Corporate Express, Inc. - Company Profile, Information, Business Description, History, Background Information on Corporate Express, Inc.

1 Environmental Way
Broomfield, Colorado 80021-3416

Company Perspectives:

Through procurement analysis and a close business partnership between the company and its clients, Corporate Express, Inc. is re-engineering the procurement process for providing office supplies, promotional products, desktop software, furniture, computer supplies, imaging supplies, cleaning supplies, same-day delivery and logistics management to its large corporate customers.

History of Corporate Express, Inc.

Corporate Express, Inc. is the world's largest provider of non-production goods and services and office products and services to large corporations and had a revenue of $3.196 billion for fiscal 1996.

From Czechoslovakia, with Love

The company was founded in Boulder, Colorado, by Jirka Rysavy, its chairman and CEO. Born in Czechoslovakia in 1954, the son of a civil engineer and an educational researcher, Rysavy became a hurdler for the Czech national team, competing in international track and field events. While attempting to reach the Olympics, Rysavy was forced out of competition due to injuries. In 1984, after earning a master's degree in engineering the previous year at the Technical University of Prague, he extended his travel visa and never returned to Czechoslovakia.

Barely speaking English, Rysavy spent a year in solitude in a remote part of Eastern Europe. After that, he traveled the world, sleeping on park benches and living on $3 a day, eventually finding himself in Boulder, Colorado, where he worked in a print shop for $3.35 an hour. After saving up $600, he started his own company, Transformational Economy, or Transecon, which sold recycled paper. Rysavy made $100,000 before taxes in his first year of business. Investing $30,000 of that money into a new venture following his strict vegetarian diet, Rysavy created Crystal Market, a natural foods retailer store, which made $2.5 million in sales in its first year. For a man with no business experience from a non-capitalist country, Rysavy was working wonders.

Planning to continue growing his foods business with additional health food markets, Rysavy got sidetracked when one of his neighbors in Boulder decided to sell an office supply store. Rysavy obtained the heavily indebted store for $100 and the assumption of $15,000 in overdue accounts payable. After renaming it Business Express and installing a computer system to track customers and sales, Rysavy realized that he would not be able to make the store successful by remaining a retail outlet. He noticed the successful accounts that a few local companies had with the store that bought supplies in large quantities. Moving quickly away from retail and towards corporate accounts, the company, renamed Corporate Express, within a year had made $2 million with a pretax margin of 14 percent.

In the fall of 1987, after seeing the success of his corporate strategy, Rysavy hired a researcher to collect material on the office supply industry. By December, Rysavy had a pile of research materials and spent two weeks on the beach in Hawaii wading through all of it. He discovered huge problems in the industry as a whole: thousands of office supply companies were sharing a $100 billion market, split up among local markets and not selling enough volume to get deep discounts from manufacturers. And with the number of office products being produced growing at an enormous rate most stores were overburdened with huge, slow-turning inventories.

Watching Staples and Office Depot begin to boom about the same time in the small business and home business retail market, Rysavy decided to try the same thing on a bigger scale by serving large corporations, companies with 100 or more employees, which accounted for $30 billion of the industry annually. Selling his health food store to Mike Gilliland for $300,000 (Gilliland went on to make Wild Oats into a natural grocery store chain worth $200 million), Rysavy invested it all and managed to leverage the $12.8 million pricetag on the office products division of NBI, a Denver-based company with a loss of $1 million on sales of $20 million. Desiring to repeat with NBI the strategy which had worked for his small Boulder store, Rysavy needed to install a computer system to analyze NBI's market and customers. Boyhood friend and computer software developer Pavel Bouska came from Munich to Colorado to help in 1988.

