UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________ To __________
Commission file number: 1-13858
BT OFFICE PRODUCTS INTERNATIONAL, INC.
________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 13-3245865
_______________________________________ ________________________________
(State of incorporation or organization) (IRS Employer Identification No.)
2150 E. Lake Cook Road
Buffalo Grove, Illinois 60089-1877
_______________________________________ _______________________________
(Address of principal executive offices) (Zip Code)
(847) 793-7500
__________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Shares Outstanding as of
Class of Common Stock August 9, 1996
______________________________________ ______________________________
Common stock, par value $.01 per share 33,404,250
BT Office Products International, Inc.
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1996
Index of Information Included in Report
Page
____
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets 3
Condensed consolidated statements of operations 4
Condensed consolidated statements of cash flows 5
Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 12
Part II. Other Information 16
-2-
Part I. Financial Information
BT Office Products International, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In thousands)
June 30 December 31
1996 1995
------- -----------
Assets
Current assets: $ 5,747 $ 7,568
Cash and cash equivalents
Receivables, less allowances of $3,994 in 1996 and
$4,222 in 1995 192,512 179,858
Inventories 93,261 86,639
Other current assets 25,324 21,531
-------- --------
Total current assets 316,844 295,596
Other assets 20,732 19,099
Property, plant and equipment 120,930 106,674
Accumulated depreciation and amortization (47,814) (42,033)
-------- --------
Net property, plant and equipment 73,116 64,641
Intangibles, net of accumulated amortization of
$38,634 in 1996 and $34,005 in 1995 185,712 149,813
-------- --------
Total assets $596,404 $529,149
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 23,481 $ 20,176
Accounts payable 84,107 79,130
Other current liabilities 57,934 52,327
-------- --------
Total current liabilities 165,522 151,633
Long-term obligations with affiliates 131,717 83,148
Other long-term obligations 16,010 16,403
Other liabilities 17,781 17,730
Stockholders' equity:
Common stock 334 334
Additional paid-in capital 273,477 273,477
Retained earnings (deficit) (6,803) (14,819)
Cumulative translation adjustments (1,634) 1,243
-------- --------
Total stockholders' equity 265,374 260,235
-------- --------
Total liabilities and stockholders' equity $596,404 $529,149
======== ========
See notes to condensed consolidated financial statements.
-3-
BT Office Products International, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share amounts)
Three months ended Six months ended
June 30 June 30
--------- --------
1996 1995 1996 1995
(as restated) (as restated)
---- ------------- ---- ------------
Net sales $339,057 $275,627 $681,713 $544,827
Costs and expenses:
Costs of products sold 240,298 198,532 485,611 392,040
Selling and administrative 83,194 66,118 164,887 131,162
Depreciation and amortization 3,164 2,574 6,201 5,030
Amortization of intangibles 2,490 2,046 4,857 3,977
-------- -------- ------- --------
329,146 269,270 661,556 532,209
-------- -------- ------- --------
Operating income 9,911 6,357 20,157 12,618
Other income (expense):
Other income 257 273 549 784
Interest expense (1,001) (794) (1,967) (1,633)
Interest expense to affiliates (1,724) (4,679) (3,615) (9,320)
-------- -------- ------- --------
(2,468) (5,200) (5,033) (10,169)
-------- -------- ------- --------
Income before income taxes 7,443 1,157 15,124 2,449
Income tax expense 3,498 742 7,108 1,570
-------- -------- ------- --------
Net income $ 3,945 $ 415 $ 8,016 $ 879
======== ======== ======= ========
Net income per share $ 0.12 $ 0.02 $ 0.24 $ 0.04
======== ======== ======= ========
Weighted-average number of
common and common
equivalent shares 33,859 23,400 33,849 23,400
======== ======== ======= ========
See notes to condensed consolidated financial statements.
