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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 28, 1998
DAISYTEK INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-25400 75-2421746
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification
incorporation) Number)
500 NORTH CENTRAL EXPRESSWAY, PLANO, TX 75074
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 881-4700
NONE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On October 28, 1998, the Registrant issued the press release filed
herewith as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired
Not applicable
(b) Pro forma financial information
Not applicable
(c) Exhibits
99. Press Release dated October 28, 1998.
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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.
DAISYTEK INTERNATIONAL CORPORATION
Dated: October 28, 1998 By: /s/ THOMAS J. MADDEN
Thomas J. Madden
Chief Financial Officer,
Chief Accounting Officer,
Vice President - Finance
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INDEX TO EXHIBITS
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EXHIBIT PAGE
NO. EXHIBIT NUMBER
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99. Press Release dated October 28, 1998......................... 5
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EXHIBIT 99
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<CAPTION>
FOR IMMEDIATE RELEASE
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<S> <C>
Contact: MARK C. LAYTON CRAIG MCDANIEL, APR
President, Chief Executive Officer and or PRESTON F. KIRK, APR
Chief Operating Officer Michael Burns & Associates
or THOMAS J. MADDEN (214) 521-8596
Vice President - Finance and Chief Financial Officer [email protected]
Daisytek International Corporation [email protected]
(972) 881-4700
[email protected]
[email protected]
</TABLE>
DAISYTEK INTERNATIONAL REPORTS 35% NET INCOME GROWTH
DALLAS, TEXAS (OCTOBER 28, 1998) - Daisytek International Corporation (Nasdaq:
DZTK) - the world's leading wholesale distributor of consumable computer and
office automation supplies - today reported record net sales and net income for
the second quarter period ended September 30, 1998.
"We are very pleased with our performance this past quarter," said Mark
C. Layton, president, chief executive officer and chief operating officer. "This
marks Daisytek's 22nd consecutive quarter of record performance compared to
year-ago quarters."
Net sales for the second quarter of FY99, increased 22.6 percent to
$220.2 million compared to previously reported revenues of $179.6 million for
the second quarter of FY98. Second quarter FY 99's operating income, excluding
acquisition integration costs for The Tape Company, Inc., was $9.5 million, or
4.3 percent of net sales, compared to $6.8 million, or 3.8 percent of net sales,
previously reported for the second quarter of FY 98. Net income for the second
quarter of FY99 was $5.2 million, up 35.3 percent over FY98's previously
reported second quarter net income of $3.9 million. Diluted earnings per share
for the second quarter of FY99 were $0.30 per share on 17.7 million shares,
versus FY 98's as reported second quarter of $0.27 per share on 14.4 million
shares.
Net sales for the six months ended September 30, 1998, increased 25.6
percent to $442.7 million compared to previously reported revenues of $352.4
million for the same period of FY98. Operating income for the six months ended
September 30, 1998, excluding acquisition related costs for The Tape Company,
Inc., was $19.2 million, or 4.3 percent of net sales, compared to $13.5 million,
or 3.8 percent of net sales, previously reported for the same period of FY 98.
Pro forma net income for the six months ended September, 30, 1998, adjusted for
acquisition related costs and certain income tax adjustments related to the
acquisition of The Tape Company, was $10.6 million, up 37.5 percent over
previously reported net income for the first six months of FY 98 of $7.7
million. Pro forma diluted earnings per share for the six months ended September
30, 1998, were $0.60 per share on 17.8 million shares, versus $0.54 per share on
14.2 million shares the same period of FY 98.
"Daisytek's performance this past quarter was buoyed by similar trends
that we have seen over the past year," said Layton. "Our international computer
supplies business continues to have outstanding performance, contributing
revenue growth in U.S. dollars of approximately 30 percent. On a local currency
basis, this growth was even stronger at 40%, with especially strong revenue
growth in Mexico and Latin America. In the U.S., growth rates have clearly
slowed over the past year or so as we have discussed previously. Further, we
continue to focus on profitable business and are avoiding the temptation of
higher revenue growth in exchange for minimally or non-profitable business. Our
objective for the next year for the U.S. is now single digit growth, and firm
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DAISYTEK'S FISCAL YEAR 1999 SECOND QUARTER EARNINGS....PAGE 2
margins. We continue to pursue and are having some success into new channels,
such as the drug, grocery and mass merchant channels."