Clearing the Hurdles, 1992--96

In 1992, with Bouska's computer system up and running, Rysavy's company had attained 10 percent operating margins and would reach $65 million in sales by 1995. Striking out for the territories, Rysavy acquired his first companies outside of Colorado. The $31.6 million company acquired Trick & Murray, a $15 million office supply company, merging it with two other acquisitions in the Seattle area. In order to convince Trick & Murray to sell, Rysavy promised in three years to reach sales of $300 million. But at the end of 1992, the company posted revenues of $420 million. A year later, revenues rose to $520 million and the company continued its skyward climb. In 1994, the company completed six acquisitions in exchange for 1.7 million shares of stock swapped and revenues skyrocketed to $1.145 billion.

In 1995, the company moved forcefully into the international market with several foreign acquisitions. With over 14,000 employees in over 500 locations, the company's revenues reached an unprecedented $1.891 billion. Analysts estimated the company would reach $3 billion in the year 2000. They were wrong.

With two acquisitions in 1996, the company became a major player in the distribution of desktop software to corporations, both domestically and internationally. In February, the company acquired Young, a distributor of computer and imaging supplies and accessories, in a 4.4 million share stock swap. The company merged CEX Acquisition Corp., a wholly owned subsidiary of Corporate Express, into Young. In October, Corporate Express acquired France's leading supplier of computer software, the Paris-based company Nimsa, in a 1.1 million share stock swap and $2.3 million in cash. That month, the company also acquired a 51 percent interest in The Chisholm Group in the United Kingdom.

In order to deliver all of its product lines more efficiently, the company created its own delivery system. In March, the company acquired U.S. Delivery Systems, Inc. (USDS), the largest local same-day delivery service in the United States, in a 23.4 million share stock swap. The company merged DSU Acquisition Corp., a wholly owned subsidiary of Corporate Express, into USDS. Strengthening its domestic delivery infrastructure, the company acquired, in November, United TransNet, Inc. (UTI), the second-largest same-day delivery service provider in the United States, in a 6.3 million share stock swap. The company merged Bevo Acquisition Corp., a wholly owned subsidiary of Corporate Express, into UTI.

In 1996, the company acquired 104 firms, including 46 domestic office product distributors, 32 international office product distributors, and 11 delivery service companies for a total of $241.9 million in cash and approximately 3.6 million shares of stock swapped. Of the 32 international acquisitions, nine were in Canada, seven were in the United Kingdom, five were in Australia, and three were in New Zealand. With five acquisitions in Germany, two in Italy, and one (Nimsa) in France, Corporate Express entered the markets in those countries for the first time. In November, the company purchased the remaining 49 percent interest in The Chisholm Group in a stock swap and with options of up to $3.3 million, pushing the international operations of the company to account for approximately 18 percent of the company's total revenue.

From the company's inception, it has been uniquely focused on the development and deployment of innovative technology. In its early years, Corporate Express introduced inventory management systems far more sophisticated than those of many large corporations, systems which could electronically track sales and inventory by item and accurately predict future sales and inventory requirements. The company's belief in the competitive power of technology caused it to routinely reinvest much of its profits into the development of these proprietary information management systems. In 1996, approximately 300 systems architects and engineers were on the payroll of Corporate Express, showing the strength of the company's commitment to ongoing systems development and implementation.

In September, the company unveiled and began to implement a major upgrade to its proprietary global electronic commerce system. The company released ISIS 3.0, a new generation of hardware, software, and networking capabilities. When completed, it would be a dynamic program integrating all facets of the company's processes, organizational structure, systems, and customer service. The three-tier client/server computer architecture was the backbone of the company's Corporate Supplier model, seamlessly integrating three components, the customer's desktop with the company's distribution and service capabilities.

The back end of the system consisted of the actual Corporate Express company infrastructure, controlling product inventory, pricing, contracts, business practices, and delivery. Each customer account was customized by facility, price, supplier, and item. The centralized structure also allowed the consolidation of all customers' orders and invoicing, a capability especially valuable to corporations with multiple locations, as well as potentially providing a direct interface to their general ledger system. In addition, the back end system continually tracked and analyzed cost and demand patterns, allowing the company to forecast optimal reorder times and quantities, enabling the company to turn its inventory well in excess of the industry average and offering the customers a higher level of service.

