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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 12b-25
COMMISSION FILE NUMBER: 0-17156
NOTIFICATION OF LATE FILING
(check one): ____ Form 10-K _____ Form 20-F
____ Form 11-K
_X__ Form 10-Q _____ Form N-SAR
For Period Ended: September 30, 1996
___ Transaction Report on Form 10-K
___ Transaction Report on Form 20-F
___ Transaction Report on Form 11-K
___ Transaction Report on Form 10-Q
___ Transaction Report on Form N-SAR
For Transaction Period Ended: ___________
Read instructions Before Preparing Form. Please Print or
Type.
Nothing in this form shall be construed to imply that the
Commission has verified any information contained herein.
If notification relates to a portion of the filing checked
above, identify the item(s) to which the notification
relates:
PART 1- REGISTRANT INFORMATION
MERISEL, INC.
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Full Name of Registrant
N/A
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Former Name if Applicable
200 Continental Blvd.
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Address of Principal Executive Office (Street and Number)
El Segundo, California 90245
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City, State and Zip Code
PART II- RULES 12b-25(b) and (c)
If the subject report could not be filed without
unreasonable effort or expense and the registrant seeks
relief pursuant to Rule 12b-25(b), the following should be
completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part
III of this form could not be eliminated without unreasonable
effort or expense;
(b) The subject annual report, semi-annual report,
transition report on Form 10-K, 20-F, 11-K, Form N-
SAR, or portion thereof, will be filed on or before the
fifteenth calendar day following the prescribed due
[X] date; or the subject quarterly report or transition report
on Form 10-Q, or portion thereof will be filed
on or before the fifth calendar day following the prescribed
due date; and
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(c) The accountant's statement or other exhibit
required by Rule 12b-25(c) has been attached,
if applicable.
PART III- NARRATIVE
State below in reasonable detail the reasons why the Form 10-
K, 20-F, 11-K, 10-Q, N-SAR, or the transition report or
portion thereof, could not be filed within the prescribed
time period. (Attach extra sheets if needed)
The Form 10-Q for the quarter ended September 30, 1996
of Merisel, Inc. ("Merisel" or the "Company") cannot be
filed in a timely manner without unreasonable effort or
expense due to the complexity and timing of the closing of
the Company's books and the preparation of the Form 10-Q in
light of the sale of the Company's European, Latin America
and Mexican businesses, which sale was effective as of
September 27, 1996.
PART IV- OTHER INFORMATION
(1) Name and telephone number of person to contact in
regard to this notification
Bruce Zeedik 310 615-3080
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(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under Section
13 or 15(d) of the Securities Exchange Act of 1934 or
Section 30 of the Investment Company Act of 1940 during the
preceding 12 months (or for such shorter) period that the
registrant was required to file such reports been filed? If
answer is no, identify report(s).
X Yes ___ No
(3) Is it anticipated that any significant change in
results of operations from the corresponding period for the
last fiscal year will be reflected by the earnings
statements to be included in the subject report or portion
thereof?
X Yes ___ No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state
the reasons why a reasonable estimate of the results cannot
be made.
The anticipated change is described in the attached
press release of the Company, dated November 8, 1996, which
is incorporated herein by this reference.
MERISEL, INC.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: November 11, 1996 By: /s/Bruce Zeedik
Bruce Zeedik
Vice President and
Corporate Controller
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PRESS RELEASE
Contact: James E. Illson
Chief Financial Officer
(310) 615-1295
For Immediate Release
Susan T. Stillings
Vice President, Corporate Communications
and Investor Relations
(310) 615-6868
Merisel Reports Third Quarter 1996 Results
El Segundo, CA (November 8, 1996)Merisel, Inc. (NASDAQ:MSEL)
announced today its third quarter financial results for the
period ended September 30, 1996. Sales for the quarter
decreased 10 percent to $1.39 billion, from $1.54 billion in
the third quarter of 1995. Merisel incurred a net loss of
$117.1 million, or $3.90 per share, for the third quarter.