-4-
BT Office Products International, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six months ended June 30
1996 1995
(as restated)
---- --------------
Operating Activities
Net income $8,016 $ 879
Adjustments to reconcile net income to cash provided by
(used for) operating activities:
Depreciation and amortization 7,026 5,517
Amortization of intangibles 4,857 3,977
Other operating activities 1,220 159
Changes in operating assets and liabilities, net of effects of business
acquisitions:
Receivables 1,028 (10,362)
Inventories (2,749) (6,997)
Other current assets (5,052) (887)
Accounts payable and other current liabilities (4,300) (852)
Income taxes payable 1,402 (1,519)
Due to/from affiliates, net 1,483 721
------ -------
Net cash provided by (used for) operating activities 12,931 (9,364)
Investing activities
Purchases of property, plant and equipment (14,048) (7,001)
Acquisitions of businesses, less cash acquired (42,360) (20,834)
Other investing activities (1,603) (3,797)
------ -------
Net cash used for investing activities (58,011) (31,632)
Financing activities
Net payments of notes payable (4,904) (3,195)
Net payments of long-term obligations (889) (128)
Capital contribution from parent - 118,000
Costs related to initial public offering - (2,129)
Net transactions and advances with affiliates 49,161 (70,234)
------ -------
Net cash provided by financing activities 43,368 42,314
Effect of exchange rate changes on cash and cash equivalents (109) (122)
------ -------
Net increase (decrease) in cash and cash equivalents (1,821) 1,196
Cash and cash equivalents at beginning of period 7,568 4,995
------ -------
Cash and cash equivalents at end of period $5,747 $6,191
====== ======
See notes to condensed consolidated financial statements.
-5-
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Formation and Basis of Presentation
BT Office Products International, Inc. was organized in 1984 as BT USA, Inc., a
subsidiary of Buhrmann-Tetterode NV, the predecessor of N.V. Koninklijke KNP BT
("KNP BT"), a Netherlands-based diversified distribution and manufacturing
company.
On June 30, 1995, KNP BT and BT Office Products International, Inc. effected a
series of transactions described below (collectively, the "Corporate
Reorganization") in order to reorganize the legal ownership of various of their
businesses and to recapitalize the ongoing office products distribution
business, which now constitutes the "Company". Prior to the Corporate
Reorganization BT Office Products International, Inc. was a holding company (the
"Holding Company") which operated KNP BT's U.S. office products distribution
business (through its ownership of its U.S. office products companies) as well
as certain other businesses which are unrelated to the U.S. office products
distribution business.
The Corporate Reorganization included among other things: (1) KNP BT's
contribution of the net assets of its European office products businesses and
one U.S. business to the Company, (2) the transfer of the Holding Company's
unrelated businesses to KNP BT, (3) a capital contribution (the "Capital
Contribution") of $118.0 million in the form of an exchange of indebtedness of
the Holding Company under interest bearing advances by KNP BT for shares of
common stock, (4) a stock split which resulted in 23.4 million shares issued and
outstanding, and (5) the execution of various agreements related to income tax
matters, financing arrangements and shared services.
In July 1995, the Company completed the sale of 10 million shares of common
stock, at a price of $11.50 per share, in an initial public offering (the
"Offering"). After the Offering, KNP BT beneficially owns approximately 70% of
the Company's outstanding common stock. The net proceeds received from the
Offering, after underwriting commissions and costs related to the Offering and
the Corporate Reorganization (the "Net Proceeds"), were $98.5 million. Of the
Net Proceeds, the Company used $65.8 million to repay in full non-interest
bearing advances from affiliates of KNP BT made in 1994 and 1995 to finance
several acquisitions. The Company used the remaining Net Proceeds to reduce
outstanding indebtedness under the interest bearing advances from affiliates of
KNP BT made to the Company for working capital and other general corporate
purposes. Upon completion of the Offering, the Company entered into a $200
million long-term, multi-currency credit agreement (the "Antilliana Credit
Agreement") with KNP BT Antilliana NV ("Antilliana"), an affiliate of KNP BT.
-6-
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) -- Continued
1. Formation and Basis of Presentation (Continued)
The accompanying unaudited condensed consolidated financial statements present
information in accordance with generally accepted accounting principles for
interim financial information and applicable rules of Regulation S-X.
