS ON FORM 10-Q/A 1 PART I - FINANCIAL INFORMATION Item 1 - Financial Statements CORPORATE EXPRESS, INC. CONSOLIDATED BALANCE SHEETS (In thousands) ASSETS
November 29, March 1, 1997 1997 ------------- ------------ (Unaudited) Current assets: Cash and cash equivalents $ 33,779 $ 54,499 Trade accounts receivable, net of allowance of $15,353 and $13,004, respectively 619,268 494,199 Notes and other receivables 71,884 55,530 Inventories 242,414 187,558 Deferred income taxes 30,919 29,076 Other current assets 43,122 28,548 ----------- ----------- Total current assets 1,041,386 849,410 Property and equipment: Land 17,575 14,105 Buildings and leasehold improvements 125,733 106,824 Furniture and equipment 323,700 249,693 ----------- ----------- 467,008 370,622 Less accumulated depreciation (128,819) (106,891) ----------- ----------- 338,189 263,731 Goodwill, net of $50,773 and $36,471 of accumulated amortization, respectively 838,734 671,967 Other assets, net 71,346 58,869 ----------- ----------- Total assets $ 2,289,655 $ 1,843,977 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. -2- 2 CORPORATE EXPRESS, INC. CONSOLIDATED BALANCE SHEETS, Continued (In thousands) LIABILITIES AND SHAREHOLDERS' EQUITY
November 29, March 1, 1997 1997 ------------ ----------- (Unaudited) Current liabilities: Accounts payable $ 346,729 $ 297,119 Accrued payroll and benefits 59,119 45,512 Accrued purchase costs 10,928 12,888 Accrued merger and related costs 22,462 18,484 Other accrued liabilities 63,578 52,012 Current portion of long-term debt and capital leases 26,583 29,742 ----------- ----------- Total current liabilities 529,399 455,757 Capital lease obligations 11,059 11,545 Long-term debt 745,709 621,705 Deferred income taxes 43,856 26,819 Minority interest in subsidiaries 20,955 22,015 Other non-current liabilities 15,423 12,529 ----------- ----------- Total liabilities 1,366,401 1,150,370 Contingencies (Note 7) Shareholders' equity: Preferred stock, $.0001 par value, 25,000,000 shares authorized, none issued or outstanding -- -- Common stock, $.0002 par value, 300,000,000 shares authorized, 141,500,194 and 126,171,467 shares issued and outstanding, respectively 28 25 Common stock, non-voting, $.0002 par value, 3,000,000 shares authorized, none issued or outstanding -- -- Additional paid-in capital 842,307 646,536 Retained earnings 87,220 48,222 Foreign currency translation adjustments (6,301) (1,176) ----------- ----------- Total shareholders' equity 923,254 693,607 ----------- ----------- Total liabilities and shareholders' equity $ 2,289,655 $ 1,843,977 =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. -3- 3 CORPORATE EXPRESS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Three Months Ended Nine Months Ended --------------------------- ----------------------------- November 29, November 30, November 29, November 30, 1997 1996 1997 1996 ----------- ------------ ----------- ------------ (Unaudited) (Unaudited) Net sales $ 996,160 $ 889,566 $ 2,851,133 $ 2,295,442 Cost of sales 754,225 672,363 2,172,740 1,731,096 ----------- ----------- ----------- ----------- Gross profit 241,935 217,203 678,393 564,346 Warehouse operating and selling expenses 161,878 150,546 482,781 399,830 Corporate general and administrative expenses 27,695 24,931 83,300 69,056 Merger and other nonrecurring charges 15,009 12,368 14,890 12,371 ----------- ----------- ----------- ----------- Operating profit 37,353 29,358 97,422 83,089 Interest expense, net 9,998 7,493 29,192 18,156 ----------- ----------- ----------- ----------- Income before income taxes 27,355 21,865 68,230 64,933 Income tax expense 12,804 12,935 30,138 30,606 ----------- ----------- ----------- ----------- Income before minority interest 14,551 8,930 38,092 34,327 Minority interest loss (income) 28 (360) (1,014) (462) ----------- ----------- ----------- ----------- Net income $ 14,523 $ 9,290 $ 39,106 $ 34,789 =========== =========== =========== =========== Pro forma net income $ 14,523 $ 8,918 $ 39,106 $ 33,760 =========== =========== =========== =========== Pro forma net income per common share $ 0.10 $ 0.07 $ 0.29 $ 0.26 =========== =========== =========== =========== Weighted average common shares outstanding 139,999 131,283 135,932 129,387 =========== =========== =========== ===========