The loss included the following items totalling $100.5
million: $33.5 million on the sale of Merisel's European,
Latin American and Mexican operations plus a $1.2 million
operating loss from these subsidiaries, $40.0 million on an
asset impairment valuation adjustment to Merisel's
ComputerLand Franchise and Datago Aggregation businesses,
$13.4 million related to customer dispute issues in Merisel's
U.S. distribution business, $9.6 million of vendor
reconciliation adjustments and other issues at Merisel's
Canadian subsidiary and $2.8 million in severance and
professional fees. Merisel's third quarter 1996 net loss
compares to a net loss of $253 thousand, or $0.01 per share,
for the third quarter of 1995.
Sales for the nine months ended September 30, 1996 of $4.4
billion were flat with sales for the same period in 1995.
Merisel's net loss for the nine months ended September 30,
1996, was $142.1 million, or $4.75 per share, compared to a
net loss of $6.7 million, or $0.22 per share, for the same
period in 1995. In the third quarter of 1995, Merisel sold
approximately $156 million of Microsoft Windows'95 at its
launch in August 1995. Without this additional revenue,
Merisel would have reported comparable sales increases of
0.4% and 3.6%, for the three and nine month periods ended
September 30, 1996, respectively.
Merisel's operating loss for the third quarter was $66.9
million. This operating loss included the following
previously mentioned items, which total $67.0 million: a $40
million asset impairment write-down, $13.4 million in
customer dispute charges, $9.6 million in vendor
reconciliation and other issues in Canada, $1.2 million in
operating losses from Merisel's recently sold European, Latin
American and Mexican operations and $2.8 million in severance
and professional fees.
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"We spent the first nine months of 1996 operating the
business to conserve cash," said Dwight A. Steffensen,
Merisel chairman and chief executive officer. "Our recent
asset sales, combined with our plan to run the business for
cash by deferring any non-essential capital expenditures and
other cost-cutting measures, has given us room to operate the
business going forward. Now we can turn our focus from
conserving cash to profitable growth."
In the third quarter, Merisel completed the sale of its
European, Latin American and Mexican operations to CHS
Electronics, Inc., for approximately $150 million (subject to
adjustment based on the results of a closing balance sheet
audit). Although the sale caused Merisel's third quarter net
loss to increase by $33.5 million, the Company has retained
approximately $50 million in cash from the transaction, after
repaying certain debt.
The Company also recorded a non-cash asset valuation
adjustment in the third quarter of $40.0 million for
impairment to the goodwill associated with Merisel FAB, Inc.,
the holding company for Merisel's ComputerLand Franchise and
Datago Aggregation businesses. Merisel continues to explore
all of its strategic options with respect to Merisel FAB. The
Company had previously recorded an impairment loss of $30
million associated with goodwill at Merisel FAB, Inc., in the
fourth quarter of 1995.
The supplier account reconciliation and other issues at
Merisel Canada resulted primarily from adjustments taken for
price protection, returns to vendors and inventory receipt
related issues. In order to prevent further supplier account
reconciliation losses, Merisel is implementing processes and
procedures that were developed in its U.S. company after it
incurred similar losses in the fourth quarter of 1995.
Merisel's 1996 business plan assumed that the Company would
not return to profitability until the fourth quarter of
1996. As the Company's focus changes from conserving cash to
managing for profitable growth, management continues to
expect that Merisel will return to profitability, if not by
year end, within the next six months. These expectations are
based on the Company's ability to achieve expected sales and
gross margin levels and maintain the support of its trade
creditors and lenders.
The preceding preliminary financial information constitutes
forward looking information and actual results could differ
materially from current expectations. Among the factors that
could impact actual results are the following: additional
adjustments related to the Company's ongoing supplier
account reconciliation process in Canada, to customer
disputes or to the impairment of long term assets;
significant changes in payment terms to, or product
availability from the Company's key vendors; any further
unanticipated charges associated with the Company's computer
and operating systems; any asset dispositions or potential
restructurings; and, any reduction in customer demand or
deterioration of margins.