Accordingly, they do not include all information or footnotes required by
generally accepted accounting principles for complete financial statements.
Management believes the financial statements include all normal accrual
adjustments necessary for a fair presentation. Operating results for the three
month and six month periods ended June 30, 1996 do not necessarily reflect the
results that may be expected for the full year. For further information, refer
to the consolidated financial statements and notes thereto included in the
Company's Form 10-K for the year ended December 31, 1995.
The pro forma unaudited results of operations for the three month and six month
periods ended June 30, 1995, assuming the Capital Contribution and the Net
Proceeds of the Offering occurred as of January 1, 1995, were as follows (in
thousands, except per share amounts):
Three Months Ended Six Months Ended
June 30, 1995 June 30, 1995
__________________ _________________
Sales $275,627 $544,827
Net income 2,543 4,996
Net income per share 0.08 0.15
Weighted-average number of
common and common
equivalent shares 33,400 33,400
Certain amounts in the 1995 financial statements have been reclassified to
conform to the 1996 financial statement presentation.
2. Restatement of 1995 Previously Reported Unaudited Quarterly Results
In March 1996, the Company discovered certain accounting and financial reporting
irregularities at its New York operating division. The irregularities involved
misstatements in the reporting of gross profit margins and operating expenses
principally in 1995 and 1994, as well as the concealment in the accounting
records of theft of Company assets.
Based on the results of its investigations, the Company determined the impact of
the charges associated with these issues to be a reduction of previously
reported unaudited operating income for 1995 by approximately $7.5 million.
-7-
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) -- Continued
2. Restatement of 1995 Previously Reported Unaudited Quarterly Results
(Continued)
The Company engaged legal counsel to investigate the irregularities and pursue
recoveries, if any, from insurance carriers or others. The investigation, which
has been substantially completed, has uncovered no basis for any further
adjustment to the prior year financial statements.
The effect of the restatement of fiscal 1995 unaudited quarterly results of
operations is as follows (in thousands, except per share amounts):
1995 Previously Reported
__________________________________________________________
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
_______ _______ _______ _______ _____
Sales $269,200 $275,627 $277,661 $309,882 $1,132,370
Costs of products
sold 192,591 197,798 201,074 223,865 815,328
Operating income 7,760 8,216 8,854 11,343 36,173
Income before income
taxes 2,791 3,016 6,764 8,956 21,527
Net income 1,316 1,441 3,694 4,739 11,190
Net income per share .06 .06 .12 .14 .40
1995 Restated
__________________________________________________________
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
_______ _______ _______ _______ _____
Sales $269,200 $275,627 $277,661 $309,882 $1,132,370
Costs of products
sold 193,508 198,532 202,077 224,961 819,078
Operating income 6,261 6,357 6,267 9,788 28,673
Income before income
taxes 1,292 1,157 4,177 7,401 14,027
Net income 464 415 2,097 3,714 6,690
Net income per share .02 .02 .07 .11 .24
-8-
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) -- Continued
3. Business Acquisitions
During the six months ended June 30, 1996, the Company acquired four office
products businesses in the U.S. in purchase transactions for aggregate
consideration of $26.7 million, which included the issuance of $800 thousand of
notes payable.
In the year ended December 31, 1995, the Company acquired five U.S. office
products businesses in the U.S. in purchase transactions for aggregate
consideration of $34.2 million, which included the issuance of $250 thousand of
notes payable.
The pro forma unaudited results of operations for the six month periods ended
June 30, 1996 and 1995, assuming the above-described acquisitions had been
consummated as of January 1, 1995, are as follows (in thousands, except per
share amounts):
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
________________ ________________
Sales $686,151 $605,722
Net income 7,947 412
Net income per share 0.23 0.02
Weighted-average number of
common and common equivalent
shares 33,849 23,400
The Company also acquired other smaller office products and furniture businesses
in 1996 and 1995. These acquisitions did not have a significant impact on the
consolidated operating results for the six month periods ended June 30, 1996 or
1995.
