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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 12B-25
Commission File Number _____
NOTIFICATION OF LATE FILING
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(Check One): [X] Form 10-K [ ] Form 11-K [ ] Form 20-F
[ ] Form 10-Q [ ] Form N-SAR
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For Period Ended: December 31, 1996
[ ] Transition Report on Form 10-K [ ] Transition Report on Form 10-Q
[ ] Transition Report on Form 20-F [ ] Transition Report on Form N-SAR
[ ] Transition Report on Form 11-K
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For the Transition Period Ended:
Read attached instruction sheet 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 the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
PART I. REGISTRANT INFORMATION
Full name of registrant MERISEL, INC.
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Former name if applicable
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Address of principal executive office (Street and number)
200 Continental Boulevard
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City, State and Zip Code El Segundo, California 90245
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PART II. RULE 12-25 (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 appropriate box.)
[X] (a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense;
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[X] (b) The subject annual report, semi-annual report, transition report on
Form 10-K, 20-F, 11-K or Form N-SAR, or portion thereof will be filed on or
before the 15th calendar day following the prescribed due 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
[X] (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 Form 10-K, 11-K, 20-
F, 10-Q, N-SAR or the transition report portion thereof could not be filed
within the prescribed time period. (Attach extra sheets if needed.)
Merisel, Inc. (the "Company") is presently unable to file its Annual
Report on Form 10-K for the year ending December 31, 1996 for the reasons
described below.
The Company is engaged in active negotiations with holders of the
Company's 12 1/2% Senior Notes Due 2004 (the "Notes") issued under the
Indenture, dated October 15, 1994, between the Company and The Bank of New York
as successor Trustee, to restructure this debt, including converting all of such
debt to common equity. Such restructuring also entails the Company's attempt to
obtain an extension of the final maturity of the senior debt of Merisel
Americas, Inc., a wholly owned subsidiary of the Company ("Merisel Americas").
The conversion of all of the Notes, if successful, would allow the Company to
avoid significant amortization payments which would otherwise be required in
June, 1997 under Merisel Americas' senior debt obligations. No definitive
agreements have been reached, but the Company is hopeful that it can achieve
agreements in principle within the next two weeks. The Company's ability to
finalize these negotiations will determine whether the long-term debt evidenced
by such agreements will remain classified as long-term debt or whether all or
part of such debt will be reclassified as short-term debt. There can be no
assurance that the Company's negotiations with respect to such financing
arrangements will be successful. Pending further resolution of these issues, the
Company's independent auditors, Deloitte & Touche LLP, have advised the Company
that they will not be able to deliver their final independent auditors' report
and thus the financial statements required to be filed in response to Item 8 of
Form 10-K. See the accountant's statement required by Rule l2b-25(c), attached
hereto as Exhibit B.
The Company believes that until it determines whether the above referenced
restructuring can be achieved, the Company's responses to the other disclosures
required by Form 10-K would be incomplete or misleading (including, without
limitation, the Company's responses to Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations and Item 1, Business).
Because the outcome of these negotiations could impact how the Company conducts
its business in the present fiscal year, any historical descriptions of the
operations of the business would be only partially complete, and it would be
difficult for the Company to delineate its operating and other financing
requirements for the remainder of the fiscal year.
For the reasons set forth above, the Company's inability to file timely its
Annual Report on Form 10-K for the year ended December 31, 1996 could not be
eliminated by the Company without unreasonable effort or expense. The
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Company intends to file the subject annual report on Form 10-K no later than the
fifteenth calendar day after the due date of the report.
PART IV. OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to this
notification
James E. Illson (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 report(s) been filed? If the 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.
See the press release, dated February 24, 1997 attached hereto as Exhibit
A.
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
thereunto duly authorized.
Date March 31, 1997 By /s/ James E. Illson
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James E. Illson
Senior Vice President-Finance,
Chief Financial Officer and
Assistant Secretary
Instruction. The form may be signed by an executive officer of the
registrant or by any other duly authorized representative. The name and title of
the person signing the form shall be typed or printed beneath the signa ture. If
the statement is signed on behalf of the registrant by an authorized
representative (other than an executive officer), evidence of the
representative's authority to sign on behalf of the registrant shall be filed
with the form.
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ATTENTION
Intentional misstatements or omissions of fact constitute Federal criminal
violations (see 18 U.S.C. 1001).
