<PAGE> 1
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): February 3, 1999
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 February 3, 1999, 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 February 3, 1999.
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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: February 11, 1999 By: /s/ THOMAS J. MADDEN
Thomas J. Madden
Chief Financial Officer,
Chief Accounting Officer,
Vice President - Finance
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. EXHIBIT
- ------- -------
<S> <C>
99. Press Release dated February 3, 1999
</TABLE>
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EXHIBIT 99
<TABLE>
<S> <C>
FOR IMMEDIATE RELEASE
Contact: MARK C. LAYTON CRAIG MCDANIEL, APR
President, Chief Executive Officer and Michael A. Burns & Associates
Chief Operating Officer (214) 521-8596
or THOMAS J. MADDEN [email protected]
Vice President - Finance and Chief Financial Officer
Daisytek International Corporation
(972) 881-4700
[email protected]
[email protected]
</TABLE>
DAISYTEK INTERNATIONAL REPORTS RECORD 3RD QUARTER
PFS/PFSWEB Grows Over 100%
PLANO, TEXAS (FEB. 03, 1999) - 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 third quarter period ended December 31, 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 23rd consecutive quarter of record performance compared to
year-ago quarters."
Net sales for the third quarter of FY99 increased 20.9 percent to
$225.5 million compared to previously reported revenues of $186.6 million for
the third quarter of FY98. Third quarter FY99's operating income, excluding
acquisition integration costs for The Tape Company, Inc., was $8.9 million, or
4.0 percent of net sales, compared to $7.3 million, or 3.9 percent of net sales,
previously reported for the third quarter of FY98. Net income for the third
quarter of FY99 was $4.9 million, up 19.3 percent over FY98's previously
reported third quarter net income of $4.1 million. Diluted earnings per share
for the third quarter of FY99 were $0.29 per share, excluding after-tax
acquisition integration costs of $0.1 million, on 17.6 million shares, versus
FY98's previously reported third quarter earnings per share of $0.29 per share
on 14.3 million shares.
Net sales for the nine months ended December 31, 1998, increased 24.0
percent to $668.2 million compared to previously reported revenues of $539.0
million for the same period of FY98. Operating income for the nine months ended
December 31, 1998, excluding acquisition related costs for The Tape Company,
Inc., was $28.1 million, or 4.2 percent of net sales, compared to $20.8 million,
or 3.9 percent of net sales, previously reported for the same period of FY98.
Pro forma net income for the nine months ended December 31, 1998, adjusted for
acquisition related costs and certain income tax adjustments related to the
acquisition of The Tape Company, was $15.5 million, up 31.1 percent over
previously reported net income for the first nine months of FY98 of $11.8
million. Pro forma diluted earnings per share for the nine months ended December
31, 1998, were $0.89 per share, excluding after-tax acquisition integration
costs of $0.2 million, on 17.7 million shares, versus $0.83 per share on 14.3
million shares for the same period of FY98.
"Daisytek's performance this past quarter was led by a booming
performance in our Priority Fulfillment Services (PFS) and PFSWEB divisions,"
said Layton. "These divisions provide end-to-end transaction management,
including total e-commerce logistics solutions, primarily on a fee basis, to
other companies. This past quarter PFS' fee equivalent revenue and operating
profit grew more than 100 percent over the same period last year. We moved over
$100 million of our clients' product this past quarter. Further, this past
quarter and the first four weeks of this quarter, PFS secured 10 new deals,
including new Web-based arrangements with Nokia, Exabyte and IBM, further
expansion of our Tektronix relationship and additional expansion of the IBM
relationships with the opening of PFS Europe.
-more-
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DAISYTEK'S FISCAL YEAR 1999 THIRD QUARTER EARNINGS....PAGE 2
"Our international computer supplies business posted another strong
quarter of revenue growth," added Layton. "Revenue for this past quarter
increased over 50 percent compared to the same period last year, in local
currencies, and over 40 percent in U.S. dollars. Outstanding success in
international markets has grown the division to now reflect over 27 percent of
our total revenue. Although it is yet unclear, we have some concern over the
recent devaluation of the Brazilian currency and its potential effect on our
Latin American business. We continue to keep a close eye on the developments in
this region.
"Our tape division, focused on the wholesale distribution of
professional-grade tape and film to the entertainment industry, is continuing to
merge and evolve within our operational infrastructure," Layton said. "In
January, we introduced the Memphis distribution capability into the network of
sales offices in the tape division. Further, we began operating a central call
center in Chicago that utilizes Daisytek's call-center management technology and
expertise. When fully converted over the next few quarters, this new operational
structure should decrease costs and increase operating profit percentage. As
previously discussed, we recorded this past quarter a $0.2 million one-time
expense related to these integration activities and expect to record the
remaining $0.4 million of integration costs in the fourth quarter.
"In the United States, our computer consumables business was soft, as
we predicted," Layton added. "Our business with U.S. retailers, primarily office
product superstores, declined in revenue compared to the same period last year.
Other U.S. business with value-added resellers, contract stationers, and office
product dealers grew in the low single digits. Overall growth in the United
States was slightly worse than our projections.
"In the U.S. this past quarter, we expanded our relationship with BPGI,
the largest network of independent office product dealers in the United States,"
Layton also stated. "Further, we continue to see consumers demanding to buy
computer consumables in different retail outlets. Our channel focus on drug,
grocery and mass merchants continues to be strong. Both Walgreens and CVS, with
Daisytek as their consumable supplies partner, have seen very good results from
their initial foray into the product category. A significant contribution will
take time, but the seeds are sprouting in this channel and we remain excited
about its future potential. These activities and a strong pipeline of potential
new business in the U.S. reinforce our belief that our growth objectives in the
United States can be achieved.