4. Inventories
Inventories consist of products held for resale and are carried at the lower of
cost or market using the last in, first out (LIFO) method for U.S. inventories
and the first in, first out (FIFO) method for foreign inventories.
5. Per Share Data
Net income per share is calculated by dividing net income by the
weighted-average number of common shares outstanding, adjusted for dilutive
common share equivalents attributed to outstanding options to purchase common
stock.
-9-
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) -- Continued
6. Contingencies
On May 14, 1996, the Company was served with a summons and complaint in a class
action filed on April 16, 1996 in the United States District Court for the
Southern District of New York. The action, brought under Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, alleges
claims against the Company, KNP BT and certain of its officers in connection
with the financial reporting matters discussed in Note 2. The complaint seeks
damages on behalf of a class consisting of purchasers of the Company's stock
from January 30, 1996 through March 28, 1996. The Company is evaluating the
litigation and intends to vigorously defend the complaint. However, it is not
possible at this time to determine what outcome might result from the
litigation.
The Company is involved in various other legal actions arising in the normal
course of business. Management, after taking into consideration legal counsel's
evaluation of such actions, is of the opinion that the ultimate resolution of
these other matters over and above previously established accruals will not have
a material adverse effect on the financial position, net cash flows or results
of operations of the Company.
7. Long-Term Credit Agreement
On August 2, 1996 the Company entered into a $250 million syndicated bank
Competitive Advance and Revolving Credit Facility Agreement (the "New Credit
Agreement"). As a result, the Company intends to substantially reduce the
commitments available under the $200 million Antilliana Credit Agreement. The
New Credit Agreement will be used to repay existing debt owing to affiliates of
the Company and for working capital needs and general corporate purposes,
including acquisitions. The New Credit Agreement provides for borrowings by the
Company or any subsidiaries of the Company and the obligations under the New
Credit Agreement are guaranteed by the Company and each of its U.S.
subsidiaries.
The New Credit Agreement provides for a five-year, unsecured, non-amortizing,
multi-currency, revolving credit facility. Under the multi-currency arrangement,
term loans in U.S. Dollars, German Marks, British Pounds and Netherlands
Guilders (other currencies are also available) will bear interest based on a
Debt to EBITDA ratio (leverage ratio) grid ranging from .35% to .55% over the
applicable interbank rate as determined therein. The facility also provides for
revolving loans in U.S. Dollars at the prevailing prime rate. There is a
facility fee on the unused portion of the New Credit Agreement, based on a
leverage ratio grid, ranging from .125% to .225%.
-10-
BT Office Products International, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited) -- Continued
7. Long-Term Credit Agreement (Continued)
The New Credit Agreement contains various loan covenants, the most significant
of which are a minimum leverage ratio, a minimum EBITDA less capital
expenditures to interest ratio and a minimum net worth requirement. In addition,
under a change of control clause, an event of default would occur if any person
or group, other than KNP BT or its affiliates, shall own more than 50% of the
voting shares of the Company.
8. Income Taxes
The difference between the effective income tax rate and the U.S. statutory tax
rate is primarily due to the effects of state income taxes and non-deductible
goodwill amortization.
9. Subsequent Acquisition
In July 1996, the Company entered into an agreement to acquire the stock of the
Keller + Roth group of office products distributors in Germany pursuant to which
the Company agreed to pay a purchase price of $13.1 million, subject to
adjustment. The Company is in the process of obtaining audited financial
statements of the acquired company for the fiscal year ended June 30, 1996.
Financial statements and pro forma financial information will be filed pursuant
to Items 2 and 7 of Form 8-K when available.