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MERISEL NEWS PRESS RELEASE
For Immediate Release Contact: James Illson
Senior Vice President, Finance and CFO
(310) 615-1295
Financial Media/Investor Relations:
Rivian Bell
(310) 615-6812
(310) 615-6868
(800) 686-1910 (24-hour pager)
Merisel Reports Q4 Net Profit, 1996 Year-End Results;
Retains DLJ to Assist in Debt Restructuring
Merisel's Q4 Net Profit Is First Since 1994
El Segundo, Calif. (Feb. 24, 1997) -- Merisel, Inc. (NASDAQ:MSEL) announced
today that it has returned to profitability for the fourth quarter ended
December 31, 1996. The results represent the first profitable quarter in the
past eight quarters.
The company reported consolidated net income for the quarter of $1,675,000 on
sales of $1,150,000,000, compared with a net loss of $(77,256,000) on sales of
$1,578,000,000 for the fourth quarter of 1995. Earnings per share rose to $0.06
from a loss per share of $(2.59) for the comparable period last year. Net
income was $3,708,000 prior to the recognition of a $(2,033,000) charge
associated with Merisel's Franchise and Aggregation Business (FAB), the sale of
which is expected to be completed shortly.
For the year ended December 31, 1996, the company reported a net loss of
$(140,375,000) or $(4.68) per share on sales of $5,522,824,000 compared with a
net loss of $(83,911,000) or $(2.82) per share on sales of $5,956,967,000 for
1995. The 1996 loss includes a $(40,000,000) impairment charge on intangible
assets associated with Merisel FAB, a $(33,455,000) loss on the sale of
Merisel's European, Mexican, and Latin American operations, and the previously
discussed $(2,033,000) charge for the FAB sale. The seven percent decline in
revenues is attributed to third quarter divestitures and lower U.S. distribution
sales. 1996 sales for the U.S. and Canadian distribution business totaled
$3,440,000,000 and were essentially even with 1995 sales of $3,430,000,000.
Adjusted EBITDA, as defined below, totaled $19,300,000 and $8,900,000 for the
fourth quarter and year ended December 31, 1996, respectively. For the U.S.
and Canadian distribution business, adjusted EBITDA for the fourth quarter
totaled $16,200,000. Adjusted EBITDA is defined as earnings before interest,
asset securitization
(more)
[MERISEL LOGO]
200 Continental Blvd., El Segundo, CA 90245-0984 . (310) 615-3080 Fax
(310) 615-6819
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MERISEL/Q4 1996 EARNINGS
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fees, income taxes, depreciation and amortization, charges for asset
impairments, the loss on the sale of the company's European, Mexican, and Latin
American businesses, and restructuring charges.
For the fourth quarter ended December 31, 1996, the company incurred interest
expense and asset securitization fees of $12,100,000 versus $9,100,000 for the
same period last year. Interest expense and asset securitization fees for 1996
totaled $53,500,000 versus $47,900,000 for 1995.
"Our fourth quarter result reflect the strengthening of our operational
competencies, our margin performance, and our management team," stated Dwight A.
Steffensen, Merisel chairman and chief executive officer. "While fourth quarter
sales volume declined, growth in our Canadian subsidiary exceeded market growth
rates. The Merisel Open Computing Alliance (MOCA) reported its third record
quarter of revenues and is currently outpacing Sun Microsystems' expectations.
Internally, refinements in Merisel's Information and Logistical Efficiency
System (MILES) raised shipping accuracy from an average of 99.83 percent in July
to 99.98 percent today. With many of our nine warehouses now shipping at 100
percent accuracy, we have significantly raised customer service levels and have
reduced customer disputes and returns.
"Merisel began fiscal 1996 as a disparate, global operating organization, and we
enter fiscal 1997 as a tightly focused North American distribution organization
with substantially improved logistics systems."
Mr. Steffensen went on to state that "the same attention we gave to
infrastructure issues in 1996 must be given to sales in 1997. The appointment
of Bob McInerney as president and chief operating officer brings Merisel a
strong industry veteran with the right perspective to build sales while
containing operating expenses. Bob will work with Jim Wittry, senior vice
president of sales, to expand the sales force and sales infrastructure. While
the incremental expense of adding staff could affect profitability in the short
term, the benefits over time should more than outweigh these increased costs."
Mr. Steffensen emphasized that "our emphasis on rebuilding sales growth is only
meaningful if we also rebuild profitability. We can only achieve long-term
profitability if we reduce our debt service to acceptable levels and create a
permanent capital structure to support Merisel's future growth. To assist us
in the restructuring process, we have retained Donaldson, Lufkin & Jenrette
Securities Corporation (DLJ) as financial advisors.