"Priority Fulfillment Services (PFS), our division that provides
distribution and call-center services to businesses worldwide, contributed well
this quarter," added Layton. "On an annualized run rate of this quarter's
performance, PFS is currently moving on behalf of its clients over $350 million
of product, which compares to approximately $180 million moved during our fiscal
year 1998. Our PFS lead pipeline is solid and we continue to see new demand for
our unique business transaction outsourcing solution."
"Our professional tape business, which includes Steadi-Systems, Ltd.
and The Tape Company, Inc. entities, also contributed to our revenue and profit
margin growth," Layton also stated. "We continue to work on our integration of
these business units, using Daisytek's telemarketing and distribution
infrastructure. In addition, we continue to evaluate further acquisition
opportunities in this industry."
"We are cautious about the current unsettled economic outlook here in
the U.S. Thus, we have moderated our target for organic growth on a consolidated
basis in our next fiscal year to mid-teens for both revenue and earnings. We are
even more cautious about the next two quarters as some of our major customers
and suppliers are reporting a slower outlook as well," Layton added. "Slower
economic times also present expanded acquisition opportunities. We plan to step
up our efforts to acquire new businesses that can benefit from our outstanding
logistics infrastructure. Accretive acquisitions and continued profit growth
contribution from PFS can add further to the company's organic growth targets."
BACKGROUND: Daisytek is the world's leading distributor of computer and office
automation supplies and accessories, such as inkjet and toner cartridges,
diskettes and other data-storage media, copier and fax supplies, and printer
ribbons. Serving more than 25,000 customer locations in over 50 countries,
Daisytek distributes in excess of 10,000 consumable products from more than 150
manufacturers. Leading manufacturers Daisytek represents include
Hewlett-Packard, Sony, Canon, Epson, Kodak, Okidata, Lexmark, IBM, Imation,
Apple, Xerox, Panasonic, and Digital Equipment Corporation. Through its
strategic alliance with FedEx, Daisytek provides next business day delivery
throughout North America to its customers. Daisytek is headquartered in Plano,
Texas, and maintains sales and distribution centers in Miami, Memphis, Mexico
City, Singapore, Sydney, Toronto, and Vancouver. More information about Daisytek
is available at www.daisytek.com.
The matters discussed in this news release and, in particular, information
regarding future revenue, earnings and business plans and goals, consist of
forward-looking information under the Private Securities Litigation Reform Act
of 1995 and are subject to and involve risks and uncertainties which could cause
actual results to differ materially from the forward-looking information. These
risks and uncertainties include, but are not limited to, general economic
conditions, industry trends, integration of acquired business units, the
dependence upon and/or loss of key suppliers or customers, the loss of strategic
product shipping relationships, customer demand, product availability,
competition (including pricing and availability), concentrations of credit risk,
distribution efficiencies, capacity constraints, technological difficulties,
risk of international operations including exchange rate fluctuations and the
regulatory and trade environment (both domestic and foreign). A description of
these factors, as well as other factors, which could affect the Company's
business, is set forth in the Company's Prospectus dated March 26, 1998, and the
Company's 10-K for the fiscal year ended March 31, 1998.
- FINANCIAL STATEMENTS FOLLOW -
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DAISYTEK'S FISCAL YEAR 1999 SECOND QUARTER EARNINGS....PAGE 3
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
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Three Months Ended
September 30, Three Months Ended
-------------------------- September 30,
1997 1997
1998 Reported(1) % Change Restated(2)
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Net sales $ 220,151 $ 179,568 22.6% $ 190,060
Cost of sales 193,428 161,697 169,734
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Gross profit 26,723 17,871 49.5% 20,326
Selling, general and administrative expenses 17,218 11,052 55.8% 13,094
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Income from operations before acquisition related costs 9,505 6,819 39.4% 7,232
Acquisition integration costs 130 -- --
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Income from operations 9,375 6,819 37.5% 7,232
Interest expense 789 552 660
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Income before income taxes 8,586 6,267 6,572
Provision for income taxes 3,350 2,398 2,425
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Net income $ 5,236 $ 3,869 35.3% $ 4,147
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Net income per common share:
Basic $ 0.31 $ 0.28 10.7% $ 0.28
Diluted $ 0.30 $ 0.27 11.1% $ 0.27
Pro forma data (3):
Historical net income $ 5,236 $ 3,869 $ 4,147
Pro forma adjustments:
Provision for income taxes -- -- (92)
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Pro forma net income $ 5,236 $ 3,869 35.3% $ 4,055
========== ========== ==========
Pro forma net income per common share:
Basic $ 0.31 $ 0.28 10.7% $ 0.28
Diluted $ 0.30 $ 0.27 11.1% $ 0.26
Weighted average common and
Common share equivalents outstanding:
Basic 17,105 13,592 25.8% 14,567
Diluted 17,723 14,420 22.9% 15,395
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(1) Results previously reported for Daisytek International Corporation prior to
the acquisition of The Tape Company, Inc. during June 1998.