-11-
BT Office Products International, Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations
In March 1996, following the preliminary fiscal year 1995 accounting close and
public release of unaudited fourth quarter and fiscal year 1995 operating
results, the Company discovered certain accounting and financial reporting
irregularities at its New York Division. The irregularities involved
misstatements in the reporting of gross profit margins and operating expenses
principally in 1995 and 1994, as well as concealment in the accounting records
of theft of Company assets. As a result of the discovery of these
irregularities, the Company has reduced previously reported unaudited operating
income for 1995 by approximately $7.5 million from $36.2 million to $28.7
million. All prior year amounts, including quarterly results, have been restated
to reflect the changes required as a result of these misstatements. Reference is
made to the Company's Form 10-K for the year ended December 31, 1995 for further
information on the restatement of 1994 operating results and adjustment to
opening retained earnings as of January 1, 1993 for years prior to 1994.
The Company engaged legal counsel to investigate the irregularities and pursue
recoveries, if any, from insurance carriers or others. The investigation, which
has been substantially completed, has uncovered no basis for any further
adjustment to the prior year financial statements.
Net sales increased to $339.1 million in the second quarter of 1996 from $275.6
million in the comparable period last year, an increase of $63.5 million or
23.0%. Net sales increased to $681.7 million in the first six months of 1996
from $544.8 million in the comparable period last year, an increase of $136.9
million or 25.1%.
Net sales in the United States increased to $264.2 million in the second quarter
of 1996 from $198.8 million in the comparable period last year, an increase of
$65.4 million or 32.9%. Net sales in the United States increased to $530.7
million in the first six months of 1996 from $394.1 million in the comparable
period last year, an increase of $136.6 million or 34.7%. The Company's 1996
acquisitions and the incremental impact of its 1995 acquisitions accounted for
$29.3 million and $60.6 million of the increases for the second quarter and the
first six months of 1996, respectively. Increased sales at the Company's
existing operations accounted for $36.1 million, or an internal growth rate of
18.2%, in the second quarter and $76.0 million, or an internal growth rate of
19.3%, for the first six months of 1996. The Company believes that the principal
factors contributing to this internal growth were increased sales to existing
and new accounts and "add-on" acquisitions at nine divisions.
-12-
BT Office Products International, Inc.
Results of Operations (Continued)
Net sales in Europe decreased to $74.9 million in the second quarter of 1996
from $76.8 million in the comparable period last year, a decrease of $1.9
million or 2.5%. Net sales in Europe increased to $151.0 million in the first
six months of 1996 from $150.7 million in the comparable period last year, an
increase of $0.3 million or 0.2%. Effective July 1, 1995, the personal computer
sales and service operation of Bierbrauer & Nagel GmbH & Co. KG was transferred
to the Information Systems Division of KNP BT at net book value. Removing the
effects of this transferred operation, European sales for the second quarter
would have increased by 2.7%, of which 10.9% would have been attributed to
internal growth, offset by an 8.2% currency depreciation against the U.S.
dollar. European sales for the first six months of 1996 would have increased by
5.9%, of which 10.0% would have been attributed to internal growth, offset by a
4.1% currency depreciation against the U.S. dollar. The Company believes that
the principal factors contributing to this internal growth were increased sales
to existing and new accounts and sales associated with an "add-on" acquisition
in Germany.
Costs of products sold include cost of inventory as well as delivery and
occupancy expenses of distribution facilities. Costs of products sold increased
to $240.3 million in the second quarter of 1996 from $198.5 million in the
comparable period last year, an increase of $41.8 million or 21.1%. Costs of
products sold increased to $485.6 million in the first six months of 1996 from
$392.0 million in the comparable period last year, an increase of $93.6 million
or 23.9%. The Company's 1996 acquisitions and the incremental impact of the
Company's 1995 acquisitions accounted for $21.3 million of the second quarter
increase and $43.6 million of the increase in the first six months of 1996. The
balance of the increase for both the second quarter and the first six months of
1996 was attributable to higher sales levels at existing operations in the U.S.
and Europe.
Gross profit, as a percentage of net sales, was 29.1% in the second quarter of
1996 as compared to 28.0% in the comparable period last year, an increase of
1.1%. Gross profit, as a percentage of net sales, was 28.8% for the first six
months of 1996 as compared to 28.0% in the comparable period last year, an
increase of 0.8%. The increases for the second quarter and the first six months
of 1996 were primarily attributable to improved margin management, higher
margins on paper and related product sales and a lower LIFO charge associated
with inventory cost decreases in the U.S. amounting to 0.2%.