At the front end, the customer's desktop, the system offered order entry featuring powerful search and display capabilities, rapid price look-up, customized order and payment approval, routing, and a secure connection for electronic commerce, allowing orders to be transmitted via a full range of traditional or electronic connections. The system was available to the customer without charge in a variety of formats, including a customized interface with customers' Intranet facilities. An Internet version of the system was being tested in late 1996 by certain key customers.

Within five years, the company's revenues had grown from $32 million to a staggering $3.196 billion, a 58 percent increase over 1995 revenues of $1.890 billion, blowing analysts' previous-year estimates away, and the company declared a 50 percent share dividend of its common stock, giving each shareholder an additional share of stock for every two shares held.

From Here to There, 1997 Onward

In 1997, the company continued its skyrocketing growth rate with more acquisitions. January saw the company acquiring Hermann Marketing, Inc. (HMI), the largest privately held supplier of promotional products to large corporations in the United States, Canada, the United Kingdom, and the Netherlands, in a 4.6 million share stock swap. The company merged Hermann Marketing Acquisition Corp., a wholly owned subsidiary of Corporate Express into HMI. Also in January, the company acquired Sofco-Mead, Inc. (SMI), one of the largest suppliers of janitorial and cleaning supplies in the U.S., in a 2.6 million share stock swap. The company merged IMS Acquisition Inc., a wholly owned subsidiary of Corporate Express into SMI.

By February, Corporate Express had acquired 15 additional companies, including St. Paul Book and Stationery, Inc. The St. Paul, Minnesota-based company was founded in 1851 and was one of the largest and oldest independent contract stationers in the United States. By June, the company had already acquired 13 additional companies for a total of $24.7 million. Two of the companies were contract stationers in Italy. Katro S.p.A. and Asite S.p.A. were purchased and consolidated into a new 120,000-square-foot distribution center located in Milan. Two other contract stationers were acquired in Cologne and Leipzig, Germany. The remaining nine acquisitions were in North America, including Everything for the Office, a $20 million-a-year contract stationer in Minneapolis, Minnesota.

September brought a definitive merger agreement with Data Documents Incorporated, a leading provider of forms management services and systems and custom business forms to large corporate customers, in a $195 million stock swap. The Omaha, Nebraska-based Data Documents added 85 new locations to the company. That month the company also finalized the expansion of its unsecured, multi-currency credit facility from $350 million to $500 million.

By mid-1997, the company employed some 27,000 people and operated from approximately 700 locations throughout the world, including 80 distribution centers located in the United States, Canada, Australia, New Zealand, Germany, France, Italy, and the United Kingdom. Customers select desired products and place orders by various means of electronic commerce, telephone, or fax, and receive next-business-day delivery via the company's fleet of over 10,000 delivery vehicles.

The company remained firmly committed to working toward preserving the Earth's environment through the creation of a nonprofit foundation. It also encouraged its employees, suppliers, and customers to adopt environmentally conservative practices such as disposing of trash properly, reusing old paper for notepads, and using electronic commerce to conserve paper and fossil fuels. Corporate Express also redesigned its shipping cartons to include more recycled materials; minimized the use of Styrofoam and plastic; initiated a toner cartridge collection, refill, and disposal system for numerous contract clients; increased the use of natural gas rather than unleaded gas in its fleet of trucks; and treated wet and dry waste items separately.

With such major customers as Oracle Corporation, Saturn Corporation, and Sun Microsystems, and heavy investors such as OfficeMax, the deep-discount office superstore chain, which owns 20.3 percent of the company (Rysavy owns 5.4 percent), the company could be expected to continue to significantly increase the scope of its operations throughout the United States, Canada, the United Kingdom, and Australia. In addition, with acquisitions in New Zealand, Germany, Italy, and France, the company aspired to enter new markets and attempt to capture more of the $300 billion-a-year global industry from Boise Cascade, Office Depot, Burhmann-Tetterode, and Staples, its largest competitors.