The accompanying notes are an integral part of the consolidated financial statements. -4- 4 CORPORATE EXPRESS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Nine Months Ended --------------------------- November 29, November 30, 1997 1996 ------------- ------------ (Unaudited) Cash flows from operating activities: Net income $ 39,106 $ 34,789 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 31,737 21,595 Amortization 16,832 12,891 (Gain) loss on sale of assets 787 Non-cash portion of merger and restructuring charge 2,197 2,384 Adjustment to conform fiscal years -- 204 Minority interest (1,014) (462) Other 2,342 (1,503) Changes in assets and liabilities, excluding acquisitions: (Increase) decrease in accounts receivable (94,778) (58,915) (Increase) decrease in inventory (18,408) (6,228) (Increase) decrease in other current assets (7,048) (6,570) (Increase) decrease in other assets 6,258 2,667 Increase (decrease) in accounts payable 29,616 20,407 Increase (decrease) in accrued liabilities 6,069 11,948 --------- --------- Net cash provided by operating activities 13,696 33,207 --------- --------- Cash flows from investing activities: Proceeds from sale of assets 20,200 1,829 Capital expenditures (64,125) (88,092) Payment for acquisitions, net of cash acquired (21,693) (227,026) Investment in marketable securities (10,902) (18,273) Other 2,670 (8,730) --------- --------- Net cash used in investing activities (73,850) (340,292) --------- --------- Cash flows from financing activities: Issuance of common stock 7,513 9,096 Issuance of subsidiary common stock 2,434 -- Debt issuance costs (704) (8,428) Proceeds from long-term borrowings 8,324 344,834 Repayments of long-term borrowings (29,082) (15,059) Proceeds from short-term borrowings 9,267 1,840 Repayments of short-term borrowings (6,247) (22,537) Net proceeds from line of credit 110,558 5,913 Cash paid to retire bonds (62,178) -- Other (14) (4,666) --------- --------- Net cash provided by financing activities 39,871 310,993 Net cash used in discontinued operations (10) (177) Effect of foreign currency exchange rate changes on cash (427) 232 --------- --------- (Decrease) increase in cash and cash equivalents (20,720) 3,963 Cash and cash equivalents, beginning of period 54,499 29,813 --------- --------- Cash and cash equivalents, end of period $ 33,779 $ 33,776 ========= =========
The accompanying notes are an integral part of the consolidated financial statements. -5- 5 CORPORATE EXPRESS, INC. NOTES TO CONSOLIDATED STATEMENTS Supplemental schedule of noncash investing and financing activities: Capital lease obligations in the amount of $3,504,000 and $5,853,000 were incurred during the nine months ended November 29, 1997 and November 30, 1996, respectively, for equipment and vehicles. During the nine months ended November 29, 1997, the Company invested $14,546,000 in net cash and 13,887,842 shares of common stock in its acquisition program. During the nine months ended November 30, 1996, the Company invested $219,917,000 in net cash and approximately 2,421,000 shares of common stock for acquisitions. In conjunction with these acquisitions, liabilities were assumed as follows:
Nine Months Ended -------------------------- November 29, November 30, 1997 1996 ------------- ----------- (In thousands) (Unaudited) Fair value of assets and goodwill acquired $ 340,964 $ 541,469 Cash paid, net of cash acquired (14,546) (219,917) Issuance of notes payable -- (4,325) Issuance of stock (176,257) (75,620) Purchase price payable, included in current liabilities (3,361) (4,724) --------- --------- Liabilities assumed $ 146,800 $ 236,883 ========= =========