Selling and administrative expenses increased to $83.2 million in the second
quarter of 1996 from $66.1 million in the comparable period last year, an
increase of $17.1 million or 25.9%. Selling and administrative expenses
increased to $164.9 million in the first six months of 1996 from $131.2 million
in the comparable period last year, an increase of $33.7 million or 25.7%. The
Company's 1996 acquisitions and the incremental impact of the Company's 1995
acquisitions accounted for $6.8 million of the second quarter increase and $13.4
million of the increase in the first six months of 1996. The balance of the
increase for the second quarter of $10.3 million and the first six months of
1996 of $20.3 million was attributable to existing divisions.
-13-
BT Office Products International, Inc.
Results of Operations (Continued)
Operating income increased to $9.9 million in the second quarter of 1996 from
$6.4 million in the comparable period last year, an increase of $3.5 million or
54.7%. Operating income increased to $20.2 million in the first six months of
1996 from $12.6 million in the comparable period last year, an increase of $7.6
million or 60.3%. Operating income in the United States increased to $8.2
million in the second quarter of 1996 from $5.7 million in the comparable period
last year, an increase of $2.5 million or 43.9%. Operating income in the United
States increased to $17.8 million in the first six months of 1996 from $11.1
million in the comparable period last year, an increase of $6.7 million or
60.4%. Operating income in Europe increased to $1.7 million in the second
quarter of 1996 from $0.7 million in the comparable period last year, an
increase of $1.0 million or 142.9%. Operating income in Europe increased to $2.4
million in the first six months of 1996 from $1.5 million in the comparable
period last year, an increase of $0.9 million or 60.0%.
Interest expense to affiliates decreased to $1.7 million in the second quarter
of 1996 from $4.7 million in the comparable period last year. Interest expense
to affiliates decreased to $3.6 million in the first six months of 1996 from
$9.3 million in the comparable period last year. The decrease in affiliated
interest expense was attributable to the effects of the Corporate
Reorganization, the Offering, and the Antilliana Credit Agreement which has
resulted in lower interest rates.
Net income increased to $3.9 million in the second quarter of 1996 from $0.4
million in the comparable period last year. Net income increased to $8.0 million
in the first six months of 1996 from $0.9 million in the comparable period last
year. The increase in net income was due to increased operating income at
existing operations, acquisitions, lower interest costs and a lower effective
income tax rate. The effective income tax rate was 47.0% for the first six
months of 1996 as compared to 64.1% for the comparable period in the prior year.
This decrease is primarily due to the effects of non-deductible goodwill
amortization and other permanent differences against a relatively higher pre-tax
income base in 1996.
-14-
BT Office Products International, Inc.
Liquidity and Capital Resources
Cash provided by operating activities in the first six months of 1996 was $12.9
million, which included $8.0 million of net income and $11.9 million of non-cash
depreciation and amortization charges. Significant cash requirements in the
first six months of 1996 included $42.4 million related to acquisitions, $14.0
million for capital expenditures and $5.8 million for the net payment of notes
payable and long-term obligations. The Company funded its cash requirements
through operations and $49.2 million of borrowings under the Antilliana Credit
Agreement.
Historically, the Company relied upon capital contributions from KNP BT, cash
from revolving credit facilities with KNP BT and cash flow from operations to
fund working capital and investments in acquisitions. In July 1995, the Company
completed the sale of 10 million shares of common stock in the Offering (see
Note 1). Of the Net Proceeds of $98.5 million, the Company used $65.8 million to
repay in full non-interest bearing advances from affiliates of KNP BT made in
1994 and 1995 to finance several acquisitions. The Company used the remaining
Net Proceeds to reduce outstanding indebtedness under the interest bearing
advances from affiliates of KNP BT made to the Company for working capital and
other general corporate purposes. Upon the completion of the Offering, the
Company also entered into the $200 million Antilliana Credit Agreement to
provide funds for working capital and other general corporate purposes.