Principal Subsidiaries: ASAP Software Express, Inc.; Corporate Express Australia; Corporate Express, Inc. (Kansas City, Missouri); Corporate Express of Northern California, Inc.; Corporate Express of Texas, Inc.; Corporate Express of the East, Inc.; Corporate Express of the Mid-Atlantic, Inc.; Federal Sales Service, Inc.; Richard Young Journal, Inc.; Ross-Martin Co.; Siekert and Baum Corporate Express, Inc.; U.S. Delivery Systems, Inc.

Additional Details

Further Reference

Arreola, Sylvia Moya, "Largest Area Courier and Messenger Firms," Houston Business Journal, April 25, 1997, p. 22.Aven, Paula, "Denver-Area Office Supply Companies," Denver Business Journal, February 24, 1995, p. 18A.Avery, Susan, "Can Consolidated Continue?" Purchasing, October 17, 1996, p. 93.Benjamin, Aubri, "Largest Courier and Messenger Service Firms," South Florida Business Journal, September 20, 1996, p. 18A.Birkin, Danielle, "Busiest Area Messenger Services," Business Journal--Portland, July 4, 1997, p. 14.Brown, Dionne, and Andrew Pratt, "Largest Office Furniture Companies," South Florida Business Journal, December 15, 1995, p. 4B."Corporate Express Acquisition," Wall Street Journal, November 7, 1996, p. B8(W)."Corporate Express Agrees to Buy Data Documents," New York Times, September 12, 1997, p. C4(N)/D4(L)."Corporate Express Cites $24.7 Million Expansion," New York Times, June 7, 1997, p. 23(N)."Corporate Express Inc.," Wall Street Journal, January 9, 1997, p. B4(W)/A4(E)."Corporate Express Stock Plummets on Earnings News," New York Times, March 6, 1997, p. C4(N)/D4(L)."Corporate Express Stock Split," Wall Street Journal, January 23, 1997, p. C21(W)."Data Documents Purchase Is Planned for $195 Million," Wall Street Journal, September 12, 1997, p. B4(W)/B4(E).Edgerton, Jerry, "These Six Small Stocks Promise Big Gains," Money, Winter 1996, p. 66."The Hottest Entrepreneurs in America," Inc., December 1995, p. 35."Jirka Rysavy: Chairman and CEO, Corporate Express," Chain Store Age Executive with Shopping Center Age, December 1995, p. 54."Jirka Rysavy, Corporate Express," PI, September 1996.Ketelsen, James, "Learning the Hard Way," Forbes, December 18, 1995, p. 130.Laderman, Jeffrey M., "Don't Worry, Be Bullish," Business Week, August 4, 1997, pp. 28--29.------. "Three IPOs That'll Let You in On the Ground Floor," Business Week, June 6, 1994, p. 108.Mullins, Robert, "Supply Firms Take New Owners, Battle with Chains," Business Journal-Milwaukee, April 15, 1995, p. 2A."Profit Fell 17% in Quarter on 40% Revenue Increase," Wall Street Journal, June 27, 1997, p. B5(W).Rutledge, Tanya, "Office Products Giant to Build Mega-Project," Houston Business Journal, October 25, 1996, p. 1A.Schine, Eric, "The Mountain Man of Office Gear," Business Week, May 5, 1997, p. 114.Schonfeld, Erick, "Delivering Growth," Fortune, September 4, 1995, p. 137.Svaldi, Aldo, "Corporate Express Shares Rebound from March Fall," Denver Business Journal, July 4, 1997, p. 4A.Tejada, Carlos, "Corporate Express Says Earnings Trail Estimates, and Its Stock Almost Plummets 45%," Wall Street Journal, March 6, 1997, p. B2(W)/B10(E).Vasquez, Beverly, "Corporate Express Turns 100: Dealmaking Flurry Makes Boulder Office Supplier Nation's Largest," Denver Business Journal, February 28, 1997, p. 6B.

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