In addition to the amounts set forth above, during the nine months ended November 29, 1997, the Company paid $7,147,000 and issued approximately 61,932 shares of common stock for prior period acquisitions, and acquired the remaining 49% interest in Corporate Express United Kingdom for shares of common stock of the Company. During the nine months ended November 30, 1996, the Company paid $4,820,000 for prior period acquisitions, $2,289,000 to dissenting shareholders of a pooled company, purchased a warehouse facility for 135,000 shares of common stock and issued 71,471 shares of common stock to retire convertible debt of $1,449,400 previously issued by one of the Company's acquired subsidiaries. The accompanying notes are an integral part of the consolidated financial statements. -6- 6 CORPORATE EXPRESS, INC. NOTES TO CONSOLIDATED STATEMENTS 1. Basis of Presentation and Significant Accounting Policies The consolidated financial statements include the accounts of Corporate Express, Inc. ("Corporate Express" or the "Company") and its majority-owned subsidiaries. The following acquisitions were accounted for as poolings of interests and, accordingly, the accompanying financial statements have been restated to include their accounts and operations: . Nimsa S.A. ("Nimsa") was acquired by the Company on October 31, 1996. . Bevo Acquisition Corp., Inc., a wholly-owned subsidiary of the Company, was merged with and into United TransNet, Inc. ("UT") on November 8, 1996. . IMS Acquisition, Inc., a wholly-owned subsidiary of the Company, was merged with and into Sofco Mead, Inc. ("Sofco") on January 24, 1997. . H.M. Acquisition Corp., a wholly-owned subsidiary of the Company, was merged with and into Hermann Marketing, Inc. ("HMI") on January 30, 1997. Acquisitions accounted for as purchases are included in the accounts and operations as of the effective date of the transaction and immaterial acquisitions accounted for as poolings of interests are included in the accounts and operations as of the beginning of the fiscal quarter in which the transaction is effective. The Company accounts for its investments in less than 50% owned entities using the equity or cost methods. All intercompany balances and transactions have been eliminated. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, such interim statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for these interim periods are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company's Annual Report on Form 10-K/A for the year ended March 1, 1997. Certain of the Company's locations calculate cost of sales using an estimated gross profit method for interim periods. Cost of sales at these locations are adjusted based on physical inventories which are performed no less than once a year. The Company capitalizes certain salaries and wages and payments to outside firms for direct services related to the development and implementation of its software. All software is amortized over its economic useful life of three to seven years using the straight-line method. New Accounting Standards: In the fourth quarter of fiscal 1997, the Company will adopt SFAS No. 128, "Earnings per Share." This statement simplifies the standards for computing earnings per share found in APB Opinion No. 15, "Earnings per Share" and makes them comparable to international earnings per share standards. Had SFAS No. 128 been effective during the nine months ended November 29, 1997 and November 30, 1996, (i) "Basic earnings per share" under SFAS No. 128 would have been $.30 and $.28, respectively, and (ii) "Dilutive earnings per share" under SFAS No. 128 would have been $.29 and $.26, respectively. Had SFAS No. 128 been effective during the three months ended November 29, 1997 and November 30, 1996, (i) "Basic earnings per share" under SFAS No. 128 would have been $.11 and $.07, respectively, and (ii) "Dilutive earnings per share" under SFAS No. 128 would have been $.10 and $.07, respectively. -7- 7 CORPORATE EXPRESS, INC. NOTES TO CONSOLIDATED STATEMENTS 2. Changes in Reported Amounts The Company has revised its previously issued financial statements for the three and nine-month periods ended November 29, 1997 and November 30, 1996 to reclassify the Data Documents Incorporated ("DDI") acquisition from a pooling of interests transaction to a purchase acquisition. Subsequent to the merger with DDI, the Company announced its intention to repurchase up to 35,000,000 shares of its common stock and, in accordance with current accounting practices, such announcement precludes the Company from recording the DDI merger as a pooling of interests transaction. The following table summarizes the changes to the previously reported amounts.