On August 2, 1996, the Company entered into the $250 million New Credit
Agreement. The initial borrowing under the New Credit Agreement was used to
repay approximately $130 million of outstanding indebtedness for the Company's
U.S. operations under the Antilliana Credit Agreement. The Company intends to
substantially reduce the commitments available under the Antilliana Credit
Agreement. The New Credit Agreement provides for a five-year, non-amortizing,
unsecured, multi-currency, revolving credit facility (see Note 7 to the
Condensed Consolidated Financial Statements). The new agreement extends the
maturity period three years beyond the Antilliana Credit Agreement and provides
additional debt capacity. The Company believes that internally generated funds
and borrowings under its credit facilities will be sufficient to meet its
presently anticipated cash requirements for acquisitions, capital expenditures
and working capital. However, depending on the development of the Company's
business, the Company's capital needs may change, particularly with respect to
financing future acquisitions.
-15-
Part II. Other Information
BT Office Products International, Inc.
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders (the "Annual Meeting"), for which
proxies were solicited pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, was held on June 25, 1996 for the purposes of (1)
electing directors of the Company to serve until the next annual meeting of
stockholders and until their successors are duly elected and qualified and (2)
ratifying the appointment by the Board of Directors of the Company of Coopers &
Lybrand L.L.P. as the Company's independent auditors for the fiscal year ending
December 31, 1996. The nominees for director listed in the proxy statement, each
of whom was elected at the Annual Meeting, received the number of votes for such
election, and had the number of votes for such election withheld, as indicated
below (with each share of the Company's common stock being entitled to one
vote):
Number of Votes Number of Votes
For Withheld
________________ _______________
Frank J. de Wit 32,447,545 66,500
Rudolf A.J. Huyzer 32,447,545 66,500
Rob W.J.M. Bonnier 32,447,545 66,500
Karl M. von der Heyden 32,441,545 72,500
Lorrence T. Kellar 32,447,095 66,950
Frans H.J. Koffrie 32,441,195 72,850
James B. Miller 32,447,545 66,500
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BT Office Products International, Inc.
Item 4. Submission of Matters to a Vote of Security Holders (continued)
There were 32,508,100 votes for the resolution ratifying the appointment of
Coopers & Lybrand L.L.P. as the Company's independent auditors for the fiscal
year ending December 31, 1996, 2,700 votes against such resolution and 3,245
abstentions.
Item 5. Other Information
Reference is made to Note 7 to the Condensed Consolidated Financial Statements
included in Part I of this report.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Number Description
10.1 Assignment and Modification Agreement, dated June 26,
1996, among BT Office Products International, Inc.,
KNP BT Antilliana N.V., and KNP BT Finance (USA),
Inc.
10.2 Competitive Advance and Revolving Credit Facility
Agreement, dated as of August 2, 1996 among BT Office
Products International, Inc., the subsidiaries,
guarantors and lenders named therein, The Chase
Manhattan Bank, as Administrative Agent, and ABN AMRO
Bank N.V., as Documentation Agent.
10.3 Agreement of Resignation of Howard L. Brown
27 Financial Data Schedule
(b) Reports on Form 8-K
On May 20, 1996, the Company filed a Current Report on Form 8-K reporting a
change in the Company's independent auditors.
On July 17, 1996, the Company filed a Current Report on Form 8-K reporting the
acquisition of the Keller + Roth group of companies in Germany.
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BT Office Products International, Inc.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BT Office Products International, Inc.
/s/John J. McKiernan
_________________________________________________________
John J. McKiernan
Vice President--Finance and Administration
and Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)
Date: August 14, 1996
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INDEX TO EXHIBITS
Page in Sequentially
Exhibit No. Description Numbered Copy
__________ ___________ ____________________
10.1 Assignment and Modification Agreement
10.2 Competitive Advance and Revolving Credit
Facility Agreement
10.3 Agreement of Resignation
27 Financial Data Schedule
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