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MERISEL, INC. AND SUBSIDIARIES SUMMARY OPERATING RESULTS
(In thousands, except per share amounts)
3 Months 9 Months
Ended Sept. 30, Ended Sept. 30,
1996 1995 1996 1995
Net Sales $1,393,532 $1,544,018 $4,372,789 $4,378,776
Gross Profit 57,193 89,253 224,003 267,951
Impairment Loss 40,000 0 40,000 0
Loss on Asset Sale 33,455 0 33,455 0
Loss Before Income 115,683 134 140,669 8,432
Taxes
Net Loss 117,138 253 142,050 6,655
Net Loss Per Share $3.90 $0.01 $4.75 $0.22
Weighted Average Shares 30,038 29,819 29,924 29,756
Outstanding
Merisel, Inc. (NASDAQ:MSEL) is a leader in the distribution
of computer hardware, software and networking products. The
Company holds Fortune 500 status, with 1995 sales of $4.6
billion after giving effect of the asset sales to CHS
Electronics. Merisel distributes a full line of 25,000
products to more than 45,000 resellers in the U.S. and
Canada.
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MERISEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
NET SALES $1,393,532
COST OF SALES 1,336,339
GROSS PROFIT 57,193
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 84,082
IMPAIRMENT LOSS 40,000
OPERATING LOSS (66,889)
LOSS ON SALE OF EUROPEAN, LATIN AMERICAN AND
MEXICAN OPERATIONS 33,455
INTEREST EXPENSE 9,613
OTHER EXPENSES 5,726
LOSS BEFORE INCOME TAXES (115,683)
INCOME TAX PROVISION 1,455
NET LOSS (117,138)
WEIGHTED AVERAGE SHARES OUTSTANDING 30,038
NET LOSS PER SHARE ($3.90)
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MERISEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
(UNAUDITED)
NET SALES $4,372,789
COST OF SALES 4,148,786
GROSS PROFIT 224,003
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 245,640
IMPAIRMENT LOSS 40,000
OPERATING LOSS (61,637)
LOSS ON SALE OF EUROPEAN, LATIN AMERICAN AND
MEXICAN OPERATIONS 33,455
INTEREST EXPENSE 29,085
OTHER EXPENSES 16,492
LOSS BEFORE INCOME TAXES (140,669)
INCOME TAX PROVISION 1,381
NET LOSS (142,050)
WEIGHTED AVERAGE SHARES OUTSTANDING 29,924
NET LOSS PER SHARE ($4.75)
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MERISEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
(UNAUDITED)
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $26,923
ACCOUNTS RECEIVABLE
(net of allowance for doubtful accounts 195,895
of $18,913)
RECEIVABLE FROM ASSET SALE 123,261
INVENTORIES 278,165
PREPAID EXPENSES AND OTHER CURRENT ASSETS 10,101
INCOME TAX RECEIVABLE 9,452
TOTAL CURRENT ASSETS 643,797
PROPERTY AND EQUIPMENT, NET 63,649
COST IN EXCESS OF NET ASSETS ACQUIRED, NET 44,168
OTHER ASSETS 10,830
TOTAL ASSETS $762,444
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $320,767
ACCRUED LIABILITIES 58,088
SUBORDINATED DEBT - CURRENT 4,400
SHORT-TERM BANK DEBT 80,000
TOTAL CURRENT LIABILITIES 463,255
LONG-TERM DEBT 272,705
SUBORDINATED DEBT 13,200
TOTAL LIABILITIES 749,160
STOCKHOLDERS' EQUITY:
CAPITAL STOCK 300
ADDITIONAL PAID IN CAPITAL 142,154
ACCUMULATED DEFICIT (122,839)
CUMULATIVE TRANSLATION ADJUSTMENT (6,331)
TOTAL STOCKHOLDERS' EQUITY 13,284
TOTAL LIABILITIES AND STOCKHOLDERS' $762,444
EQUITY
