SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 2000
MERISEL, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-17156 95-4172359
(State or Other Jurisdiction (Commission File (I.R.S. Employer
of Incorporation) Number) Identification No.)
200 Continental Boulevard, El Segundo, California 90245-0948
(Address of Principal Executive Offices) (Zip Code)
(310) 615-3080
(Registrant's Telephone Number, Including Area Code)
Not applicable
(Registrant's Name or Former Address, if Changed Since Last Report)
<PAGE>
10
Item 2. Acquisition or Disposition of Assets.
On October 30, 2000, Merisel announced that Merisel, Inc., a
Delaware corporation (the "Company"), Merisel Americas, Inc., a Delaware
corporation ("Americas"), and Arrow Electronics, Inc., a New York corporation
("Arrow"), had completed the sale by Americas of the outstanding capital stock
of Merisel Open Computing Alliance, Inc. ("MOCA") to Arrow pursuant to a Stock
Sale Agreement, dated as of September 15, 2000 (the "Stock Sale Agreement"). The
Stock Sale Agreement provided for a purchase price of $110 million, subject to
adjustments based on changes in working capital reflected on MOCA's closing
balance sheet, plus an additional amount up to $37.5 million based upon
development with respect to MOCA's business by the end of March 2001. The
preliminary purchase price was approximately $191.2 million of which $18.5
million will be paid by Arrow on a deferred basis, subject to the collection of
specified customer accounts receivable and returning of certain inventory, and
approximately $57.5 million was for amounts outstanding under the Merisel asset
securitization facility. Based on the preliminary purchase price, the Company
expects to realize a gain of approximately $27.4 million from the sale of MOCA,
without including the potential additional $37.5 million. The final purchase
price will be adjusted for actual working capital amounts as of the closing date
determined within 60 days of closing. These adjustments are not expected to be
material.
In connection with the transaction, the Company, Americas,
MOCA and Arrow have entered into a transition services agreement pursuant to
which Americas will provide logistics management, order processing,
configuration and information technology services to MOCA for an initial term of
six months.
The Stock Sale Agreement, which was previously filed, is
incorporated by reference into this Item 2.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Pro Forma Financial Information
The following unaudited pro forma financial statements are filed
with this report:
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Pro Forma Condensed Consolidated Balance Sheet as of June 30,
2000.........................................................Page 4
Pro Forma Condensed Consolidated Statements of Operations:
Six Months Ended June 30, 2000.....................Page 5
Year Ended December 31, 1999.......................Page 6
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Statements ............................Page 7-8
The unaudited Pro Forma Condensed Consolidated Balance Sheet of the
Company as of June 30, 2000 reflects the financial position of the Company
after giving effect to the disposition of MOCA as discussed in Item 2 and
assumes the disposition took place on June 30, 2000. The unaudited Pro
Forma Condensed Consolidated Statements of Operations for the year ended
December 31, 1999 and the six months ended June 30, 2000 assume that the
disposition occurred on the first date of the period presented, and are
based on the operations of the Company for the year ended December 31, 1999
and the six months ended June 30, 2000.
The unaudited pro forma condensed consolidated financial statements
presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or future results
of operations of the Company, or of the financial position or results of
operations of the Company that would have actually occurred had the
transaction occurred as of the date or as of the first date of the periods
presented.
The unaudited pro forma condensed consolidated financial statements
should be read in conjunction with the historical financial statements and
related notes of the Company for the year ended December 31, 1999 as filed
on Form 10-K and for the six months ended June 30, 2000 as filed on Form
10-Q.
(c) Exhibits:
2.1 Stock Sale Agreement, dated as of September 15, 2000, by and
among Merisel, Inc., a Delaware corporation, Merisel Americas,
Inc., a Delaware corporation, and Arrow Electronics, Inc., a
New York corporation (incorporated by reference to Form 8-K,
File No. 0-17156, filed by Merisel on September 22, 2000).