(2) Restated for pooling of interests to combine the results of operations of
Daisytek and The Tape Company.
(3) The Tape Company included a business unit organized as a subchapter S
corporation, whereby income taxes were paid individually by the owners. The
pro forma provision for income tax adjustment is provided to reflect income
tax under a corporate tax structure
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DAISYTEK'S FISCAL YEAR 1999 SECOND QUARTER EARNINGS....PAGE 4
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Six Months Ended
September 30, Six Months Ended
-------------------------- September 30,
1997 1997
1998 Reported(1) % Change Restated(2)
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Net sales $ 442,740 $ 352,380 25.6% $ 372,837
Cost of sales 389,490 317,203 332,888
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Gross profit 53,250 35,177 51.4% 39,949
Selling, general and administrative expenses 34,093 21,635 57.6% 25,616
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Income from operations before acquisition related costs 19,157 13,542 41.5% 14,333
Acquisition and integration costs 535 -- --
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Income from operations 18,622 13,542 37.5% 14,333
Interest expense 1,641 1,071 1,246
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Income before income taxes 16,981 12,471 13,087
Provision for income taxes 6,352 4,773 4,840
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Net income $ 10,629 $ 7,698 38.1% $ 8,247
========== ========== ==========
Net income per common share:
Basic $ 0.62 $ 0.57 8.8% $ 0.57
Diluted $ 0.60 $ 0.54 11.1% $ 0.54
Pro forma data (3):
Historical net income $ 10,629 $ 7,698 $ 8,247
Pro forma adjustments:
Provision for income taxes (291) -- (174)
Acquisition related costs, net of tax 246 -- --
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Pro forma net income $ 10,584 $ 7,698 37.5% $ 8,073
========== ========== ==========
Pro forma net income per common share:
Basic $ 0.62 $ 0.57 8.8% $ 0.56
Diluted $ 0.60 $ 0.54 11.1% $ 0.53
Weighted average common and
common share equivalents outstanding:
Basic 17,055 13,478 26.5% 14,453
Diluted 17,769 14,234 24.8% 15,209
</TABLE>
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(1) Results previously reported for Daisytek International Corporation prior to
the acquisition of The Tape Company, Inc. during June 1998.
(2) Restated for pooling of interests to combine the results of operations of
Daisytek and The Tape Company.
(3) Pro forma data includes the following adjustments: (a) The Tape Company
included a business unit organized as a subchapter S corporation, whereby
income taxes were paid individually by the owners. The pro forma provision
for income tax adjustment is provided to reflect income tax under a
corporate tax structure. (b) Daisytek incurred various acquisition related
accounting, legal and other costs applicable to the acquisition of The Tape
Company and acquisition integration costs. The pro forma adjustment for
acquisition related costs, net of tax, excludes such costs from pro forma
net income for the six months ended September 30, 1998.
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DAISYTEK'S FISCAL YEAR 1999 SECOND QUARTER EARNINGS....PAGE 5
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In Thousands)
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Reported Restated
September 30, March 31, March 31,
1998 1998 (1) 1998 (2)
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Trade accounts receivable, net $ 123,347 $ 122,621 $ 127,563
Inventories, net excluding Priority Fulfillment Services Division $ 84,139 $ 78,060 $ 81,956
Inventories, Priority Fulfillment Services Division $ 23,056 $ 11,634 $ 11,634
Trade accounts payable $ 71,647 $ 83,787 $ 87,390
Long-term debt, less current portion $ 41,909 $ 12,655 $ 17,468
Shareholders' equity $ 148,796 $ 139,370 $ 137,729
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(1) Financial position previously reported for Daisytek prior to the
acquisition of The Tape Company during June 1998.
(2) Restated for pooling of interests to combine the financial position of
Daisytek and The Tape Company.