Three Months Ended Nine Months Ended --------------------------- --------------------------- November 29, November 30, November 29, November 30, 1997 1996 1997 1996 ------------- ------------ ------------- ------------ Income before income taxes, minority interest, and extraordinary item: As previously reported $ 29,198 $ 25,345 $ 78,426 $ 75,750 As revised 27,355 21,865 68,225 64,936 Extraordinary item: As previously reported (7,108) -- (7,108) -- As revised -- -- -- -- Pro forma net income: As previously reported 7,709 10,974 37,255 40,100 As revised 14,523 8,918 39,106 33,760 Pro forma net income per common share: Continuing operations: As previously reported 0.10 0.08 0.30 0.29 As revised 0.10 0.07 0.29 0.26 Extraordinary item: As previously reported (0.05) -- (0.05) -- As revised -- -- -- -- Net income: As previously reported 0.05 0.08 0.25 0.29 As revised $ 0.10 $ 0.07 $ 0.29 $ 0.26 Weighted average common shares: As previously reported 150,636 142,235 146,789 140,321 As revised 139,999 131,283 135,932 129,387
November 29, March 1, 1997 1997 ------------- ------------ Total Assets As previously reported 2,151,053 1,973,258 As revised 2,289,655 1,843,977 Total Equity As previously reported 788,958 727,150 As revised 923,254 693,607
-8- 8 CORPORATE EXPRESS, INC. NOTES TO CONSOLIDATED STATEMENTS 3. Accrued Purchase Costs In conjunction with purchase acquisitions, the Company accrues certain of the direct costs associated with closing redundant facilities of acquired companies, and severance and relocation payments for the acquired company's employees. The following table sets forth activity in the Company's accrued purchase costs liability account for the nine months ended November 29, 1997:
Disposition Facility Redundant of Assets Total Exit Costs Facilities Severance & Other ------------ ----------- ----------- ---------- ------------ (In thousands) Balance, March 1, 1997 $12,888 $ 1,845 $ 3,269 $ 6,149 $1,625 Additions/Adjustments 5,578 724 1,349 3,494 11 Payments (7,275) (1,525) (1,065) (4,420) (265) Reversals to goodwill (263) -- (72) (166) (25) ------- ------- ------- ------- ------ Balance, November 29, 1997 $10,928 $ 1,044 $ 3,481 $ 5,057 $1,346 ======= ======= ======= ======= ======
4. Merger and Other Nonrecurring Charges During the third quarter of fiscal 1997, the Company recorded a net merger and other nonrecurring charge of $15,009,000. This net charge is comprised of $18,073,000 in merger and other nonrecurring charges in connection with the Company's acquisition of DDI, the continued integration of delivery and certain provisions for reductions in force and facility closures at other locations, offset by $3,064,000 in revisions to the merger and other nonrecurring charges established in previous periods to reflect the final transaction and exit costs incurred. These revisions reflect the finalization of contract buyouts and delays in closing certain facilities and disposition of related assets. The current quarter charge includes the closure of 34 facilities and the reduction of approximately 720 employees. During the second quarter of fiscal 1997, the Company incurred $754,000 of merger transaction costs related to second quarter acquisitions accounted for as immaterial poolings of interests. Additionally, the Company reduced previous charges by $874,000 to reflect actual exit costs to be incurred. During the third and fourth quarters of fiscal 1996, the Company recorded an estimated net merger and other nonrecurring charge of $19,840,000 in connection with the Company's acquisition of UT, Nimsa, HMI and Sofco. During the fourth quarter of fiscal 1995, the Company recorded a merger and other nonrecurring charge primarily in conjunction with the U.S. Delivery Systems, Inc. ("Delivery") and Richard Young Journal, Inc. acquisitions. This liability was adjusted in fiscal 1996 to reflect the actual merger transaction costs incurred and revised plans primarily as a result of the integration of UT with Delivery. The Company expected to complete this plan within two years; however, due to the acquisition of UT in the third quarter of fiscal 1996, the revised exit plan is expected to be completed by the end of the first quarter of fiscal 1998. The following table summarizes the merger and other nonrecurring charges and sets forth their usage for the nine months ended November 29, 1997: -9- 9 CORPORATE EXPRESS, INC. NOTES TO CONSOLIDATED STATEMENTS
Balance FY 97 Cash Non-Cash Balance 3/1/97 Net Charge Payments Usage 11/29/97 ------- ---------- -------- -------- --------- (In thousands) Merger transaction costs (1) $ 4,082 $ 4,485 $(3,444) $ 5,123 Severance and terminations (2) 7,665 7,745 (3,732) 11,678 Facility closure and consolidation (3) 6,737 463 (1,539) 5,661 ------- ------- ------- --------- Accrued merger and related costs, balance 18,484 12,693 (8,715) 22,462 Other asset write-downs and costs (4) 4,152 2,197 -- $(1,955) 4,394 ------- ------- ------- ------- --------- Total $22,636 $14,890 $(8,715) $(1,955) $ 26,856 ======= ======= ======= ======= =========