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<TABLE>
<CAPTION>
PRO FORMA FINANCIAL INFORMATION
MERISEL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(In thousands)
(Unaudited)
Pro Forma Adjustments
---------------------------------------
Historical
6/30/00 MOCA (a) Other Pro Forma
----------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 36,448 $ 94,966 (b) $ 131,414
Accounts receivable (net of allowances) 214,516 $ 89,082 18,531 (c) 143,965
Inventories 193,764 51,844 141,920
Prepaid expenses and other current assets 7,740 667 7,073
Deferred income taxes 892 892
----------------- ----------------- ---------------- -----------------
Total current assets 453,360 141,593 113,497 425,264
Property and Equipment, Net 75,501 609 74,892
Cost in Excess of Net Assets Acquired, Net 3,784 3,784
Other Assets 362 362
----------------- ----------------- ---------------- -----------------
Total Assets $ 533,007 $ 142,202 $ 113,497 $ 504,302
================= ================= ================ =================
Current Liabilities:
Accounts payable 305,153 54,690 250,463
Accrued liabilities 55,104 6,645 2,500 (d) 50,959
Long-term debt and capitalized lease
obligations - current 5,904 5,904
----------------- ----------------- ---------------- -----------------
Total current liabilities 366,161 61,335 2,500 307,326
Long-Term Debt 87,500 87,500
Capitalized Lease Obligations 223 223
----------------- ----------------- ---------------- -----------------
Total Liabilities 453,884 61,335 2,500 395,049
Stockholder's Equity 79,123 80,867 110,997 109,253
----------------- ----------------- ---------------- -----------------
Total Liabilities and Stockholders' Equity $ 533,007 $ 142,202 $ 113,497 $ 504,302
================= ================= ================ =================
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA FINANCIAL INFORMATION
MERISEL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(In thousands, except per share data)
Pro Forma Adjustments
---------------------------------------
Historical
6/30/00 MOCA (a) Other Pro Forma
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net Sales $ 2,091,608 558,760 $ 1,532,848
Cost of Sales 1,992,972 524,891 1,468,081
---------------- ----------------- ---------------- -----------------
Gross Profit 98,636 33,869 64,767
Selling, General & Administrative Expenses 109,361 18,500 $ 5,816 (b) 96,677
Impairment Losses 19,487 19,487
---------------- ----------------- ---------------- -----------------
Operating (Loss) Income (30,212) 15,369 (5,816) (51,397)
Interest Expense 8,574 2,994 2,994 (c) 8,574
Other Expense, Net 12,902 4,732 8,170
---------------- ----------------- ---------------- -----------------
(Loss) Income Before Income Taxes and
extraordinary item (51,688) 7,643 (8,810) (68,141)
Income Tax Expense 313 87 226
---------------- ----------------- ---------------- -----------------
Net (Loss) Income before extraordinary item $ (52,001) $ 7,556 $ (8,810) $ (68,367)
================ ================= ================ =================
Net Loss Per Share before extraordinary (0.65) (0.85)
item
================ ================= ================ =================
Weighted Average Number of Shares
Outstanding 80,299 80,299
================ ================= ================ =================
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA FINANCIAL INFORMATION
MERISEL, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(In thousands, except per share data)
Pro Forma Adjustments
---------------------------------------
Historical
12/31/99 MOCA (a) Other Pro Forma
---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net Sales $ 5,188,679 $ 957,283 $ 4,231,396
Cost of Sales 4,947,626 901,531 4,046,095
---------------- ----------------- ---------------- -----------------
Gross Profit 241,053 55,752 185,301
Selling, General & Administrative Expenses 235,471 33,281 $ 9,807 (b) 211,997
Litigation-Related Charge 12,000 12,000
Restructuring Charge 3,200 3,200
Impairment Losses 3,800 3,800
---------------- ----------------- ---------------- -----------------
Operating (Loss) Income (13,418) 22,471 (9,807) (45,696)
Interest Expense 17,849 4,656 4,656 (c) 17,849
Other Expense, Net 28,962 7,391 21,571
---------------- ----------------- ---------------- -----------------
(Loss) Income Before Income Taxes and
extraordinary item (60,229) 10,424 (14,463) (85,116)
Income Tax Expense 939 939
================ ================= ================ =================
Net (Loss) Income before extraordinary item $ (61,168) $ 10,424 $ (14,463) $ (86,055)
================ ================= ================ =================
Net Loss Per Share before extraordinary (0.76) (1.07)
item
Weighted Average Number of Shares
Outstanding 80,279 80,279
================ ================= ================ =================
See accompanying notes to unaudited pro forma condensed consolidated financial statements.