"On a group basis, we continue to target organic growth of 15 percent
for both revenues and earnings in our next fiscal year," Layton stated.
"Additional large PFS contracts and acquisitions could add to this target."
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.
Priority Fulfillment Services, Inc. is an international commerce solutions
company. PFS delivers outsourced end-to-end transaction management and
E-business solutions for corporate, high-volume and fast-growth companies in a
wide range of industries. PFS and its subsidiaries represent customers worldwide
through the Internet and with strategically located call centers and
distribution facilities. PFSWEB provides E-business logistics solutions for
Web-based E-tailers.
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DAISYTEK'S FISCAL YEAR 1999 THIRD QUARTER EARNINGS....PAGE 3
This news release and more information about Daisytek and Priority Fulfillment
Services are available at www.daisytek.com and www.pfsoutsourcing.com. Daisytek
is a registered trademark of Daisytek, Incorporated. All rights reserved
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-
-more-
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DAISYTEK'S FISCAL YEAR 1999 THIRD QUARTER EARNINGS....PAGE 4
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended
December 31, Three Months Ended
-------------------------- December 31,
1997 1997
1998 Reported (1) % Change Restated (2)
---------- ------------ -------- ------------------
<S> <C> <C> <C> <C>
Net sales $ 225,507 $ 186,586 20.9% $ 197,775
Cost of sales 198,721 167,823 176,407
---------- ---------- ----------
Gross profit 26,786 18,763 42.8% 21,368
Selling, general and administrative expenses 17,877 11,508 55.3% 13,641
---------- ---------- ----------
Income from operations before acquisition related costs 8,909 7,255 22.8% 7,727
Acquisition integration costs 197 -- --
---------- ---------- ----------
Income from operations 8,712 7,255 20.1% 7,727
Interest expense 617 548 681
---------- ---------- ----------
Income before income taxes 8,095 6,707 7,046
Provision for income taxes 3,159 2,569 2,622
---------- ---------- ----------
Net income $ 4,936 $ 4,138 19.3% $ 4,424
========== ========== ==========
Net income per common share:
Basic $ 0.29 $ 0.30 -3.3% $ 0.30
Diluted $ 0.28 $ 0.29 -3.5% $ 0.29
Pro forma data (3):
Historical net income $ 4,936 $ 4,138 $ 4,424
Pro forma adjustments:
Provision for income taxes -- -- (79)
---------- ---------- ----------
Pro forma net income $ 4,936 $ 4,138 19.3% $ 4,345
========== ========== ==========
Pro forma net income per common share:
Basic $ 0.29 $ 0.30 -3.3% $ 0.30
Diluted $ 0.28 $ 0.29 -3.5% $ 0.28
Weighted average common and common share equivalents
outstanding:
Basic 17,140 13,632 25.7% 14,607
Diluted 17,572 14,308 22.8% 15,283
</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) 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 THIRD QUARTER EARNINGS....PAGE 5
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Nine Months Ended
December 31, Nine Months Ended
-------------------------- December 31,
1997 1997
1998 Reported (1) % Change Restated (2)
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Net sales $ 668,247 $ 538,966 24.0% $ 570,612
Cost of sales 588,211 485,026 509,295
---------- ---------- ----------
Gross profit 80,036 53,940 48.4% 61,317
Selling, general and administrative expenses 51,970 33,143 56.8% 39,257
---------- ---------- ----------
Income from operations before acquisition related costs 28,066 20,797 35.0% 22,060
Acquisition and acquisition integration costs 732 -- --
---------- ---------- ----------
Income from operations 27,334 20,797 31.4% 22,060
Interest expense 2,258 1,619 1,927
---------- ---------- ----------
Income before income taxes 25,076 19,178 20,133
Provision for income taxes 9,511 7,342 7,462
---------- ---------- ----------
Net income $ 15,565 $ 11,836 31.5% $ 12,671
========== ========== ==========
Net income per common share:
Basic $ 0.91 $ 0.87 4.6% $ 0.87
Diluted $ 0.88 $ 0.83 6.0% $ 0.83
Pro forma data (3):
Historical net income $ 15,565 $ 11,836 $ 12,671
Pro forma adjustments:
Provision for income taxes (291) -- (253)
Acquisition related costs, net of tax 246 -- --
---------- ---------- ----------
Pro forma net income $ 15,520 $ 11,836 31.1% $ 12,418
========== ========== ==========
Pro forma net income per common share:
Basic $ 0.91 $ 0.87 4.6% $ 0.86
Diluted $ 0.88 $ 0.83 6.0% $ 0.82
Weighted average common and common share equivalents
outstanding:
Basic 17,083 13,530 26.3% 14,505
Diluted 17,734 14,260 24.4% 15,235
</TABLE>
- --------------------
(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 nine months ended December 31, 1998.
-more-
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DAISYTEK'S FISCAL YEAR 1999 THIRD QUARTER EARNINGS....PAGE 6
DAISYTEK INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEET DATA
(In Thousands)
<TABLE>
<CAPTION>
Reported Restated
December 31, March 31, March 31,
1998 1998 (1) 1998 (2)
------------ ------------ -----------
<S> <C> <C> <C>
Trade accounts receivable, net $ 127,237 $ 122,621 $ 127,563
Inventories, net excluding Priority Fulfillment Services Division $ 80,977 $ 78,060 $ 81,956
Inventories, Priority Fulfillment Services Division $ 34,359 $ 11,634 $ 11,634
Trade accounts payable $ 86,905 $ 83,787 $ 87,390
Long-term debt, less current portion $ 41,043 $ 12,655 $ 16,916
Shareholders' equity $ 153,615 $ 139,370 $ 137,731
</TABLE>
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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.
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