(1) Merger transaction costs are the direct costs from the pooling transactions and those direct costs incurred by DDI, and include legal, accounting, investment banking, printing, contract buy-outs and other related costs. Remaining merger transactions costs for the fiscal 1996 charge are primarily for the UT acquisition and include contract buy-outs for certain employees which are expected to be resolved by the end of fiscal 1997. (2) Severance and employee termination costs are related to the elimination of duplicate management positions, facility closures and consolidations, and centralization of certain shared services. Of the 1,717 employees currently planned to be terminated, 392 have been terminated as of November 29, 1997. The Company expects to complete the facility closures and related terminations for the fiscal 1995 charge, which totals $1,839,000, by the end of the first quarter in fiscal 1998 and the fiscal 1996 charge, which totals $2,879,000, by the end of fiscal 1998. The centralization of certain shared services began in the second quarter of fiscal 1997 and will continue through fiscal 1998. The Company expects to complete the facility closures and related terminations for the fiscal year 1997 charge, which totals $6,960,000, by the end of fiscal 1998. (3) Facility closure and consolidation costs are the estimated costs to close redundant facilities, lease costs and other costs associated with closed facilities. One hundred thirty four of the 215 facilities currently planned to be closed or consolidated have been closed or consolidated. The remaining facilities in the fiscal 1995 charge are expected to be closed by the end of the first quarter in fiscal 1998, the remaining facilities in the fiscal 1996 charge are expected to be closed by the end of fiscal 1998, and the facilities identified in the 1997 charge are expected to be closed by the end of fiscal 1998. (4) Other asset write-downs and costs are recorded as contra assets, and include the loss on sale of assets and leasehold improvements and equipment being abandoned or written off as a result of the exit plans. The remaining balance primarily represents assets that will be disposed of in conjunction with facility closures, which are expected to be completed by the end of fiscal 1998. 5. Pro Forma Acquisition Results Effective November 26, 1997, the Company issued approximately 10,740,000 shares of common stock in exchange for all of the outstanding stock of DDI, a provider of forms management services and systems, custom business forms and pressure-sensitive labels for large corporate customers. This acquisition was originally accounted for as a pooling of interest transaction. Subsequent to completing this merger, the Company announced its intention to repurchase up to 35,000,000 shares of its common stock and in accordance with current accounting practices, this announcement precluded the Company from accounting for the DDI acquisition as a pooling of interests transaction. This amended Form 10-Q reflects the DDI acquisition as a purchase transaction; accordingly, the excess of the purchase price over the fair market value of the net tangible assets acquired was allocated to goodwill and is amortized over 40 years. On May 15, 1996, the Company acquired all of the outstanding capital stock of ASAP Software Express, Inc. ("ASAP"), a leading distributor of software to large corporations, for a purchase price of approximately $98,000,000. In addition, the Company purchased all of the outstanding capital stock of Boulevard Produits De Bureau, Inc. ("Boulevard"), a seller of office supplies, furniture and equipment, for a net cash purchase price of -10- 10 CORPORATE EXPRESS, INC. NOTES TO CONSOLIDATED STATEMENTS $16,102,000. The Company also repaid $9,498,000 of Boulevard promissory notes with cash of $731,900 and 356,832 shares of the Company's common stock. The excess of the purchase price over the fair market value of the net tangible assets acquired in both acquisitions was allocated to goodwill and is being amortized over 40 years. The operating results of DDI, ASAP and Boulevard are included in the Company's consolidated statement of operations from the effective date of each acquisition. The following pro forma financial information assumes the DDI, ASAP and Boulevard acquisitions occurred at the beginning of the nine-month period ended November 30, 1996. These results have been prepared for comparative purposes only and do not purport to be indicative of what would have occurred had the transactions occurred at the beginning of the period, or of results which may occur in the future. The pro forma results listed below are unaudited and reflect purchase price adjustments.
Nine months Ended ---------------------------------------- November 29, 1997 November 30, 1996 ------------------- ------------------- (In thousands, except per share amounts) Net sales $3,048,124 $2,532,520 Net income 46,648 38,647 Net income per share 0.32 0.28
6. Pro Forma Net Income: The pro forma net income and pro forma net income per share reflect the tax adjustment for a fiscal 1996 acquisition accounted for as a pooling of interests that was previously an S corporation for income tax purposes, as if the acquired company had filed a C corporation tax return for all periods presented. The effect is as follows:
Three Months Ended Nine Months Ended November 30, 1996 November 30, 1996 ------------------ ----------------- Net income before pro forma adjustments, per consolidated statements of operations $9,290 $34,789 Pro forma provision for income taxes 372 1,029 ------ ------- Pro forma net income $8,918 $33,760 ====== =======
7. Contingencies In the normal course of business, the Company is subject to certain legal proceedings. In the opinion of management, the outcome of such litigation will not have a material adverse effect on the Company's financial position or operating results. -11- -----END PRIVACY-ENHANCED MESSAGE-----