</TABLE>
<PAGE>
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
1. General
The foregoing unaudited pro forma condensed consolidated financial statements
illustrate the effect of the sale by the Company of MOCA pursuant to a Stock
Sale Agreement among the Company, Merisel Americas, Inc., and Arrow Electronics,
Inc. At June 30, 2000 the purchase price would have been approximately $183.5
million, of which approximately $18.5 million would be paid by Arrow on a
deferred basis, subject to the collection of certain specified customer accounts
receivable and returning of certain inventory, and approximately $70.0 million
would have been for amounts outstanding under the Merisel asset securitization
facility. Assuming the transaction was completed on June 30, 2000, the Company
would have realized a $30.1 million gain from the sale of MOCA, without
including the potential additional $37.5 million, as follows:
(in thousands)
Estimated purchase price $183,535
Less pay down of asset securitization 70,038
Less estimated MOCA equity 80,867
Less estimated direct costs associated with transaction 2,500
-------------------
Estimated gain on sale of MOCA $ 30,130
===================
2. Adjustments to Pro Forma Balance Sheet
(a) MOCA - Represents the historical unaudited June 30, 2000 balances for
MOCA which are eliminated to reflect the sale of MOCA to Arrow.
(b) Cash - Consists of cash proceeds resulting from the sale of MOCA net of
cash retained by Arrow pending the collection of specifically-identified
MOCA accounts receivable and the return of certain inventory.
(c) Accounts Receivable - Consists of cash retained by Arrow pending the
collection of specifically-identified MOCA accounts receivable and the
return of certain inventory.
(d) Accrued Liabilities - Consists of estimated direct costs associated with the
sale of MOCA including but not limited to legal, accounting and
investment banking fees.
3. Adjustments to Pro Forma Income Statement for the Six Months Ended June 30,
2000
<PAGE>
(a) MOCA - Represents the historical unaudited balances for MOCA for the
six months ended June 30, 2000 which are eliminated to reflect the sale
of MOCA to Arrow.
(b) Selling, General and Administrative Expenses - Consists of corporate costs
allocated by the Company to MOCA (corporate overhead, administrative
expenses, etc.) that would not have been eliminated due to the sale of
MOCA.
(c) Interest Expense - Consists of interest expense allocated by the Company to
MOCA (related to outstanding Senior Notes) that would not have been
eliminated due to the sale of MOCA.
4. Adjustments to Pro Forma Income Statement for the Year Ended December 31,
1999
(a) MOCA - Represents the historical unaudited balances for MOCA for the year
ended December 31, 1999 which are eliminated to reflect the sale of MOCA to
Arrow.
(b) Selling, General and Administrative Expense - Consists of corporate costs
allocated by the Company to MOCA (corporate overhead, administrative
expenses, etc.) that would not have been eliminated due to the sale of
MOCA.
(c) Interest Expense - Consists of interest expense allocated by the Company to
MOCA (related to outstanding Senior Notes) that would not have been
eliminated due to the sale of MOCA.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
MERISEL, INC.
By: ______________________________
TIMOTHY N. JENSON
Executive Vice President and Chief
Financial Officer
Date: November 13, 2000
<PAGE>
EXHIBIT INDEX
Exhibit
Designation Nature of Exhibit
2.1 Stock Sale Agreement, dated as of September 15,
2000, by and among Merisel, Inc., a Delaware
corporation, Merisel Americas, Inc., a Delaware
corporation, and Arrow Electronics, Inc., a New
York corporation (incorporated by reference to Form
8-K, File No. 0-17156, filed by Merisel on September
22, 2000).