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Merisel/Q4 1996 Earnings
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"We intend to effect a permanent resolution of the debt issue and create an
appropriate financial foundation to serve our core business. Despite the
improvements in operations, the company's long-term viability depends on
satisfactorily restructuring the debt. We intend to enter discussions with
existing lenders promptly and pursue an aggressive timetable to complete the
restructuring."
Except for the historical financial information contained herein, the matters
discussed in this news release constitute forward looking information, and
actual results could differ materially from current expectations. Among the
factors that could impact actual results are the following: any change in the
status of the pending sale of Merisel's Franchise and Aggregation Business, the
company's pending debt restructuring, and other items detailed periodically in
the company's SEC reports on forms 10-K and 10-Q.
Merisel, Inc. (NASDAQ:MSEL) is a leader in the distribution of computer
hardware, software and networking products. Merisel distributes a full line of
25,000 products to more than 45,000 resellers throughout the U.S. and Canada.
MERISEL, INC. AND SUBSIDIARIES SUMMARY OPERATING RESULTS
(In thousands, except per share amounts)
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3 Months Ended Dec. 31, 12 Months Ended Dec. 31
1996 1995 1996 1995
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Net Sales $1,150,035 $1,578,191 $5,522,824 $5,956,937
Gross Profit 65,251 55,738 289,254 323,689
Impairment Loss 2,033 51,383 42,033 51,383
Loss on Asset Sale -- -- 33,455 --
Income(Loss) Before
Income Taxes 1,833 (97,258) (138,836) (105,690)
Net Income(Loss) 1,675 (77,256) (140,375) (83,911)
Net Income(Loss) Per
Share $0.06 $(2.59) $(4.68) $(2.82)
Weighted Average Shares 30,099 29,859 30,001 29,806
Outstanding
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# # #
Note to Editors: Additional Financial Tables Follow
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MERISEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNT)
(UNAUDITED)
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NET SALES $1,150,035
COST OF SALES
GROSS PROFIT 1,084,784
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65,251
SELLING, GENERAL & ADMINISTRATIVE EXPENSES 49,381
IMPAIRMENT LOSS 2,033
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OPERATING INCOME 13,837
INTEREST EXPENSE 8,346
OTHER EXPENSES 3,658
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INCOME BEFORE INCOME TAXES 1,833
INCOME TAX PROVISION 158
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NET INCOME $ 1,675
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WEIGHTED AVERAGE SHARES OUTSTANDING 30,099
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NET INCOME PER SHARE $ 0.06
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MERISEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNT)
(UNAUDITED)
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NET SALES $5,522,824
COST OF SALES 5,233,570
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GROSS PROFIT 289,254
SELLING, GENERAL & ADMINISTRATIVE EXPENSES
295,021
IMPAIRMENT LOSSES
42,033
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OPERATING LOSS (47,800)
LOSS ON SALE OF EUROPEAN, MEXICAN AND LATIN
AMERICAN OPERATIONS 33,455
INTEREST EXPENSE 37,431
OTHER EXPENSES 20,150
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LOSS BEFORE INCOME TAXES (138,836)
INCOME TAX PROVISION 1,539
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NET LOSS $ (140,375)
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WEIGHTED AVERAGE SHARES OUTSTANDING 30,001
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NET LOSS PER SHARE $ (4.68)
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Exhibit B
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March 31, 1997
Securities and Exchange Commission
Mail Stop 9-5
450 5th Street, N.W.
Washington, D.C. 20549
Re: Merisel, Inc. Form 12b-25
Dear Sirs/Madams:
We are independent accountants for Merisel, Inc. At December 31, 1996, Merisel
has outstanding $125,000,000 of 12.5% senior notes due 2004, as amended. The
Company is engaged in negotiations with holders of the notes to restructure this
debt, including converting all of such debt to equity. The Company is also
attempting to obtain an extension of the final maturity of the senior debt of
Merisel Americas, Inc. a wholly owned subsidiary of Merisel, Inc.
The results of the negotiations will impact the balance sheet classification of
the debt as well as the financial statement disclosures. Accordingly, as these
negotiations are not complete, additional time is required for us to complete
our audit of the financial statements of Merisel, Inc. for the year ended
December 31, 1996.
Yours truly,
/s/ Deloitte & Touche LLP
